Investors don't seem too enamored with Celgene's
You just need to look past what Abraxis is now -- a one-drug wonder with revenue of less than $400 million -- and look at where it could be with some tender care from Celgene.
The cash and stock purchase values Abraxis at $71.93 (using last night's closing price for Celgene), which is only 17% higher than yesterday's close, but it's nearly triple Abraxis' 52-week low. Clearly it would have been a better move to buy back in March before positive lung cancer data for its only drug, Abraxane, sent shares soaring. But Executive Chairman Patrick Soon-Shiong, who owns or controls 82% of the shares, probably wasn't willing to sell at that point.
In fact, he seems to have so much confidence that Abraxane will expand beyond its use in breast cancer that he negotiated a contingent value right (CVR) that entitles shareholders to receive up to $650 million in milestone payments plus royalties if Abraxane is approved for additional indications.
Abraxis is more than just Abraxane, though. The drug is built on a platform that could work for multiple drugs, much like Alkermes'
In Abraxis' case, its nanoparticle albumin bound (nab) technology helps chemotherapy drugs infiltrate the tumor better. Abraxane is just nab added to Bristol-Myers Squibb's
With Celgene's drug-development experience, it should be able to leverage Abraxane and nab technology into something worthy of the $2.9 billion price tag.
Tim Beyers sees plenty of value in high-growth stocks.
