Now that Celgene has wrapped up its $3 billion-plus buyout of Abraxis BioScience, analysts are cheering. That wasn't necessarily the case in June, when the companies announced their deal--and investors responded by selling off their stock, sending the price plummeting to $48. But as Investor's Business Daily reports, Celgene shares are now trading at near $60, and observers think the combo will eventually transform the company into a "biopharmaceutical giant."
Celgene specializes in drugs for blood cancers, with its Revlimid drug leading the company's roster. Abraxis, on the other hand, sports a promising drug for solid tumors, Abraxane. Analysts think that Celgene can beef up Abraxane sales significantly, because it already fields a cancer-drug sales force. Up to $500 million from $315 million last year, one analyst predicts.
But even more importantly, Abraxane has the potential to be a "platform drug" used to treat several forms of cancer. Now approved for breast cancers that haven't responded to other treatments, Abraxane is being tested against advanced lung cancer, malignant melanoma and advanced pancreatic cancer (all Phase III); and bladder and ovarian cancers (both Phase II).
"If Abraxane was a low-growth drug, the [buyout] price might be seen as steep, but it has the prospect to reinvigorate growth for Celgene," Standard & Poor's analyst Steven Silver tells IBD. We'll know more once that Phase III data starts to appear.