BioWorld International Correspondent
LONDON Cambridge Antibody Technology Group plc has been outbid in its attempt to acquire Drug Royalty Corp. as a cash cow, and will now pay C$14 million to buy back royalties on its products owned by DRC.
CAT, of Melbourn, UK, made an all-share bid for Toronto-based DRC in January of C$126 million (US$79.6 million), but last week, Inwest Investment Ltd., a privately held Canadian company, made a counterbid of C$133 million in cash.
John Aston, finance director of CAT, told BioWorld International, “We didn’t want to get into a bidding war with Inwest; it doesn’t make sense to pay cash to buy cash flow.” CAT’s offer is still on the table but Aston said it was unlikely to be taken up.
However, if the Inwest deal goes through CAT has the right to terminate its royalty agreement with DRC upon payment of C$14 million in cash or shares. Aston said no decision had been made on how to pay.
DRC made a venture capital investment in CAT in 1994, in return for 3 percent of CAT’s income until 2009. The company’s international portfolio of royalty interests also includes stakes in a number of drugs, including Amgen Inc.’s Neupogen, Bristol-Myers Squibb Co.’s Taxol and Johnson & Johnson’s Remicade. For the year ended Aug. 31, 2001, DRC reported earnings before taxes of C$9.1 million, on revenues of C$21.1 million.
Aston said the outcome was “mildly disappointing. We entered into these negotiations because we wanted the royalty stream. We didn’t get that, but we are now in a position where we can buy back our royalties. It is not the best outcome, but it is a satisfactory outcome.”
CAT, based in Melbourn, also said it intends to appeal the judgment that MorphoSys AG, of Munich, Germany, does not infringe CAT’s Griffiths U.S. Patent No. 5,885,793. Last week a judge in the District Court of Washington confirmed a ruling made on Dec. 24 that the method used by MorphoSys to create its antibody library does not infringe the Griffiths patent.
The Griffiths patent, which is co-owned by CAT and the Medical Research Council, the UK public funding body, relates to methods of isolating specific antibodies to human self-antigens from phage display libraries and to antibodies produced by those methods.