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Bayer Eyeing Norwegian Oncology Firm

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The HealthCare segment at Bayer (BAYRY) offered a preliminary acquisition proposal to a Norway-based oncology firm, Algeta ASA. The news was confirmed by the Board of Directors at Algeta. Bayer has offered NOK 336 (approx. $55.11) per share for Algeta.

The companies are currently in discussion and only time will tell whether the preliminary proposal will convert into a concrete agreement. We remind investors that Bayer’s association with Algeta goes back to 2009 when the companies entered into a partnership agreement to develop and commercialize their oncology drug Xofigo (radium-223) in the global markets.

Bayer has been pretty active on acquisition and collaboration this year, especially to boost its oncology portfolio. In Oct 2013, Bayer entered into a master collaboration agreement with Sysmex Inostics, a diagnostic company, for the development of companion diagnostics for targeted oncology therapies. As per the agreement, Sysmex Inostics’ innovative blood-based companion diagnostic solutions will be used to develop Bayer’s anti-cancer agents.

Moreover, in Jun 2013, the company inked a collaboration agreement with Seattle Genetics Inc. (SGEN) to gain worldwide rights to Seattle Genetics’ auristatin-based antibody-drug conjugate (ADC) technology along with antibodies to several oncology targets. As per the terms of the deal, Bayer will be responsible for the development, manufacturing and commercialization of all products under the agreement.

We are encouraged by the company’s efforts to boost its oncology portfolio by acquisitions and collaborations. However, companies like Roche (RHHBY) have a strong presence in the oncology market at this moment.

Bayer, a large-cap pharma stock, presently carries a Zacks Rank #2 (Buy). Some other stocks worth considering include Actelion Ltd. (ALIOF). Actelion holds a Zacks Rank #1 (Strong Buy).

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