In what could become one of the top acquisitions of 2005, Amgen Inc. offered to acquire Abgenix Inc. for $22.50 a share - or about $2.2 billion in cash.

The proposed payout is a significant premium to Fremont, Calif.-based Abgenix's current trading price. Shares (NASDAQ:ABGX) closed at $14.65 on Wednesday, up 46 cents.

Amgen also plans to assume all of Abgenix's debt. The Thousand Oaks, Calif.-based company's shares (NASDAQ:AMGN) fell 68 cents Wednesday to close at $76.78. News of the acquisition came shortly after the markets closed, and Abgenix's stock soared in the after-market funding.

The boards of both companies have approved the merger, which should close by the end of the first quarter of 2006. Completion is subject to the approvals of Abgenix's shareholders and regulatory authorities.

"I think Amgen got a good deal," said Adam Noah, analyst in the San Francisco office of Merriman Curhan Ford & Co. "They're basically paying about $2 billion for a product that could sell $2 billion to $3 billion each year."

That product is panitumumab, a monoclonal antibody for colorectal cancer partnered with Amgen, which began working with Abgenix on the compound after acquiring Immunex Corp., of Seattle, for $10.3 billion in 2002. (See BioWorld Today, July 17, 2002.)

Phase III data "were good enough that not only Abgenix's stock went up, but competitor ImClone's stock went down," Noah noted. "People were talking about [using the drug against] second-line and first-line" disease, when it originally had targeted third-line.

Panitumumab is the first epidermal growth factor receptor inhibitor to show a statistically significant improvement in progression-free survival in those who have failed standard chemotherapy, making it a potential threat to New York-based ImClone Systems Inc.'s Erbitux (cetuximab). That company's shares fell 20.6 percent in November, while Abgenix's rose 37.7 percent, following the release of the top-line Phase III data. (See BioWorld Today, Nov. 4, 2005.)

Amgen and Abgenix plan to file a biologics license application for panitumumab in the first quarter of 2006. If it reaches the market for colorectal cancer and head and neck cancer, its potential peak worldwide sales could reach $2 billion, Amgen said.

The potential buyout includes Abgenix's 100,000-square-foot manufacturing plant and its fully human monoclonal antibody technology, XenoMouse. "If you include the [transgenic mouse] technology, that makes my point even stronger," Noah said.

Amgen plans to retain all of Abgenix's manufacturing employees.

The deal "can be extrapolated to a lot of other companies," Noah said, at least potentially. Platform firms once were lumped with "genomics" outfits and shunned by big-pharma buyers, but "now they have these products coming to a later stage, and delivering. They weren't buying them back then, but they're buying them now, because the risk is coming out of it more and more."

Another company ripe for such a deal could be San Diego-based Arena Pharmaceuticals Inc., with its G protein-coupled receptor platform, he said. (See "Arena's Obesity Drug Yields Positive Results In Phase IIb," this issue.)

"I heard rumors about them when the stock was at $5, and people were saying, Why doesn't Merck just buy them?'" Noah said, pointing out that collaborator Merck & Co. Inc., of Whitehouse Station, N.J., bought $7.5 million worth of shares of Arena at $8 each about a year ago, when the shares had closed at $4.61 the day before.

The answer, he said, might be that the platform companies with "so much hidden value" are refusing to sell until they get the prices they want. "Maybe they overpromised and underdelivered five years ago, but they're delivering now," as in the case with Abgenix's colorectal-cancer compound.

For Amgen, the deal also eliminates a tiered royalty it would have paid to Abgenix on future sales of denosumab (formerly AMG 162), which was created with XenoMouse. That product, which targets RANK ligand, is being studied to treat osteoporosis, treatment-induced bone loss, bone metastases, multiple myeloma and rheumatoid arthritis.

Abgenix is a natural fit for Amgen, said Amgen president and CEO, Kevin Sharer, in a statement.

"This investment reflects Amgen's commitment to our pipeline and our growing confidence in the future success of both panitumumab and denosumab," he said.

Abgenix's president and CEO, Bill Ringo, said the acquisition "provides an attractive valuation for our shareholders," and "will maximize the value" of Abgenix's antibody products and its scientific platform.

In the bigger picture, Noah said, "five or six other companies" could be in a position similar to Abgenix before long. RNAi interference might be next.

"My contention today would be that it's way too early, but I would include them in this category," he said.