GSK to go hostile with $2.6 bln Human Genome (Nasdaq: HGSI) tender

Orlando, FL 5/9/12 (StreetBeat) -- GlaxoSmithKline (NYSE: GSK) will take its $2.6 billion bid for Human Genome Sciences (Nasdsaq: HGSI) direct to shareholders this week, after its takeover offer was rejected last month by the U.S. biotech group's board.

The decision to go hostile with the $13 a share cash tender offersets GSK up for a potentially lengthy battle with those Human Genome investors who believe it is not offering enough.

"They will do fantastically well out of this - at $13 it is a steal," said Mark Evans, a fund manager at Taube Hodson Stonex, the sixth largest investor in Human Genome with a 5.6 percent stake.

"I still think it is very likely that they will have to pay more."

The top 10 investors in Human Genome together own 78 percent of the shares, putting them in the driving seat in deciding the fate of the company.

Human Genome's board spurned the approach from Britain's biggest drugmaker on April 19, saying it did not reflect the company's inherent value. GSK insists its bid, at an 81 percent premium to the price on April 18, is full and fair.

Human Genome shares were at $14.35 in pre-market trading on Nasdaq by 1220 GMT after closing at $14.62 on Tuesday - above GSK's offer price but still only half the peak touched in April last year, when investors' hopes were higher for its new drug for the autoimmune condition lupus, Benlysta.

GSK and the U.S. pioneer of gene-based drug discovery sell Benlysta together and the companies are collaborating on two other experimental drugs in late-stage trials for diabetes and heart disease that could become significant sellers.

Buying Human Genome would give GSK full rights to these partnered drugs, underscoring the appetite among big drugmakers for biotech products to refill their medicine chests.

A spokeswoman for GSK declined to say exactly when this week the tender, which will stay open for 20 business days, would be launched. The standard practice is for tender offers to proceed only if the buyer gets a majority of the shares, but there is scope to extend or amend the offer.

GSK stock was down 1.9 percent, underperforming a 1.3 percent fall in the London FTSE 100 index, after it announced the planned tender offer on Wednesday.

NO NEED TO JOIN REVIEW PROCESS

Human Genome has hired Goldman Sachs and Credit Suisse to explore strategic alternatives, including a possible sale of the company, and has invited GSK to join the process.

But GSK, which is being advised by Lazard and Morgan Stanley, said it would not participate in that strategic review.

"GSK's participation in the process is unnecessary as its offer is not conditioned on due diligence or financing and can be completed expeditiously," it said in a statement.

"It is important for HGS shareholders to understand that GSK is committed to proceeding with its offer."

GSK's partnership with the Rockville, Maryland-based company goes back two decades, and even though the deals between the two companies have no tricky change-of-control clauses, analysts doubt another company will emerge as a "white knight" bidder.

Any non-GSK acquirer would only get partial control of the key drugs, which could make it an unappetizing target.

GSK and Human Genome share rights to Benlysta, but GSK is in charge of developing both the new heart drug darapladib and albiglutide for diabetes. As a result, the British-based company already has a dominant economic interest in these two drugs.

HOLDING THE CARDS

"Glaxo holds a lot of the cards in this story," said Navid Malik, an analyst at Cenkos Securities.

"I think Glaxo will have to raise its offer but probably not significantly ... the right price for shareholders in Human Genome would be in the mid to high-teens (dollars per share)."

Many shareholders bought into Human Genome when the shares surged from some $3 in July 2009 after impressive clinical trials results with Benlysta, when they may have paid around $15-18 a share.

Drugmakers around the world are seeking deals to get new drugs into the pipeline as older products lose patent protection, and GSK's bid for Human Genome is the latest in a recent wave of takeover activity in the biotechnology sector.

AstraZeneca (NYSE: AZN) last month agreed to buy Ardea Biosciences (Nasdaq: RDEA) for $1.26 billion to access a promising gout drug, while Roche made an ultimately unsuccessful bid for gene sequencing firm Illumina in January.

GSK said it would prefer to complete the deal on "a friendly basis in a timely fashion" and it remained willing to discuss its offer with Human Genome at any time.

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Market Movers: HGSI +110% Rejects Offer from GSK; MLNX +30%

Tomahawk, WI 4/19/2012 (StreetBeat) -- Human Genome Sciences (HGSI) shares soared 110% to $14.36 on news that GlaxoSmithKline PLC (GSK) has offered $13 a share for the biotech group. Human Genome said that the bid is too low and that it has hired Goldman Sachs and Credit Suisse to help it evaluate other options, which could include a sale. Human Genome added that it has invited development partner Glaxo to participate in the process.

