Celgene to purchase Pharmion for $2.9 billion

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Biotech company Celgene announced it has agreed to acquire blood cancer treatment maker Pharmion for $2.9 billion in cash and stock.

With the acquisition, Celgene aims to become a global player in the fields of hematology and oncology.
 
Celgene is paying more than 10 times Pharmion's revenue of $256 million over the past 12 months.

Pharmion's sales were $238.6 million during 2006 as the company posted a $91 million loss.  
 
Pharmion has 500 employees with four drugs on the market--its most successful is Vidaza for blood-cell disorders. Pharmion's pipeline includes Amrubicin for small-cell lung cancer.

Pharmion has an existing marketing relationship with Celgene. Pharmion owns European marketing rights to Celgene's myeloma treatment Thalomid.

Chris Raymond, an analyst with Robert W. Baird, said Celgene was paying a stiff premium -- 11 times 2007 revenue estimates -- with Vidaza due to lose patent protection in 2011.

"While the addition of Vidaza and Thalidomide/Europe provides decent diversification, we think the price is steep for a company whose flagship [drug] loses patent protection in just 3.5 years," Raymond said in a research note.

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