British Firm Agrees to Buy MedImmune

MedImmune accepted a $15.6 billion buyout offer from British drug giant AstraZeneca, capping what was described as a ferociously competitive bidding war for the region's most successful biotech company in a deal that could keep much of its operations local.

The Gaithersburg company, founded nearly two decades ago by a former Walter Reed Army Institute of Research scientist, agreed to AstraZeneca's offer of $58 per share late Sunday, which was a 53.3 percent premium on the biotech firm's April 11 share price. On April 12, MedImmune abruptly switched course from its go-it-alone strategy, saying it was exploring a sale that had been urged by several large investors, including Carl C. Icahn. The stock price began to soar.

Other firms had bid on MedImmune, including Merck, according to a source with knowledge of the bidding who spoke on the condition of anonymity because the process was private. Merck declined to comment.

AstraZeneca, known for its heartburn drug Nexium, has been facing problems similar to other big drug companies': the prospect of competition from generic copies of blockbuster drugs and a lack of big-time products in its pipeline. The MedImmune acquisition would give AstraZeneca a major presence in biotechnology, an area of drug development that when successful can reap handsome financial rewards with life-changing treatments.

At the same time, MedImmune gives AstraZeneca two high-profile products on the market: Synagis, which prevents certain respiratory infections in babies, and FluMist, a nasal flu vaccine. Until now, AstraZeneca had no presence in the booming vaccine business. Its big European competitors, GlaxoSmithKline and Novartis, each have such a presence.

David Brennan, AstraZeneca's chief executive, said the MedImmune deal was "a significant acceleration" in the firm's efforts to enter the biotech business.

The London company plans to capitalize on MedImmune's research and manufacturing capabilities for its biotech ramp-up. AstraZeneca plans to offer all of MedImmune's 2,500 employees a bonus to stay with the new company. Brennan said it was too early to tell whether MedImmune would keep its name or how much autonomy the firm would have.

Wayne T. Hockmeyer, MedImmune's chairman and founder, said he did not view the deal as a tale of a big drug company buying a small biotech firm, taking its products and then closing up. "My sense is that we are going to see exactly the opposite here," he said. "That is extremely good for everyone here, including the state and the county."

MedImmune chief executive David M. Mott is to head AstraZeneca's biotech efforts and become a senior member of the management team. Mott, a former investment banker with no formal scientific education, has been criticized for his stewardship of MedImmune, with Icahn calling the company's management "very lackluster." If the sale is approved, Mott would have 6.2 million shares that would be worth more than $359 million. It was not clear yesterday how much of that would be profit because the cost of the shares would have to be subtracted.

The company said Mott was not available for interviews. "I don't think David needs any defense," Hockmeyer said. "My own view is that he's done a superb job."

The sale of MedImmune, the nation's eighth-most valuable biotech firm, caps an extraordinary story in the annals of local business and is big news for the region's biotech community, which is largely clustered in Montgomery County, off of I-270. The scientists who work there know it as DNA Alley. Hockmeyer, a former Walter Reed researcher, founded the company 19 years ago in what has now become a customary career track for many scientists working for federal research organizations: Do great research, find some deep-pocketed investors, start a company, dream.

The move from laboratory to board room took considerable nerve, but Hockmeyer was a scientist who has shown his fair share, once using himself as a lab rat to try out a malaria vaccine that he developed at Walter Reed. "It's not every day that you go from zero to a $15 billion-plus company," he said yesterday. "This has been a great 19 years, a remarkable success story."

It was not always easy. The company faced the possibility of going under after one of its drugs, RespiGam, was denied approval by a Food and Drug Administration advisory panel in 1993. Rather than lay off many of his 120 employees, Hockmeyer started over, spending millions of dollars conducting new studies to prove that the drug, which prevented a virus in babies, worked. Hockmeyer called the strategy "Bet the Farm." RespiGam was approved three years later.

A successor drug to RespiGam, Synagis, was launched in September 1998. It became one of the industry's biggest products, surpassing $1 billion in sales in 2005.

MedImmune's problems started last year, with signs that sales of Synagis appeared to be slowing and lingering questions surrounding FluMist, which MedImmune acquired after it bought Aviron for more than $1 billion in 2002.

The nasal flu vaccine did not catch on, and MedImmune set out to rebuild the program with a formulation that did not need to be frozen. MedImmune also set out to expand the vaccine's approval to children younger than 5. The non-frozen version was approved, and MedImmune awaits word from the FDA about whether it would allow the new formulation for young children.

Staff writers Tomoeh Murakami Tse and Renae Merle and news services contributed to this report.