THOUSAND OAKS, Calif. ( TheStreet) -- When most people make long-shot bets, let's say playing the lottery when the jackpot hits $300 million, slapping down $5 doesn't seem like too big of a wager for what could be a fantastic payday.

When Amgen ( AMGN), likewise, decides to take a flyer, the biotech giant wagers $425 million. That may seem like a lot of money to place on a bet, and it surely is, but then, Amgen's wallet is stuffed with $17 billion.

Amgen's acquisition of privately held BioVex Group for $425 million upfront (plus another $575 million in potential future payments) announced Monday is a high-risk bet on a technology that seeks to re-engineer the simple herpes virus into an tumor-killing cancer immunotherapy. Right now, the only approved cancer immunotherapy is Dendreon's ( DNDN) prostate cancer treatment Provenge.

If the BioVex drug works, Amgen's investment will pay for itself because the company will control a novel drug with blockbuster potential as a treatment for skin cancer, but also perhaps head-and-neck and other solid tumor cancers. If BioVex blows up, Amgen wagered and lost less than 3% of its net cash.

Amgen and its shareholders don't need to wait very long for the BioVex bet to read out. The BioVex drug, known as OncoVex, is nearly through a pivotal phase III study in skin cancer with results expected in the second half of the year. A second phase III study in head-and-neck cancer is also underway.

In a phone interview Tuesday, Amgen's top scientist Roger Perlmutter acknowledged buying BioVex is a surprising and somewhat risky move for Amgen, especially given skepticism he's expressed publicly about cancer immunotherapy in general.

Why is BioVex any different?

"What impresses me about about BioVex is the firm scientific approach the company has taken in engineering the virus but also the responses seen to date in clinical trials ," said Perlmutter, who oversees Amgen's entire research and development team. Amgen spent $2.9 billion on R&D last year.

OncoVex is an oncolytic (cancer-killing) virus that started as a simple herpes virus (the kind that causes cold sores) but was genetically re-engineered in the lab to seek out and invade fast-growing cancer cells. The virus is designed to leave healthy cells, which don't divide as fast, alone.

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