Less than two weeks after placating the rumor mill by officially announcing that it was evaluating "strategic alternatives," MGI Pharma Inc. agreed to be acquired by Eisai Co. Ltd. for $41 per share, or about $3.9 billion in cash.

Shares of Minneapolis-based MGI (NASDAQ:MOGN) have gained steadily in the past year, rising from about $19 in November 2006 to approximately $30 last month. The stock jumped to $35.10 after MGI revealed its strategic review plans, and shares rose another 19.6 percent, or $6.55, to close at $40 on Monday's news of the deal with Eisai. (See BioWorld Today, Nov. 30, 2007.)

In a research note, analyst Christopher Raymond of Robert Baird & Co. said he was "impressed with MGI's ability to fetch such a premium."

Spokespersons from MGI could not be reached for comment, but the company said in its press release that it had met with "many of the leading companies in the pharmaceutical and biotechnology industry" during its strategic review period. However, if a better offer comes along, MGI still can back out by paying Eisai a $129 million break-up fee.

For Tokyo-based Eisai, the acquisition of MGI is one of several recent moves to grow its U.S. oncology franchise. Earlier this year, Eisai bought Exton, Pa.-based Morphotek Inc. for its clinical-stage anticancer antibody program, and last year it bought three marketed cancer drugs from Ligand Pharmaceuticals Inc. (See BioWorld Today, Sept. 11, 2006, and March 23, 2007.)

The MGI deal adds five more marketed cancer products to the mix: Aloxi (palonosetron hydrochloride), for chemotherapy-induced nausea and vomiting (CINV); Dacogen (decitabine), for myelodysplastic syndromes (MDS); Gliadel Wafer (polifeprosan 20 with carmustine implant), for malignant gliomas; Hexalen (altretamine), for ovarian cancer; and Salagen (pilocarpine hydrochloride), for dry mouth associated with Sjogren's Syndrome and radiation therapy.

MGI's products generated sales of $110.8 million in the third quarter of 2007, contributing to the company's cash balance of $166.5 million at Sept. 30. Eisai said it expects the acquisition to be accretive to its cash earning per share in fiscal year 2008 and to its GAAP earning per share in fiscal year 2009.

Yet the long-term revenue-generating potential of MGI's products has raised some questions. Aloxi, the biggest earner, brought in $66.3 million in the third quarter, down from $70.4 million in the third quarter last year. Aloxi faces patent expiration in 2015, but MGI is trying to squeeze more value out of the drug in the interim by seeking approval in postoperative nausea and vomiting as well as in CINV with an oral formulation. In both cases, supplemental new drug applications have been submitted to the FDA.

MGI's other revenue-generator of note, Dacogen, brought in $34.6 million in the third quarter, up from $11.9 million in the same period last year. Meanwhile, competitor Vidaza (azacitidine for injection, Pharmion Corp.) pulled in $42.3 million in the third quarter, up from $36.6 million in the third quarter last year. Future market share may hinge on Phase III data: Pharmion reported earlier this year that Vidaza extended overall survival by 74 percent in higher-risk MDS patients, resulting in median survival of 24.4 months. (See BioWorld Today, Aug. 3, 2007.)

Data from a Phase III Dacogen study are expected in the first half of 2008, and Raymond said MGI "needs to show comparable data" to Vidaza in order to stay in the race. As with Aloxi, MGI is seeking to continue expanding the label for Dacogen and has Phase III programs in acute myeloid leukemia and in alternate dosing for MDS.

Beyond its marketed products, MGI also has a late-stage pipeline that includes Aquavan (fospropofol disodium), a sedative-hypnotic agent under FDA review for patients undergoing minor surgical or diagnostic procedures; Saforis (glutamine), an oral mucositis drug that received an approvable letter last year requiring another Phase III trial; and amolimogene, a cervical dysplasia drug in pivotal trials. (See BioWorld Today, Oct. 16, 2006, and Sept. 28, 2007.)

MGI also has a handful of drugs in early and mid-stage trials, including the thrombocytopenic drug AKR-501. Like most of MGI's products, AKR-501 was licensed rather than internally developed: MGI picked it up from AkaRx Inc. earlier this year. (See BioWorld Today, Aug. 30, 2007.)

Under the terms of the definitive merger agreement, Eisai will acquire all outstanding shares of MGI through a tender offer made by Jaguar Acquisition Corp., a wholly-owned subsidiary of Eisai Corp., Eisai's North American division. After completion of the tender offer, Jaguar will be merged into MGI, which will become a wholly-owned subsidiary of Eisai Corp.

MGI's board of directors unanimously approved the deal, which is expected to close in the first quarter of 2008.