The Facet Biotech Buyout Saga (FACT, BIIB, ABT, PDLI)
Facet Biotech Corporation (NASDAQ: FACT) is a buyout saga that seemed as though it would never end in 2009. The company is now finally being acquired, but not by Biogen Idec (NASDAQ: BIIB). Abbott Laboratories (NYSE: ABT) announced last night that it entered into a definitive agreement for $27.00 per share in a cash buyout. The deal is valued at $722 million, but that includes about $272 million in cash and equivalents.
The net cost will be about $450 million. In late-2009, Facet turned down a second unsolicited offer from Biogen Idec of $17.50 a share after having rejected a lower offer before that.
Facet has discovery and development partnerships with Biogen Idec for MS, and it also has partnerships with PDL BioPharma (NASDAQ: PDLI) and Roche.
Facet shares are up 66% at $26.96 this morning after last night’s deal. Its prior 52-week trading range was $5.86 to $18.35.
JON C. OGG
Biogen Idec Has To Look Beyond Facet (FACT, BIIB)
Facet Biotech Corporation (NASDAQ: FACT) is outright rejecting the buyout offer from Biogen Idec Inc. (NASDAQ: BIIB). The company issued a press release stating that the stockholders rejected Biogen Idec’s unsolicited tender offer for $17.50 per share. Furthermore, it noted that Biogen Idec has terminated its tender offer after the company recently raised its offer as a “last and final offer.”
Facet management also called the Biogen Idec $17.50 offer as being “inadequate and did not fairly value our company and its prospects.” The company further noted that it will continue pursuing opportunities. Furthermore, it also noted that the company has requested that its financial advisor, Centerview Partners, solicit additional third parties that may have an interest in a transaction that our board would find in our stockholders’ best interests.
The company did note that it offers Biogen Idec the opportunity to conduct due diligence discussions to see if a materially increased offer could be made. Facet has a pipeline of five clinical-stage products and is seeking to identify and develop new oncology drugs and applying its proprietary protein engineering technologies to potentially improve the clinical performance of protein therapeutics. Its main targets are in oncology for cancers, which could have opened a new pipeline up for Biogen Idec. Facet’s market cap is $417 million, and Biogen noted that it was offering to pay $493 million for it when it raised its tender offer to $17.50 from $14.50.
Facet shares are finding the price down 2% at $16.00 in pre-market trading, and the 52-week trading range is $5.86 to $18.35. One problem Facet had was that it came public in late 2008 when the markets were in serious question. That is when it hit as high as $18.00, but shares were down under $10.00 in early September when Biogen Idec made its first offer.
Facet may want to hold out for money. It may get it, and it may not. As for Biogen Idec and its desire to buy a new drug pipeline that diversifies its dependence on MS drugs, it has already signaled that it is willing to pay almost $500 million for a company with very low revenues (Thomson Reuters estimate is $82+ million in revenues for all of 2010 for Facet).
JON C. OGG
Key Biotech Short Selling Changes in November (AMGN, BIIB, CELG, GILD, GENZ, GERN, LIFE, DNDN, HGSI, AMLN, OSIP)
We have now seen the changes in short selling in biotech stocks via the late-November short interest report from NASDAQ. This marks the changes seen at the November 30, 2009 settlement date versus a November 13 settlement date. We have given short interest data on Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Gilead Sciences Inc. (NASDAQ: GILD), Celgene Corporation (NASDAQ: CELG), Genzyme Corp. (NASDAQ: GENZ), Geron Corporation (NASDAQ: GERN), Life Technologies Corporation (NASDAQ: LIFE), Dendreon Corp. (NASDAQ: DNDN), Human Genome Sciences Inc. (NASDAQ: HGSI), Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), and OSI Pharmaceuticals Inc. (NASDAQ: OSIP).
Again, the change reflects the November 30 date versus a prior date of November 13:
Amgen Inc. (AMGN) 18,247,560 shares versus 15,888,876, a gain of 14.8%.
Biogen Idec Inc. (NASDAQ: BIIB) 8,914,221 shares versus 8,201,010, a gain of 8.7%.
Gilead Sciences Inc. (NASDAQ: GILD) 19,334,491 shares versus 20,330,539, a drop of -4.9%.
Celgene Corporation (NASDAQ: CELG) 7,800,195 shares versus 8,122,937, a drop of -4.0%.
Genzyme Corp. (NASDAQ: GENZ) 3,835,576 shares versus 4,531,522, a drop of -15.4%
Geron Corporation (NASDAQ: GERN) 13,846,894 shares versus 13,653,745, a gain of 1.4%.
Life Technologies Corporation (NASDAQ: LIFE) 8,686,786 shares versus 8,950,719, a drop of -3.0%.
