ChemGenex to be acquired by Cephalon

US biopharmaceutical company Cephalon has continued its trend of buying into promising Australian biotechnology companies with the announcement it intends to acquire ChemGenex Pharmaceuticals (ASX:CXS) for $159 million in cash.

The deal amounts to an offer of 70 cents per share in ChemGenex and 2 cents per ASX-listed option. This represents a 60% premium on ChemGenex’s share price of 44c as of when it issued a trading halt on Friday 25th of March.

The offer values ChemGenex at $225 million if applied to all of the company’s shares.

Read more about ChemGenex and Omapro.

Cephalon is also investigating extending the offer to holders of ChemGenex American Depository Receipts.

The ChemGenex board and directors unanimously recommended the offer to the company’s shareholders in the absence of a superior offer.

ChemGenex’s share price bounced by over 50% to 67.5c as of late-afternoon trading today on the back of the news.

This is not the first venture into the Australian biotech market by Chephalon. It made headlines when it bought 20% of stem cell specialists, Mesoblast, in the world’s biggest deal involving a stem cell company.

Cephalon had already acquired 27.5% of ChemGenex in an earlier deal.

ChemGenex has had a bumpy 18 months, with its share price peaking at close to $1.00 at the beginning of 2010 in anticipation of a tick of approval from the US Food and Drug Administration for Omapro, which is a treatment for patients with chronic myeloid leukaemia who have failed two or more frontline treatments and who have the T315I mutation.

However, the FDA knocked back the New Drug Application on the grounds that there was no FDA-approved diagnostic for the T315I mutation. ChemGenex agreed to work on seeing a diagnostic approved, at which point the anticipation was that the FDA would give Omapro the go-ahead.

On the back of the stalled NDA, ChemGenex’s share price dropped to a low of 30c in 2010.

The two companies are currently finalising the deal, which will be completed if and when ChemGenex share holders accept the offer.