Mellanox Technologies (MLNX) shares shot up 25% to $54.20, after the tech company reported better-than-expected first-quarter earnings late Wednesday. The stock won buy recommendations from analysts at Mizuho and Wunderlich Securities.

Gilead Sciences (GILD) shares rallied 16% to $54.18. Gilead released promising clinical data for its hepatitis C drug candidate GS-7977, which it acquired through its recent $11 billion takeover of Pharmasset.

Cypress Semiconductor (CY) shares jumped 9% to $15.53 after it released first-quarter financial results before Thursday’s bell.

Qualcomm Inc. (QCOM) shares dropped nearly 6% to $63.30, making it the worst performer on the S&P 500 Thursday morning. The chipmaker released its quarterly earnings report late Wednesday.

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Human Genome Sciences (Nasdaq: HGSI) Soars on Takeover Bid

Shawshank, VA 4/19/12 (StreetBeat) -- The biotechnology company Human Genome Sciences (Nasdaq: HGSI) rejected an unsolicited $2.59 billion takeover bid on Thursday from the British drug maker GlaxoSmithKline (NYSE: GSK).

Human Genome Sciences, based in Rockville, Md., said the offer did not reflect the value of the company, but added that it had started to explore its strategic options, including the potential sale of the business.

Glaxo has been asked to participate in this process, according to a statement from Human Genome Sciences. There are no assurances that a deal will eventually take place, the company added.

Under the terms of its deal, GlaxoSmithKline, based in London, offered $13 a share in cash to shareholders of Human Genome Sciences, an 81 percent premium on the company’s closing share price on Wednesday.

The proposed deal would be the fifth largest foreign takeover of a U.S. biotech company, according to the data provider S&P Capital IQ. The announcement also comes after the Swiss pharmaceutical giant Roche on Wednesday walked away from its failed $6.2 billion hostile takeover of Illumina, the provider of genetic analysis services.

“We are disappointed that Human Genome Sciences has rejected our offer without discussion,” Glaxo’s chief executive, Andrew Witty, said in a statement. “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,”

Analysts say Glaxo’s bid is an attempt to take advantage of the 75 percent drop in Human Genome Sciences’ share price over the last 12 months. The company reported a $381 million loss last year, following a $233 million loss in 2010. The losses were related to marketing and other administrative costs of its lupus drug Benlysta, according to a company statement.

Despite the initial rejection from Human Genome Sciences, Glaxo is well placed to acquire the biotech company. Both companies already split the profits of Benlysta, and are co-developing two other drugs to treat heart disease and diabetes, respectively.

The acquisition of Human Genome Sciences would allow Glaxo to pocket all the profits from the drugs that it is currently developing with the U.S. biotech company, Mark Clark, a Deutsche Bank analyst, told investors in a research note.

Glaxo said it expected roughly $200 million of cost savings by 2015, adding the proposed deal would add to its earnings in 2013.

Human Genome Sciences said on Thursday that it had asked for additional information regarding these drugs, darapladib and albiglutide, as it has a financial rights connected to them.

In a research note to investors, BMO Capital Markets said other large pharmaceutical and biotech companies might be interested in Human Genome Sciences, which could force potential bidders to increase their offers for the company.

The analysts added that Glaxo’s current takeover bid appeared opportunistic ahead of the release to market of the two drugs that are being co-developed by the companies.

In mid-afternoon trading in London, Glaxo’s share price had risen 1.1 percent, while in early morning trading in New York, stock in Human Genome Sciences had jumped more than 100 percent.

Human Genome Sciences has retained Goldman Sachs, Credit Suisse, and the law firms Skadden, Arps, Slate, Meagher & Flom and DLA Piper to help with its potential sale.

Lazard, Morgan Stanley and the law firms Cleary Gottlieb Steen & Hamilton and Wachtell, Lipton, Rosen & Katz are advising Glaxo.

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GSK ups lung drug bet by buying more of Theravance (Nasdaq: THRX)

Shawshank, Va 4/2/12 (StreetBeat) -- GlaxoSmithKline (NYSE: GSK) bet another LONDON 12.9 million on the success of lung drug Relovair on Monday by raising its stake in U.S. biotech firm Theravance (Nasdaq: THRX) - its partner on the new medicine - to 26.8 percent.

Britain's biggest drugmaker has been working with Theravance for 10 years to develop Relovair, an inhaled therapy combining two ingredients, which is a potential successor to GSK's $8 billion-a-year top-seller Advair.

Relovair will be submitted to regulators for approval as a treatment for chronic obstructive pulmonary disease (COPD) in mid-2012.

