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J&J Reportedly May Buy Scios for $2 Billion

Johnson & Johnson (JNJ) reportedly is in advanced talks to acquire biotech outfit Scios (SCIO) for about $2 billion.

Johnson & Johnson would pay about $45 a share of Scios, representing a 30% premium from its $34.69 close Thursday. In premarket trading, Scios shares surged 25% to $43.25, according to Instinet. Neither Johnson & Johnson nor Scios has issued any statements about the discussions, first reported in Friday's Wall Street Journal. The Journal noted that the two sides haven't agreed on a set price.

Scios has been a coveted commodity among the many Big Pharma players eager to partner up on its promising treatment for rheumatoid arthritis. At the J.P. Morgan H&Q conference last month, Scios Chief Executive Richard Brewer noted that the big drug makers have been paying visits to his company's headquarters.

With today's news, Johnson & Johnson appears to be in the pole position for an out-and-out acquisition, but other candidates may emerge.

The acquisition would be a boon for Johnson & Johnson, which has a history of scooping up smaller fry to keep its drug pipeline filled. Scios has one successful drug already -- Natrecor, a drug that treats patients suffering from congestive heart failure. Natrecor is expected to bring in up to $170 million in revenue this year.

Scios' rheumatoid arthritis treatment -- currently in phase II study -- looks very promising as well. The pill would have an advantage over Amgen's (AMGN) Enbrel and Abbott's (ABT) Humira, both of which are injected. The Journal noted that Scios' drug, if approved, would be a good fit with J&J's injected rheumatoid arthritis treatment, Remicade.

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