Grinding Them Out at the Biotech Rumor Mill

By buying Millennium, Amgen gets Velcade, a groundbreaking cancer drug that could (maybe) one day grow into a blockbuster. Amgen also buys Millennium's cancer pipeline and its medical research staff, a pretty smart crew that is at the forefront of the whole genomics thing, even if it's taking longer to pan out than first thought.

Sure, buying Millenniun would be expensive, but probably not more expensive than the Immunex deal, which turned out pretty darn good for Amgen. And Amgen executives, including CEO Kevin Sharer, have told Wall Street that they are not averse to doing a deal that would be short-term dilutive to earnings, if it were in the long-term interest of the company.

Why would Millennium sell? Because while doing great science, Millennium executives also have built a bloated, money-sucking company that bleeds a copious amount of red ink. For Millennium to truly succeed, to turn a serious profit, CEO Mark Levin needs to make some major cuts. If he's not brave enough to do that, an acquirer like Amgen certainly won't have any qualms. And as for Integrilin, the heart drug Millennium acquired in the Cor Therapeutics deal -- Amgen could easily sell it off. Integrilin is co-marketed with Schering-Plough (SGP - commentary - Cramer's Take). Don't you think that struggling drug giant might want to gain control of 100% of the drug's economics?

Amgen should buy Celgene: Why does everyone seem to think that Amgen needs to buy someone? This proposed marriage has much in common with the Millennium combination, with less baggage. Celgene (CELG - commentary - Cramer's Take), like Millennium, sells a multiple myeloma drug, Thalomid, and is working on a next-generation version dubbed Revimid. Celgene, however, has long been rumored to be on the sale block, so the company (ahem) might be a little shopped around.

GlaxoSmithKline should gobble up MGI Pharmaceuticals: This is a deal in which the old guard takes out the up-and-comer before it grows up and gets dangerous. GlaxoSmithKline (GSK - commentary - Cramer's Take) markets Zofran as a treatment to fight nausea in patients coming out of surgery or undergoing chemotherapy. But the drug goes off patent in 2006.

Meanwhile, MGI Pharma (MOGN - commentary - Cramer's Take) is developing palonosetron, a newer, and better, anti-nausea drug, which could receive Food and Drug Administration approval as early as next month. Glaxo has a market value of $127 billion, while MGI Pharma's market cap is a relatively puny $663 million, which means the U.K.-based drug giant wouldn't even raise a sweat doing this deal. And as we speak, MGI Pharma still doesn't have a marketing partner for palonosetron, something many people think it'll need.

Now, a deal like this could have antitrust issues, so if Glaxo can't reach the altar, Merck (MRK - commentary - Cramer's Take) might want to take a shot at tying the knot with MGI Pharma. Again, it's a synergistic thing. Merck sells its own anti-nausea drug, Emend, but data suggest it will work in a complementary fashion with palonosetron. And because Emend and palonosetron work different mechanistically, there might not be the same anticompetitive issues.

---

Adam Feuerstein writes regularly for RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback.