A multi-million pound bidding war for Oxford GlycoSciences has broken out between UK biotech rivals Celltech and Cambridge Antibody Technology.

CAT's £110 million offer was accepted by the management of the Oxford-based company last month, but several companies have now expressed an interest, with Celltech confirming its own bid.

The value of CAT's original all-share bid has now slipped to £95 million, but OGS Chief Executive David Ebsworth nevertheless dismissed Celltech's £101 million offer as undervalued.

The offer is nearly 25% bigger than CAT's but is still less than OGS 's £137 million cash reserves at the end of 2002, and is also below the company's current stockmarket value.

He said: "This inadequate cash offer is a spoiling tactic by Celltech. It is clearly opportunistic and a bid to acquire OGS on the cheap", but added that the company was not in principle against Celltech or a cash bid.

CAT's Chief Executive Peter Chambr has now indicated willingness to increase its bid, and said Celltech was not interested in building on the work of OGS.

"OGS shareholders get the opportunity to benefit first through synergies by cutting out duplicated overheads, and in the long term, by owning a biotechnology company that will rival the best companies in the world", he said.

"The alternative is to sell out for cash at a low point for the sector and at a discount to the break up value".

Many analysts share this view, and say CAT's strong management twinned with OGS's novel oncology drug targets would be an ideal marriage to create a second sizeable UK biotech company behind Celltech.

But Peter Allen, Celltech's Chief Financial Officer, denied this suggestion, saying: "When they [OGS] accepted the offer from CAT they put a price on the business that we thought represented good value".

He added that up to 25% of OGS's patent libraries could yield new drug candidates for Celltech. "The life blood of biotechnology companies is a pipeline of targets on which to work their development magic".

Much of Celltech's growth so far has been built on acquisitions, first buying Chiroscience and then Medeva, boosting its R&D pipeline and furnishing the company with a sales and marketing force.

Since joining the company from Bayer just over a year ago, David Ebsworth has been preparing OGS for a merger, despite already having approval of one product Zavesca, for the rare Gaucher's disease and several promising cancer treatment candidates. Despite the rich potential of the company's target-generating proteomics technology, few analysts believe the company could hit profitability within five years without a merger.

The outcome of the bidding war is likely to be decided by shareholders, who include investment management firm Amvescap, which has significant stakes in all three companies.

pharmafocus@pharmafile.co.uk