Dendreon Corp. (NASDAQ: DNDN) 9,881,341 shares versus 9,105,303, a gain of 8.5%.
Human Genome Sciences Inc. (NASDAQ: HGSI) 17,100,782 shares versus 17,571,094, a drop of -2.7%.
Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) 8,353,185 shares versus 8,538,392, a drop of -2.2%.
OSI Pharmaceuticals Inc. (NASDAQ: OSIP) 5,471,010 versus 5,517,134, a drop of -0.8%.
JON C. OGG
December 10, 2009
Value Stocks in Drugs & Biotech (AMGN, BIIB, CBST, CEPH, PDLI)
This weekend we ran screens of several drug and biotech companies in our quest for ‘cheap stocks’ in the BioHealth sector. The intent is not solely for buyout targets because we prefer to look at value stocks rather than just picking buyout hopefuls. The obvious issue that makes most of these cheap is because there have been problems or have been issues that made these look cheap on the surface. To look for sub-market valuations, we used Thomson Reuters estimates for 2009 and 2010 earnings. We then set a maximum target of 15-times earnings and screened out the companies that gave the ‘false positives’ as there were many.
Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Cephalon Inc. (NASDAQ: CEPH), Cubist Pharmaceuticals Inc. (NASDAQ: CBST), and PDL BioPharma, Inc. (NASDAQ: PDLI) all made the cut. We initially wanted to look for market caps over $1 billion, but we set the bar at $500 million and tried to focus on companies with growth. We included valuation data, performance, and some color on each name. Some, but not all of these, are also in our upcoming biotech buyout targets for 2010.
Amgen Inc. (NASDAQ: AMGN) is one we have long noted during its waves of problems and as it was under future reimbursement pressure that may be more like an old fashioned drug company now as it has matured. The company’s market cap is $56 billion, which is actually now the largest market cap since Genentech is now Roche. Its stock trades at $55.48 and its 52-week trading range is $44.96 to $64.76. Because of the pressure and past issues, it trades at only about 11-times earnings for 2009 ($5.03 est.) and 2010 ($5.14 est.) both. It also trades at under 4-times 2009 and 2010 revenue expectations and it sits with an arsenal of almost $14 billion in cash and equivalents, yet has over $10.5 billion in long-term debt.
Biogen Idec Inc. (NASDAQ: BIIB) is no stranger to issues… another activist was just out this week calling for more action and the company has not been able to get out from under the TYSABRI PML despite the notion that this is a very low risk. At $46.38, its market cap is $13.4 billion and its 52-week trading range is $37.21 to $55.34. Biogen has over $3.1 billion in cash if you include its short-term and long-term investments and it carries just under $1.1 billion in long-term debt. Biogen also trades at 11.6-times the $3.99 EPS target for 2009 and only 10.5-times the $4.42 target for 2010; and Biogen trades at 3-times 2009 expected sales. The risk is here is of course the TYSABRI risks. You never know if they will have to pull it again. This is an opinion rather than a formal target, but TYSABRI is good enough in treatments of MS that it could quite literally have two or three times the number of patients using it if the PML risk can either be quantified better or could be mitigated. Another issue is that it is trying to acquire Facet Biotech Corporation (NASDAQ: FACT) as a diversification and added pipeline move.
Read more
Activist Going Back After Biogen Idec (BIIB, CELG, GILD, GENZ, AMGN)
Biogen Idec Inc. (NASDAQ: BIIB) is not exactly new to the world of activist investors as there have been problems inside the company for years. An SEC filing this morning was filed by a fund called HealthCor Management, L.P. located in New York. It turns out that the fund is not a new entrant here, but the revelations are rather specific rather than broad and non-specific compared to other activist complaints. More importantly, the fund has CC’d in the following entities:
- PRIMECAP Management
- ClearBridge Advisors LLC
- Barclay’s Global Investors UK
- Fidelity Management & Research
- Icahn Capital LP
- Goldman Sachs Group
- State Street Corporation
- Vanguard Group Inc.
- Capital Research Group Investors
- Invesco Ltd.
Yep, you knew Carl Icahn was going to be in there. After all, the most recent Icahn holdings still showed Icahn holding a significant number of shares.
What is interesting is the data that HealthCor provided. It is calling for a specific buyback plan of $500 million to $1 billion worth of stock PER YEAR. It noted that Biogen Idec outspends and is expected to outspend all of its major large-cap biotech peers.
The activist group here compared the statistics (most of which include items) to Celgene Corporation (NASDAQ: CELG), Gilead Sciences Inc. (NASDAQ: GILD), Genzyme Corp. (NASDAQ: GENZ), Amgen Inc. (NASDAQ: AMGN), and Genentech-Roche.
