Tomahawk, WI 9/06/2013 (BasicsMedia) – Japans Otsuka looks set to buy Astex Pharmaceuticals, Inc. (NASDAQ:ASTX)  after lengthy negotiation of which a price close to $900 million is being quoted. With Otsuka Holdings co mainstay patents for schizophrenia beginning to expire, this was a necessary move in an attempt of trying to stay afloat in terms of increased revenue streams and long term stability. The deal looks set to go through as failure to do so Otsuka will be required to pay Astex $31m.

Otsuka Officially pronounced in the Tokyo stock exchange that it was planning to launch a tender offer within the next ten days that would essentially run for 20 days. The whole purchase of Astex is rumored to cost $886million at a share price of $8.50. Astex mainly produces drugs for cancer such as Dacogen that treats blood disorder Myelodysplastic. Astex is also currently developing drugs to treat prostate lung and ovarian cancer.

 After the news that Astex was to be bought its share prices rose by as much as 41% which is  a nine year high of $9.39 on the Nasdaq. The move by Otsuka is seen by analysts as a move of trying to acquire smaller biotech firms to gain the much needed access to new drugs that would translate to increased sales in the long run.  Expiring patents are making it inevitable for big companies to acquire small companies to acquire the much needed stability and boost income returns.

This is not the first time that we are seeing large companies buying off small companies, Amgen Inc last month made history by buying off Onyx Pharmaceuticals Inc for $10.4 billion which is considered the fifth largest biotechnology deal. Other moves that have preceded this move include acquisition of pearl Therapeutics for $1.15 billion by AstraZeneca Plc

The overall volume of healthcare mergers and acquisition during the first quota of the year has jumped by over 30%compared to last year the same period. Cancer as a disease has started receiving increased investments as it is seen as a good investment with future increased returns on investment as scientist continue to understand the genetic basis of the disease

 Astex shares traded on Thursday at $8.57 with many investors having the self belief that Astex may be in line to get a new and better offer from another bidder in the coming few days. The biotech positive news have been coming for a while, only last month its SG-110 experimental drug for acute myeloid leukemia returned positive news in Phase 11 of mild stage clinical trial.

Otsuka has been experiencing good results in the market and reported sales of Y122 billion for last year. Three quarters of these returns were derived from its Pharmaceutical businesses. Astex on its part had revenues averaging $83.2m for last year.

The closing price of Astex’s stock was $8.55 gaining 3.39% in the previous session with a volume of 53.37 million shares compared to the average volume of 2.02 million.

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