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Second life for CAT

30th May 2006

30052006_AstraLogo1Q.jpgIn what is expected to be its last set of results, Cambridge Antibody Technology (CAT) has rewarded its suitor, AstraZeneca, by reporting an interim profit of £4.6m.

The two companies have been in partnership to develop drugs since 2004 and AstraZeneca had previously acquired a 20% stake in the UK biotechnology firm. Then, in May - and following much speculation - AstraZeneca made an offer of £702m for the company, valuing CAT at an instant 67% premium to its prevailing share price. CAT's board immediately gave the go ahead for the purchase.

CAT's flagship product is Humira, a monoclonal antibody for arthritis developed with Abbott of the US. Increasing royalties from Humira helped boost revenue to £172.5m in the six months to 31 March, up from £9.8m the year before. These figures arose after CAT came to a final settlement in litigation with Abbott in October 2005, ending two years of legal battles that culminated in CAT receiving a 2.688% royalty on Humira sales, up from 2% previously. Further royalties might also be expected if Abbott succeeds in obtaining approval for Humira's additional use to treat chronic inflammation of the spine, and potentially in the future to treat Crohn's disease, psoriasis, ulcerative colitis and juvenile rheumatoid arthritis.

In acquiring CAT, AstraZeneca hopes to take advantage of the company's development skills across a broad range of products. Peter Chambré, CAT's chief executive, will leave as part of the deal, but AstraZeneca has introduced a package of financial incentives designed to retain other senior employees.

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