Medimmune to acquire U.S. Bioscience for 16.68 times revenue

Weekly Corporate Growth Report, Oct 4, 1999

The Deal: Medimmune Inc. has agreed to acquire U.S. Bioscience Inc. for $492 million in stock. The deal represents the latest consolidation trend in the biotechnology industry. Medimmune will exchange 0.15 of its shares for each share of U.S. Bioscience. On the news, U.S. Bioscience rose $2.625, or 22.8%, to $14.125/share, while Medimmune rose $7.1875, or 7.0%, to $109.25/share.

Discussion: U.S. Bioscience is a pharmaceutical company that specializes in developing products for patients with cancer and AIDS. The company has three products on the market, including Ethyol, which reduces the cumulative kidney toxicity for patients with advanced ovarian cancer and cell lung cancer. NeuTrexin is used to treat pneumonia, and Hexalen is used to treat recurrent ovarian cancer.

Medimmune is a biotechnology company that develops and markets products to treat infectious disease, transplantation medicine, autoimmune disorders, and cancer. The company markets three products through its hospital-based sales force and has five new products in clinical trials. Pharmaceutical companies are under pressure to increase earnings faster than they can develop new products. As a result, large pharmaceutical and biotechnology companies are acquiring smaller companies to add new drug products to their portfolios. Acquisitions are less costly and less risky than developing drugs from scratch. Medimmune's acquisition will solidify its position in the field of oncology and infectious disease.