Picking through Biogen Idec's (Nasdaq: BIIB) castoffs, Abbott Labs (NYSE: ABT) thinks it's found a gem in Facet Biotech (Nasdaq: FACT). Yesterday, after the market closed, Abbott announced that it would buy Facet for $27 per share. That's a 66% increase on yesterday's close, and more than triple where it was before Biogen made its initial offer back in September.

At $27 per share, Facet is valued at $722 million, but the net cost for Abbott won't be that high. Facet is expected to have about $272 million in cash and equivalents when the deal closes. Still a net cost of $450 million seems a little high for a company whose most advanced drugs are two already-partnered phase 2 drugs, daclizumab and voliciximab.

What really worries me about this purchase is that Biogen, which is Facet's partner on daclizumab and voliciximab, was only willing to offer $17.50 a share. Partners tend to have the best sense of the true value of a drug, because they have access to data that investors and other companies don't. Even if you assume that Biogen was lowballing Facet, I have a hard time thinking that Facet's pipeline is worth nearly four times what Biogen was willing to pay.

And of course, Abbott now has to work with Biogen on developing daclizumab and voliciximab. If its perceived value of the drug is off by so much, will there be problems in deciding how much to invest in the development of the drugs?

While Abbott has put more on the line than Biogen was willing to, in the long run, investors won't care much what value was put on daclizumab and the rest of the pipeline. Like Eli Lilly's (NYSE: LLY) outbid of Bristol-Myers Squibb (NYSE: BMY) to purchase Bristol-Myers' partner, ImClone Systems, it'll all come down to whether the pipeline produces approvable drugs. If daclizumab and voliciximab make it to market, $450 million will look cheap.

Have thoughts on which biotech will be the next to be taken out? Let us know in the comment box below.

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