Biotech buyouts are generally causes for celebration. Seeing a stock get acquired at a nice premium is the dream for many biotech investors. But sometimes dreams turn in to nightmares, as may be happening with Astex Pharmaceuticals.

Sarissa Capital, a hedge fund and the largest shareholder of Astex, is arguing that investors are getting a raw deal. Japanese conglomerate Otsuka agreed to buy the biotech company at a 27% premium, which Sarissa argues dramatically undervalues its exciting pipeline of oncology and central nervous system drugs. 

Taking a closer look at the company's pipeline shows Sarissa may have a point. Astex has caught the interest of several big pharmas and has several partnerships to show for it. Its only approved drug, Dacogen, is sold internationally by Johnson & Johnson, and the two are teaming up on a cancer drug as well. Novartis also has a pair of cancer drugs in development with Astex as well, and AstraZeneca has partnered up on an early stage BACE inhibitor for Alzheimer's. But investors need to remember that none of these assets are past mid-stage development, and a lot can go wrong in large phase 3 trials.

In this video, health care analyst David Williamson discusses what these events mean for investors in Astex.

Follow David on Twitter: @MotleyDavid.