R&D MARGINS (HISTORICAL AND CONSENSUS)
2007A 2008A 2009E 2010E 2011E
CELG 24% 24% 26% 24% 24%
GILD 12% 12% 12% 13% 13%
GENZ 18% 17% 18% 16% 16%
AMGN 21% 19% 18% 18% 18%
DNA 20% 20% 20% 20% 19%
AVERAGE 19% 18% 19% 18% 18%
BIIB 29% 26% 27% 27% 26%
HealthCor also noted that Biogen has failed to maximize its earnings and cash generation potential. There is a complain that CEO James Mullen has sold approximately $85 million worth of stock.
Now that the market has stabilized, there are likely to be more activist filings made in realm of underperforming biotech stocks.
JON C. OGG
NOVEMBER 20, 2009
Carl Icahn Narrows BioHealth Focus (AMLN, BIIB, ENZN, CYBX, EXEL, FRX, GENZ, REGN)
Carl Icahn, via his Icahn Capital LP and other entities owned the following drug and biotech or biohealth names. There may be some overlaps because of more than 1 filing, but here goes:
Amylin Pharmaceuticals Inc. (NASDAQ: AMLN) 12,971,328 shares;
Biogen Idec Corp. (NASDAQ: BIIB) 3,215,051 shares, second filing showed 12,860,205 shares;
Enzon Pharmaceuticals Inc. (NASDAQ: ENZN) 704,214 shares;
Cyberonics Inc. (NASDAQ: CYBX) 2,107,972 shares;
Exelixis Inc. (NASDAQ: EXEL) 2,357,110 shares;
Forest Labs (NYSE: FRX) 1,000,000 shares
Genzyme Corp. (NASDAQ: GENZ) 1,450,800 shares;
Regeneron Pharmaceuticals (NASDAQ: REGN) 2,508,001 shares.
Two smaller positions were omitted.
This is not the smallest amount he has held in biotechs and biohealth plays, but the focus looks narrower than in the past when there were more positions.
JON C. OGG
Key Biotech Short Interest Changes (AMGN, GILD, BIIB, CELG, GENZ, GERN, LIFE, DNDN, HGSI, AMLN, OSIP)
We have now been able to see the short interest changes that took place over the month of October-2009 in the world of biotech stocks. There were some key gains seen in a couple names, but the overall trend in biotech short selling seems to be down. We have given short interest data on Amgen Inc. (NASDAQ: AMGN), Gilead Sciences Inc. (NASDAQ: GILD), Biogen Idec Inc. (NASDAQ: BIIB), Celgene Corporation (NASDAQ: CELG), and Genzyme Corp. (NASDAQ: GENZ), Geron Corporation (NASDAQ: GERN), Life Technologies Corporation (NASDAQ: LIFE), Dendreon Corp. (NASDAQ: DNDN), Human Genome Sciences Inc. (NASDAQ: HGSI), Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), and OSI Pharmaceuticals Inc. (NASDAQ: OSIP).
Key data is below with the short interest and the percentage change from mid-October to the end of october:
Amgen Inc. (AMGN)
AS OF DATE Short Int. Change
10/30/2009. 14,737,921 -9.5%
10/15/2009. 16,286,597
Gilead Sciences Inc. (NASDAQ: GILD)
AS OF DATE Short Int. Change
10/30/2009. 16,198,837 +10.2%
10/15/2009. 14,703,407
Celgene Corporation (NASDAQ: CELG)
AS OF DATE Short Int. Change
10/30/2009. 7,370,581 -4.6%
10/15/2009. 7,725,108
Biogen Idec Inc. (NASDAQ: BIIB)
AS OF DATE Short Int. Change
10/30/2009. 8,574,239 -2.9%
10/15/2009. 8,827,991
Genzyme Corp. (NASDAQ: GENZ)
AS OF DATE Short Int. Change
10/30/2009. 5,118,715 -36%
10/15/2009. 8,085,099
Geron Corporation (NASDAQ: GERN)
AS OF DATE Short Int. Change
10/30/2009. 12,907,169 -1.9%
10/15/2009. 15,152,295
Life Technologies Corporation (NASDAQ: LIFE)
AS OF DATE Short Int. Change
10/30/2009. 7,746,689 +8.0%
10/15/2009. 7,173,192
Dendreon Corp. (NASDAQ: DNDN)
AS OF DATE Short Int. Change
10/30/2009. 8,427,630 +0.4%
10/15/2009. 8.398,235
Human Genome Sciences Inc. (NASDAQ: HGSI)
AS OF DATE Short Int. Change
10/30/2009. 17,160,491 -4.5%
10/15/2009. 17,967,328
Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN)
AS OF DATE Short Int. Change
10/30/2009. 10,199,665 -17%
10/15/2009. 12,347,842
OSI Pharmaceuticals Inc. (NASDAQ: OSIP)
AS OF DATE Short Int. Change
10/30/2009. 5,415,588 +4%
10/15/2009. 5,212,729
JON C. OGG
NOVEMBER 11, 2009
Biogen Idec Invests In Alzheimer’s Disease (BIIB)
It seems that Biogen Idec Inc. (NASDAQ: BIIB) is investing further into Alzheimer’s Disease. A company called Probiodrug AG, a biotech with a particular focus on Alzheimer’s disease, announced on Monday that it had successfully closed a Series B financing round. The total round came to above 36 million Euros or more than $52 million today. This group had previously raised around $52 million before this current round.
