GSK raises fists in $2.6B hostile bid for Human Genome Sciences

Posted under Benlysta, Blog, Companies, Diagnostics, Funding, GlaxoSmithKline, Human Genome Sciences, M&A, Medical Devices, Medical Supply, Pharmaceuticals, Startups, Universities, Videos by rmcbride

The gloves are off. GlaxoSmithKline ($GSK) has mounted a hostile offer for its long-time partner Human Genome Sciences ($HGSI), whose board shot down GSK buyout bid last month but invited the London-based drug giant to a sales process that could involve other potential bidders.

GSK says it wants no part in the sales process. Rather, the company plans to go directly to Rockville, MD-based HGS shareholders with a tender offer of $13 per share, the same amount that HGS board snubbed in April. Even though the offer amount is an 81% premium on the closing price at the time bid became publicly known, HGS honchos say that it undervalues the real worth of their biotech group, and critics say GSK offer is opportunistic and HGS shares were trading at around $30 per share about a year ago.

The recent market for biotech buyouts places huge premiums on the companies, and Reuters reported last month that a coterie of powerful shareholders in biotech have pushed boards to hold out for larger offers from pharma buyers. Yet GSK holds a lot of cards in its game with HGS leadership, already controlling half of the biotech's lupus drug Benlysta and substantial stakes in HGS experimental diabetes drug albiglutide and darapladib for heart disease. GSK would gain full control of these assets in a HGS buyout, but other buyers of HGS would have to share them with the British drugmaker.

"I still think it is very likely that they will have to pay more," Mark Evans, a Taube Hodson Stonex fund manager, whose firm holds a major stake in HGS, told Reuters. He called the $13-per-share offer a "steal."

GSK now appears to be telling HGS and its advisers at Goldman and Credit Suisse to put up or shut up. The drug giant says the 20 business days that its tender offer remains open should give HGS and its bankers enough time to fetch other offers. At the same time, GSK says that its ready and willing to go to the table and hammer out an amicable acquisition with HGS leaders at any time.

- here's GSK release

- see Reuters' article
- and Bloomberg's report

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UPDATED: GSK puts Human Genome Sciences in play with $2.59B buyout offer

Posted under Benlysta, Blog, Companies, darapladib, Diagnostics, Funding, GlaxoSmithKline, Human Genome Sciences, lupus, M&A, Medical Devices, Medical Supply, Pharmaceuticals, Startups, Universities, Videos by john

After more than two years of rumors and speculation, GlaxoSmithKline ($GSK) has finally stepped up to the plate with an offer to buy out its partner Human Genome Sciences ($HGSI) for $2.59 billion, or $13 a share. And in moments speculators bid up HGS's battered share value by 110%, to more than $15, as HGS quickly rejected the offer. 

In rejecting the offer, though, HGS also said it was teaming up with Goldman, Sachs and Credit Suisse to explore a sale. In other words, they're looking for new offers to drive up the buyout price, putting the company in play.

GSK's $13 offer would have triggered laughter after the biotech company won approval for Benlysta, a breakthrough drug for lupus. GSK acquired the European license for the drug and seemed the most likely suitor for the developer. But at yesterday's close HGS's disappointing marketing record had beaten down the stock value to $7.17.

But GSK is interested in more than just Benlysta. It's also partnered with the company on the late-stage heart drug darapladib--tapped as a possible blockbuster--as well as the experimental diabetes treatment albiglutide. And now it wants more information on both as it pushes for a buyout.  

"Having worked together with Human Genome Sciences for nearly 20 years, we believe there is clear strategic and financial logic to this combination for both companies and our respective shareholders – and that now is the appropriate time in the evolution of our relationship for our two companies to combine," said Glaxo CEO Andrew Witty. Witty went on to outline $200 million in prospective "synergies" following a buyout as HGS is merged into the bigger company.

A GSK/HGS combination has long been one of the most discussed possibilities in the industry. The initial speculation began when Benlysta began to look like a winner in Phase III. Just last August Piper Jaffray speculated that HGS could be had for $21 to $26 a share. But the biotech's high-flying expectations to turn an approval into blockbuster sales quickly ran into trouble, and soon the persistent discussion of a buyout failed to spark even a brief revival in the share price. 

GSK chose an opportune moment to strike.

- get the release from HGS
- here's the release from Glaxo
- here's the story from Reuters

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HGS to axe 150 as Benlysta sales continue to disappoint

Posted under Benlysta, Blog, Companies, Diagnostics, Funding, Human Genome Sciences, layoffs, Medical Devices, Medical Supply, Pharmaceuticals, Startups, Universities, Videos by John Carroll

With its share price battered by disappointing initial sales of the pioneering lupus drug Benlysta, Human Genome Sciences CEO Tom Watkins ($HGSI) was preparing to take the stage at the annual JP Morgan conference in San Francisco to announce plans to shed 150 jobs in a range of departments, including R&D.

"We are pioneering a treatment in a market that has not seen a new option for patients in decades," Watkins said in a statement released ahead of his appearance. "Although we are still in the early adoption phase of our launch, our experience in the market to date reinforces our belief that Benlysta will ultimately play a major role in improving the standard of care for SLE patients."

Like other developers making the transition into commercialization, HGS has learned some bitter lessons in the process. HGS reported Benlysta sales of a bit more than $25 million in the fourth quarter, in line with the diminished expectations of analysts after the drug failed to take off as quickly as initially predicted. With the numbers skewing downward, the biotech CEO was forced to trim costs. HGS also outlined its progress with other drug programs in today's release.

- here's the HGS release

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