Amid acquisition rumors, renewed earlier this month following Celgene Corp.'s $2.9 billion offer for competitor Pharmion Corp., Minneapolis-based MGI Pharma Inc. has hired Lehman Brothers investment bank to help it evaluate "possible strategic alternatives."

In corporate-speak, that generally means a potential merger or acquisition might be in the works, though MGI declined to comment further, stating in a press release that it will not publicly disclose additional information until the review process has been completed.

Nevertheless, Wall Street was buoyed by the news, sending MGI's shares (NASDAQ:MOGN) up 19 percent, or $5.55, Thursday to close at $35.10.

The move comes as no surprise, given the speculation in recent months, analyst Christopher Raymond, of Chicago-based Robert W. Baird & Co., wrote in a research note, though he added that the "formal announcement may be an indication that a deal is more imminent now." Raymond maintained a $30 price target, and said MGI "may be an attractive target for the right player and [we] like the potential for a deal ultimately getting done."

MGI's marketed compounds include Aloxi (palonosetron hydrochloride) injection for chemotherapy-induced nausea and vomiting, Dacogen (decitabine) for myelodysplastic syndromes (MDS) and Gliadel Wafer (polifeprosan 20 with carmustine implant) for high-grade malignant glioma. Total product sales totaled $110.8 million in the third quarter.

Most recently, the firm's fiercest competition has been in the MDS space, where Dacogen vies for market share with Pharmion's Vidaza (azacitidine).

Boulder, Colo.-based Pharmion, which announced last week that it is being bought by Summit, N.J.-based Celgene, intends to seek a label expansion for the drug in high-risk MDS patients based on impressive two-year survival data reported earlier this year. (See BioWorld Today, Aug. 3, 2007, and Nov. 20, 2007.) Dacogen's survival data is expected to be released next year.

MGI co-develops Dacogen with Johnson & Johnson unit Janssen-Cilag, which handles regulatory and commercial activities outside of North America. MGI, which reported non-GAAP net income of $24.8 million, or 30 cents per share, for the third quarter, had about $166.5 million in cash as of Sept. 30.

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