UCB makes recommended cash offer for Celltech Group

Belgian company UCB has made a cash offer worth £1.53bn for UK biotech company Celltech Group.

The offer has been unanimously recommended by the boards of both companies, and will create a European-based company that will be one of the largest biopharmaceutical companies in the world.

The two companies complement each other in a number of important areas. First, the combined group will have strong positions in speciality therapeutic areas such as central nervous system, inflammation and oncology. Celltech has expertise in biotechnological r&d, especially monoclonal antibodies, while UCB's expertise lies in pharmaceutical chemistry. This will result in a significantly strengthened combination of small and large molecule discovery and development expertise, allowing the combined group to increase the flow of drug development candidates.

Another benefit will be an enhanced global presence across the US, Europe and Asia, to commercialise and launch new products, particularly in the specialist areas in which the combination will focus and where UCB has already demonstrated its ability to launch and propel products successfully to market leadership.

'We have pursued and implemented over the last few years an ambitious plan to develop the company in pharmaceuticals, including through external growth,' said Baron Georges Jacobs, chairman of the executive committee of UCB. 'This transaction represents a major step in the implementation of our goals, as well as a unique opportunity to build a leading innovative biopharmaceutical company.'

Brussels-based UCB had a turnover of approximately €3bn in 2003 and employs more than 11,500 people. Its flagship pharmaceutical business had a turnover of €1.5bn in 2003. Its pharmaceutical re-search activities employ more than 1,000 people and have a budget of €244m for 2004.

Celltech employs some 1,900 people and had turnover in excess of £350m in 2003. Its investment in R&D activity, which employs some 450 people, amounted to £106m in 2003. The company has a broad and innovative pipeline including a major new product in advanced phase III trials (CDP870) for which UCB has entered into a worldwide development and marketing agreement. The license agreement is not conditional upon the success of the proposed offer for Celltech by UCB.

Under the terms of the agreement, Celltech grants UCB co-exclusive worldwide rights to develop and commercialise CDP870, its anti-TNF-α PEGylated antibody fragment. The licence is exclusive for rheumatoid arthritis and other indications, excluding Crohn's disease. UCB will be responsible for the conduct of future clinical studies and all commercialisation activities with CDP870 other than in Crohn's disease, and will pay Celltech a significant royalty on sales in these indications. UCB will also make progress-related payments to Celltech dependent upon attaining certain project related milestones.

Celltech retains manufacturing rights and will supply all CDP870 material for commercialisation, and will discharge all royalties due to third parties. Celltech retains exclusive rights for the development and commercialisation of CDP870 in Crohn's disease in North America, major European markets, Australia and New Zealand, with UCB having development and commercialisation rights in other territories.