Shares in MediGene have shot up 11.9% to 6.23 euros as the rumour mill went into overdrive concerning the possibility of a takeover bid by Pfizer for the German biotechnology firm.

The Martinsried-headquartered firm says it is not going to comment on market speculation stemming from a Reuters piece which claimed that the New York-based behemoth has held talks with management with a view to making an offer. Pfizer is saying nothing either, although it has recently been picking up small but interesting biotech companies and signing licensing deals as opposed to jumping onto the mega-merger merry-go-round.

MediGene certainly seems to be an attractive target. Last week, it posted a 27% decline in revenues to just under 5 million euros and a 33% increase in net loss to 8.8 million euros but these figures are expected to look better once the company’s two marketed products – the prostate cancer drug Eligard (leuprolide) and Veregen (polyphenon E ointment) for genital warts – start to find their place in the market. MediGene is also hoping to get European approval shortly for Oracea (doxycycline) for the systemic treatment of the skin condition rosacea.

Analysts are also impressed with the state of MediGene’s pipeline. It acquired the UK firm Avidex for 50 million euros in September 2006 and gained access to RhuDex, an orally-available CD80 inhibitor for rheumatoid arthritis, which has just entered Phase II. The firm also recently presented “excellent data” from a Phase II trial of EndoTAG-1, for the treatment of pancreatic carcinoma.

Reuters quoted its undisclosed sources as saying that Pfizer was interested in the whole company, not just in individual drugs, and not just EndoTAG specifically which is expected to be a blockbuster in other tumour types, notably breast cancer. How willing MediGene will be to sell is debatable, as the firm has been building up its own sales force with a view to becoming a fully-integrated biotech company.