Biogen Idec New Ventures unit joined BB Biotech and Edmond de Rothschild Investment Partners, as well as LSP Life Science Partners. Support also came from all existing institutional shareholders – IBG Fonds, TVM Capital, HBM BioVentures, CFH Group as well as private investors.
Rossella Medori from Biogen Idec New Ventures will join other appointees from the financing round with observer seats. BB BIOTECH is listed in Switzerland, in Germany and in Italy.
This is not Biogen’s first entry into Alzheimer’s Disease. In 2007, Biogen Idec announced an alliance with Neurimmune Therapeutics to develop novel, fully human antibodies for the treatment of Alzheimer’s disease. But the current pipeline listed on the company’s website has nothing solid for Alzheimer’s Disease that is directly owned by the company.
This is a very small deal when you consider Biogen Idec’s $12.5 billion market cap and considering its expected revenues of almost $4.4 billion for its Fiscal-2009. But this is one step among dozens that biotech companies use for establishing pipeline candidates or partnership opportunities for the future.
JON C. OGG
PML Side Effect Concerns Moving Beyond MS to RA (RHHBY, BIIB)
PML, or progressive multifocal leukoencephalopathy, is moving beyong TYSABRI as a side effect in the world of drugs and pharmaceuticals. Yesterday the FDA posted a ‘Dear Doctor letter’ from Genentech, now part of Roche (OTC: RHHBY). Unfortunately, this involves Biogen Idec, Inc. (NASDAQ: BIIB) as well. The two companies notified healthcare professionals about a third case of PML, the first case of PML in a patient with rheumatoid arthritis treated with Rituxan who has not previously received treatment with a TNF antagonist.
The companies noted that information to date suggests that patients with RA who receive Rituxan have an increased risk of PML and that doctors should consider PML in any patient being treated with Rituxan who presents with new onset neurologic manifestations.
You can read the full letter and explanations here. Unfortunately, PML risks are likely to come more front and center in the coming weeks and months.
It is worth noting that this is not the first of the potentially fatal side effects of Rituxan. There have been prior warnings of brain disorders and other warnings including cardiac arrest, reactivation of Hepatitis B, kidney failure, and more. And PML is already a noted risk in Rituxan.
It JON C. OGG
More TYSABRI MS Woes, Sort Of (BIIB, ELN, ACOR)
Biogen Idec Inc. (NASDAQ: BIIB) is feeling the pain of regulatory review this morning. And Elan Corp. plc (NYSE: ELN) is feeling it even worse. The reason these are under pressure this Friday is because a European panel has begun a review of Biogen’s controversial yet effect multiple sclerosis drug TYSABRI. The review is over higher rates of PML brain infections (progressive multifocal leukoencephalopathy) than had been disclosed.
The European Medicines Agency’s Committee for Medicinal Products for Human Use showed some 23 PML cases since the launch of TYSABRI. Previous data showed that there were 13 cases since TYSABRI came back on the market in 2006 after the company voluntarily removed it to study the PML data. The European panel will discuss additional measures, if needed, to ensure a safe use of the drug and how to measure risks.
Biogen Idec is already in U.S. talks with the FDA over the TYSABRI label. Most recent data showed more than 46,000 people were taking TYSABRI, and over 13,000 patients had been taking TYSABRI for more than two years and were classified under long-term use.
It is impossible to pre-judge this situation, but personal discussions have given a personal belief here that the reason people keep taking TYSABRI is because many think it is the best MS drug on the market. As far as a 1 in a thousand risk, that is a very low incident ratio compared to other drugs that treat other diseases and many are willing to take that risk.
Biogen Idec is down 5.7% at $44.50 and Elan is down almost 17% at $5.35. Acorda Therapeutics, Inc. (NASDAQ: ACOR) has been noted this week as having an MS drug candidate pending under priority review date and that has been extended out to January 2010 by the FDA.
JON C. OGG
OCTOBER 23, 2009
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