Opportunity knocks

19 April 2012 By Quentin Webb, Robert Cyran Follow @rob_cyran

The British drugmaker is already a partner of Human Genome Sciences and is thus the obvious acquirer. But the U.S. biotech is wise to rebuff a $2.6 bln offer. GSK can take big cost savings, and the bid looks cheap even given scaled-back expectations for the duo’s key product.

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On April 19, Human Genome Sciences Inc said it rejected an unsolicited $2.6 billion takeover bid from GlaxoSmithKline, the British drugmaker. Human Genome said its board believed the $13-a-share offer did “not reflect the value inherent in HGS”. GSK countered that the cash offer, at an 81 percent premium to the previous close, represented “full and fair value”.

Rockville, Maryland-based Human Genome said it had hired Goldman Sachs and Credit Suisse to help explore “strategic alternatives”, including a possible sale, and had invited GSK to participate in the process. Human Genome has also asked for more information about products in GSK’s clinical pipeline to which it had “substantial financial rights”, including albiglutide and darapladib.

The two companies both sell Benlysta, the first significant new treatment in half a century for lupus, a chronic disease that causes the immune system to attack organs and joints. The drug won U.S. and European approval last year, but sales have been slower than expected. In October Human Genome pushed back its target for reaching profitability by a year, to 2014. Human Genome and GSK split costs, expenses and profits from the drug.

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