Genentech to buy biotech firm

Genentech Inc. intends to acquire tiny biotechnology company Tanox Inc. for $919 million in cash, the South San Francisco-based drug maker announced Thursday.

The acquisition would help streamline a three-way partnership the two companies share with Swiss firm Novartis in the development and commercialization of the asthma-fighting drug Xolair, which was created by Tanox.

Once the deal is completed, Genentech no longer will have to make royalty payments to Tanox while receiving such payments from Novartis.

Genentech is offering $20 a share for Houston-based Tanox, a premium of 47% to that company’s closing price Thursday of $13.64, down 85 cents.

Tanox’ stock rose $5.96 to $19.60 in extended trading after the announcement. The stock has traded between $11.55 and $21 over the last 52 weeks.

Shares of Genentech closed down $2.23 at $81.35 and fell 20 cents to $81.15 in after-hours trading.