As the industry metabolizes the third multi-billion dollar M&A deal in the past two weeks, investors bid up other life science assets on speculation that the buying spree would continue.

The buying started on Monday, when Amgen (AMGN) confirmed that it would buy Immunex (IMNX), and continued through the week. The buying sent the BioCentury 100 up 3% - a solid effort given that it was a less than stellar week for high tech, with the NASDAQ Composite falling 0.4%. Particularly heavy grazing took place in the product company space, given that the last three takeouts - IMNX, Cor (CORR) and Aviron (AVIR) - were traditional product plays.

Companies that made the takeout rumor mill included any company with a product on or near the market. "That's the blueprint on these deals," said OrbiMed's Sven Borho. "The value's always there when you have a product or a Phase III compound. Then you can make the deal accretive over the near term."

The hot name was protein-based drug developer Serono (SRA; SWX:SEO), which has both products and profits. Other names getting thrown around included Biogen (BGEN); infectious disease company Gilead (GILD); diversified health care group Celltech (LSE:CTP; CLL); neurological play Neurocrine (NBIX); cancer company Cell Therapeutics (CTIC); and in-licensor InterMune (ITMN).

In Europe, potential acquisition candidates mentioned last week included cancer and cardiovascular play MediGene (NMarkt:MDG). Analyst Dirk Schlamp of DZ Bank tipped MDG, Genmab and GPC Biotech as the most likely candidates. Genmab (CSE:GE9D) is developing human monoclonal antibodies and GPC (NMarkt:GPC) is an autoimmune, cancer, and infectious diseases concern.

The M&A activity could reflect a change in attitudes from the traditional "go it alone" strategy. Robertson Stephens banker Mark Simon suggested that managers now realize that combinations may be the quickest way to get to the next inflection point. "Public companies that have been in the biotech marathon race for five to 10 years - particularly the class of 1991 - have been very successful. But to achieve the next level of value creation, they realize that M&A may be the best option versus the traditional standalone strategy," he said.

But it wasn't just speculative buying that drove up shares. Kurt von Emster of MPM BioEquities said investors are front-running the annual JP Morgan H&Q conference, which starts on Jan. 7, as well as doing some year-end window dressing. "There's still a January effect for biotech, and the group should do reasonably well," he said.

Indeed, according to von Emster, savvy investors think the M&A pipeline may be cleaned out.

Truly low ball

The $16 billion Amgen (AMGN) is paying for Immunex (IMNX) makes the 1995 offer for IMNX shares by American Home Products (AHP) look even more paltry.