HGS faces skeptics as it boasts of a crowded bargaining table

Posted under albiglutide, Blog, Companies, darapladib, Diabetes, Diagnostics, Funding, GlaxoSmithKline, Human Genome Sciences, M&A, Medical Devices, Medical Supply, Pharmaceuticals, Startups, Universities, Videos by John Carroll

Human Genome Sciences has prescribed a poison pill for GlaxoSmithKline's hostile takeover bid. And after making a detailed case for a much better buyout deal, the biotech says it's already engaged in talks with other pharma and biotech companies interested in bidding on the company. 

In a lengthy statement, HGS ($HGSI) asserts that it "has entered into confidentiality agreements with certain parties and is providing those parties an opportunity to engage in a due diligence review of confidential information." And the company goes on to complain that GSK ($GSK), its long-time development partner with an intimate understanding of the company's potential, simply waited until its share price hit a 52-week low before pouncing.

The biotech's remarks include a detailed case for its pipeline, which includes the potential blockbuster darapladib, a heart drug. Albiglutide, an experimental treatment for diabetes, is tied to $150 million in potential milestones alone. But the argument made little headway with at least one key analyst.

"This is all the usual and expected posturing," Cowen's Eric Schmidt noted to Bloomberg. "I believe GSK remains committed to buying HGSI and do not expect others to have much interest." 

- here's the press release
- read the Bloomberg report
- get the story from The New York Times

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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

Related Articles:
GSK and HGS posture over price and value in M&A standoff
Spurned GSK chief: We're the 'compelling owner' for HGS
HGS snubs $2.6B buyout offer from Benlysta partner GSK

2012: Year of the dealmaker in biopharma

Posted under AstraZeneca, Blog, Companies, Diagnostics, Funding, GlaxoSmithKline, Human Genome Sciences, M&A, Medical Devices, Medical Supply, Mergers and Acquisitions, Pharmaceuticals, Pipeline, R&D, Startups, Universities, Videos by john

It's no coincidence that two of today's top 5 biotech stories involve late-stage drugs that look increasingly attractive to potential buyers. The surge of buyout stories recently--from Glaxo's ($GSK) move on Human Genome Sciences ($HGSI) to AstraZeneca's ($AZN) deal for Ardea ($RDEA) and the scuttlebutt about a try for Amylin ($AMLN)--has spotlighted just how hungry biopharma companies are for late-stage products. And Dow Jones highlights the trend in a piece looking at the driving factors behind the deals.

"Now, because a lot of biotechs have late-stage assets, prospective buyers are able to be a little bit more specific and more secure in the valuation that they are willing to attribute," Panmure analyst Savvas Neophytou tells Dow Jones.

For Shire ($SHPGY) CEO Angus Russell, the M&A trend is a natural outcome of Big Pharma's R&D restructuring. 

"Many of the pharmaceutical companies started producing everything in-house out of their own R&D organizations and over time they've failed to produce enough that way," he says. "So the industry is now coalescing around a 50-50 model of half on your own and half bought in. There are some things we'll do for ourselves but we need to be constantly on the lookout for new technologies."

There's certainly no sign that the M&A trend talk will cool down anytime soon. Bayer is reportedly nearing a deal. AstraZeneca is a buyer. Roche ($RHHBY) is scouting new diagnostics deals. And there's clearly an unsatisfied appetite for buyouts that can be completed in the single-digit billion dollar range. 2012 is shaping up as the year of the dealmaker in biopharma.

- here's the story from Dow Jones

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Scrambling to add new drugs, Big Pharma is paying big premiums for biotechs

Posted under Big Pharma, Biotech IPO, Blog, Companies, Diagnostics, Funding, Human Genome Sciences, M&A, Medical Devices, Medical Supply, Pharmaceuticals, Startups, Universities, Videos by john

If you've been thinking that it's a seller's market out there for biotech companies, Bloomberg has some numbers to support the case. 

Buyers have been forking over a 71% premium for companies valued at more than $500 million, says the business news service. And that's the highest level the analysts have seen since 2000. Applying that formula to Human Genome Sciences ($HGSI), which warranted a 68% premium in GSK's ($GSK) bid, the dealmakers in the crowd are looking for a bump in the offer.

"It's a good time to be a seller if you're a biotech company," Greenwood Capital's Walter Todd tells Bloomberg. "These bigger pharma companies are trying to fill in the gaps in their portfolios. Human Genome has come out and said it undervalues the company, so the assumption is that Glaxo is going to have to raise the offer or somebody else could step in."

What's driving the higher premiums? It's a simple case of Big Pharma scrambling to line up promising new drugs. That's a good place for biotech to be in, especially considering the poor IPO market that has plagued the industry for three years,  

- here's the story from Bloomberg

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GSK and HGS posture over price and value in M&A standoff
Merck KGaA chief swears off major deals amid pipeline woes
Embattled AZ chief: Bigger R&D bets, megadeals not the answer
Is M&A getting too pricey for smart drugmakers?