The world's largest biotechnology group Amgen has made a $2.2 billion offer to buy Abgenix in a deal that would give it sole rights to a cancer drug in development at the two companies.

The drug, panitumumab, is in late-stage clinical development for colorectal cancer and could plug a near-term gap in Amgen’s product pipeline, with peak sales potential of up to $900 million, according to analysts at Lehman Brothers. Amgen is even more optimistic, suggesting the drug could top $2 billion at peak.

Last month, Amgen and Abgenix reported better-than-expected results from a Phase III clinical trial in which panitumumab was found to reduce disease progression by 46% in a hard-to-treat population of colorectal cancer patients who had failed first- and second-line therapy. Amgen said yesterday it aims to file panitumumab for approval in colorectal cancer in the USA next week.

Panitumumab is a fully-human antibody that inhibits the epidermal growth factor receptor (EGFr), so is similar in action to ImClone System’s Erbitux (cetuximab), sold by Bristol-Myers Squibb in the USA and Merck KGaA in Europe. Erbitux is approved for third-line treatment of colorectal cancer – the same indication as was tested in the panitumumab study - but still managed to garner third-quarter sales of $107 million for B-MS and 59 million euros for Merck.

Abgenix and Amgen are also collaborating on the development of another antibody, denosumab, for the treatment of osteoporosis. A month ago Amgen reported Phase II results showing that twice-yearly injections with this agent boosted bone mineral density in post-menopausal women with early signs of the disease. This antibody targets RANK ligand, a key cellular signal for bone removal, and so has a different mechanism of action to all current osteoporosis drugs.

Under the terms of the agreement, Amgen will pay $22.50 per share for Abgenix, and will also assume the latter firm’s debt burden. Abgenix’ shares were trading at $14.65 at close yesterday, up a little over 3%. The deal is expected to close in the first quarter of 2006.