BioWorld International Correspondent

LONDON - Celltech Group plc has refused to comment on reports that it is preparing to make a cash bid for Oxford GlycoSciences plc, undermining the agreed-to all-share takeover offer made by Cambridge Antibody Technology Group plc on Jan. 23.

Richard Bungay, Celltech's director of corporate communications, told BioWorld International, "We haven't confirmed or denied it; we're saying absolutely nothing."

OGS confirmed it had received approaches from Celltech and from a number of other parties, but said the CAT offer is the only one currently on the table. The other parties are thought to include Xenova plc, of Slough, and the Swiss company Actelion Ltd., with which OGS has a European marketing agreement for its one approved product, Zavesca. CAT did not comment on the news that counterbids to its offer may emerge.

It was widely reported in UK newspapers Monday that Celltech's bid is being cooked up by outgoing CEO Peter Fellner, in collaboration with Goran Ando, president of R&D at Pharmacia Corp., who is tipped to become the next CEO of Slough-based Celltech. Ando is expected to lose his current job as a result of the Pfizer/Pharmacia merger.

The CAT offer of 0.3620 new CAT shares for each OGS share was worth £1.995 per share, valuing OGS at £109.6 million (US$179.8 million), when it was made. But since then CAT shares have fallen from £5.40 to £4.65, putting the offer at an even bigger discount to OGS's cash balance, which stood at £136.4 million ($218 million) on Dec. 31.

CAT, based in Cambridge, was quite open about wanting to acquire Abingdon-based OGS for its cash, but was also able to point to technology synergies between the two companies and to the advantages of merging the pipelines. The attractions for Celltech of a takeover of OGS are less clear, according to Emma Palmer, analyst at WestLB Panmure in London. She noted Celltech does not need OGS's cash; OGS's one approved product, Zavesca, is licensed out to Actelion with low returns to OGS; and the rest of the pipeline is early stage.

Celltech, based in Slough, had cash of £70 million at the end of 2002 and a credit facility, so buying OGS should not be a problem, but Palmer said, "A corporate transaction could generate a period of uncertainty for the company, especially if it coincides with a new CEO," adding, "[Celltech] may be better served by making product acquisitions to grow the top line."

Celltech and any other bidders have until March 11, when OGS and CAT shareholders are due to vote on the CAT/OGS deal.