In a deal that illustrates that Big Pharma is perfectly willing to buy rather than build biotechnology research and development,

AstraZeneca

(AZN) - Get Report

will pay $1.07 billion for

Cambridge Antibody

(CATG)

.

AstraZeneca already owns 19.2% of the British biotech company, and it offered $24.96 a share for the rest. The bid sent Cambridge's stock soaring $9.43, or 64%, to $24.27 by early afternoon. AstraZeneca's stock lost 21 cents to $53.68.

"This acquisition represents a major long-term strategic investment by AstraZeneca in novel biological therapeutics," said David Brennan, CEO of AstraZeneca. "By 2010, up to a quarter of our candidates for full-scale development will be biological therapeutic agents."

The proposal must be approved by regulators and by Cambridge shareholders. AstraZeneca said it expects the deal to close by the end of June. AstraZeneca said the deal won't affect

its fiscal-year 2006 earnings per share guidance of $3.60 to $3.90.

AstraZeneca had the opportunity to kick the tires at Cambridge, having signed a collaboration and licensing agreement in late 2004 in which it bought a piece of the company. The original agreement called for the joint development of monoclonal antibodies, especially in the field of inflammatory diseases and respiratory disorders.

Monoclonal antibodies are laboratory-produced version of human antibodies, which play a vital role in the body's defense against disease. Monoclonal antibodies provide reinforcements to the body's natural defenders, and they have been instrumental in developing cancer and inflammatory-disease drugs.

After the deal is completed, AstraZeneca said it plans to expand the research scope to treatments for cancer, neurological disorders, heart disease, gastrointestinal ailments and infection.

In acquiring the rest of Cambridge,

AstraZeneca continues its recent streak of licensing products or research, or buying developers of experimental products. It made four deals in December, signing licensing pacts for drugs to treat Alzheimer's, clogged arteries and sepsis. It also bought a company that is working on compounds to fight cancer.

Cambridge has a variety of licensing deals and alliances with other Big Pharma and biotech companies. Most notably, it helped

Abbott

(ABT) - Get Report

develop the arthritis drug Humira, and it receives royalties from Humira's sales. Other big-name companies working with Cambridge include

Genzyme

(GENZ)

Merck

(MRK) - Get Report

,

Pfizer

(PFE) - Get Report

and

Wyeth

(WYE)

.

Despite the high premium, AstraZeneca's bid is a "sensible strategic move," says John Murphy, of Goldman Sachs, in a Monday report to investors. He has an inline rating on the stock. He doesn't own shares; his firm is a financial adviser to AstraZeneca in the takeover.

The proposed acquisition "offers an attractive long-term investment into biological therapeutics," adds Mark Purcell, of Deutsche Bank, in a Monday research note. He doesn't own shares, but his firm has an investment banking relationship with AstraZeneca relating to the acquisition.

AstraZeneca is hardly alone among Big Pharma companies seeking an outside boost for developing biotech drugs. Last week, for example, Merck made a double-barreled acquisition, paying $80 million for the privately held Abmaxis of Santa Clara, Calif., and $400 million for privately held GlycoFi of Lebanon, N.H.