Emergent BioSolutions expanding with $222M deal to buy Cangene

Emergent BioSolutions, already the go-to company for anthrax vaccines, will buy Cangene Corp. for about $222 million, adding to its stable of biodefense contracts and picking up a contract manufacturing business that can kick in some additional revenue.

Emergent is a small but important link in the U.S. biodefense strategy. It has a 5-year contract with the U.S. Strategic National Stockpile to provide its BioThrax anthrax vaccine to the U.S. Strategic National Stockpile, a deal worth up to about $1.3 billion. Last year it also was selected, along with GlaxoSmithKline ($GSK) and Novartis ($NVS), to share in a $400 million contract from the U.S. Department of Health and Human Services (HHS). That deal is designed to boost vaccine manufacturing capacity in the U.S. that the government can draft in the case of pandemic or bioterror threats.

The Rockville, MD-based vaccine maker says the Cangene deal gets it three specialty products that are also included in the national stockpile, including its botulism antitoxin heptavalent (BAT). The FDA in March approved Cangene's antitoxin for botulism, saying it was safe and that the benefits of the drug outweigh the risks. The product was developed with U.S. government support. The company also has four commercial specialty drugs. It has manufacturing and plasma collection facilities in Winnipeg, Manitoba, Canada, where it is headquartered and its contract manufacturing facilities in Baltimore, MD.

Combined, the companies will have total revenues of more than $430 million and pre-tax operating income of approximately $55 million. The $3.24 per share cash offer is a 28% premium to Cangene's closing price Wednesday, when the deal was first announced. Emergent BioSolutions CEO Daniel Abdun-Nabi said, "The addition of Cangene is expected to accelerate our growth driven by a substantially expanded biodefense franchise, a portfolio of approved specialty therapeutics sold through an established commercial infrastructure, and fill/finish manufacturing capabilities with growing contract revenues."

- here's the announcement

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