Shares throughout the biotechnology sector advanced Monday as Swiss pharmaceutical giant Roche offered to buy Genentech Inc. in potentially the biggest pharma-biotech deal of the year.
Early Monday, Roche offered $43.7 billion for South San Francisco, Calif.-based Genentech, which breaks down to $89 per share, or an 8.8 percent premium above its closing price Friday. Wall Street considers the offer too low and expects Roche to eventually increase its bid.
The American Stock Exchange's biotechnology index, which tracks the industry's bellwether stocks, gained 21.39 points, or 2.7 percent, to reach 817.05 points. Meanwhile, the Nasdaq's biotech index, which tracks a wider variety of biotech companies, gained 18.4 points, or 2.2 percent, to reach 866.43 points.
Roche already owns more than half of Genentech and a successful deal would make the combined company one of the largest pharmaceutical companies in the world. The offer comes as many large pharma companies continue to either buy or internally develop biotechnology programs to rebuild lagging development pipelines.
The buyout offer helped boost shares of Cambridge, Mass.-based Biogen Idec Inc., which collaborates with Genentech on the non-Hodgkin lymphoma and rheumatoid arthritis drug Rituxan. The company reports second-quarter financial results Tuesday and partner Genentech has already said Rituxan sales rose 12 percent to $651 million.
Biogen shares rose $2.98, or 4.6 percent, to $67.63 in midday trading. The company was a potential buyout target last fall, urged on by activist investor Carl Icahn, though no sale ever materialized.
Shares of New York-based ImClone Systems Inc. rose $2.15, or 4.8 percent, to $47.30. There was market speculation in 2006 that the company was a buyout target. Icahn eventually took control of the company's board of directors.
Meanwhile, shares of San Diego, Calf.-based Amylin Pharmaceuticals Inc. rose 79 cents, or 3.1 percent, to $26.57. The company reports earnings after the market closes Monday.
Shares of Thousand Oaks, Calif.-based Amgen Inc. rose $1.09, or 2.1 percent to $53.65 while fellow biotech company Summit, N.J., Celgene Corp.'s shares rose 95 cents to $71.80.
Elsewhere in the sector, shares of Cambridge, Mass.-based Genzyme Corp. rose $1.19 to $79.42.
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