The new drug has had mixed results in clinical trials, showing superiority to Advair in some tests but not others. Still, GSK remains confident and hopes the convenience of once-daily dosing will appeal to patients, helping Relovair carve out good sales as a replacement for twice-daily Advair.

Current consensus forecasts point to annual Relovair sales of $1.46 billion by 2016, according to Thomson Reuters Pharma.

The success of Relovair is critical to GSK's future business in lung disease as Advair is set to lose patent protection in key markets, although it is not certain it will face immediate generic competition as respiratory drugs are difficult to copy.

GSK, which previously had an 18.3 percent holding in its U.S. partner, said it was paying $21.2887 per share for 10 million Theravance shares, a 7.5 percent premium to the five-day average price up to March 30..

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ImmunoGen (Nasdaq: IMGN) Rises After Drug Delays Cancer Worsening in Study

Chicago, IL 3/30/12 (StreetBeat) – ImmunoGen Inc. (Nasdaq: IMGN) rose the most in almost a year after partner Roche Holding AG (Pinksheets: RHHBY) said a breast cancer drug delayed the disease worsening in a patient study.

ImmunoGen climbed as much as 16 percent to $15.87, the biggest intraday gain since April 11, 2011. It was up 12 percent to $15.31 at 9:37 a.m. New York time. The Waltham, Massachusetts-based company rose 60 percent in the year before today.

Patients who received the medicine, T-DM1, lived “significantly” longer without their disease progressing compared with those who received a combination of GlaxoSmithKline Plc (Nasdaq: GSK)’s Tykerb and Roche’s Xeloda, Basel, Switzerland-based Roche said in a statement today. Roche is developing T-DM1 with technology it licensed from ImmunoGen.

The trial hasn’t been running long enough to show whether the drug also extended women’s lives, Roche said. Roche said it plans to apply for regulatory approval for T-DM1, also known as trastuzumab emtansine, in Europe and the U.S. this year.

“This lends further credibility to Roche’s ability to protect and increase its breast cancer revenues despite the likely appearance of biosimilar Herceptin,” analysts led by Mark Purcell atBarclays Capital wrote in a note today.

Biosimilars are lower-cost versions of complex drugs made from living organisms.

The treatment combines Roche’s Herceptin, which brought in $6 billion in 2011, according to data compiled by Bloomberg, with an older chemotherapy.

T-DM1 is a so-called “armed antibody” that combines Herceptin with DM1, which is derived from an old chemotherapy medicine called maytansine. That drug was found to be too toxic for patients in clinical trials two decades ago. ImmunoGen’s technology enabled chemists to fuse DM1 to Herceptin in such a way that it isn’t activated until Herceptin shepherds it directly to the cancer cell.

The U.S. Food and Drug Administration rejected a request in 2010 to accelerate the regulatory process.

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Agenus (Nasdaq: AGEN) Expands QS-21 License and Grants Right of First Negotiation to GlaxoSmithKline

Chicago, IL 3/7/12 (StreetBeat) -- Agenus Inc. (Nasdaq:AGEN) announced today that GlaxoSmithKline (NYSE: GSK) and Agenus have amended the QS-21 license and manufacturing agreement to include additional rights for the use of Agenus' proprietary QS-21 Stimulon(R)* adjuvant in GSK Biologicals' adjuvant systems. In addition, Agenus has agreed to grant the vaccines company the first right to negotiate for the purchase of Agenus or certain of its assets. The first right to negotiate will expire after five years.

Under the terms of the agreement, GSK will pay Agenus a non-refundable payment of $9 million, of which $2.5 million is creditable against future manufacturing technology transfer royalty payments. The agreement also includes royalty payments for an undisclosed indication upon commercialization of a vaccine product.

"Today's announcement further validates QS-21 as a key adjuvant while expanding its potential use in another important indication," stated Garo Armen, Ph.D., chairman and CEO of Agenus. "With over a dozen clinical programs in development containing our adjuvant, we are pleased to be able to contribute to the future development of a broad range of vaccines."

Saponin Platform: QS-21 Stimulon(R)Adjuvant

QS-21 Stimulon(R) adjuvant is designed to strengthen the body's immune response to a vaccine's antigen, thus making it more effective. QS-21 has become a critical component in the development of investigational preventive vaccine formulations across a wide variety of investigational prophylactic and therapeutic vaccines. Licensees of QS-21 include GSK, Janssen Alzheimer Immunotherapy, and Integrated Biotherapeutics. Agenus is generally entitled to receive milestone payments as QS-21-containing programs advance as well as royalties on sales of products.

Data from Phase 3 pivotal trials of four GSK vaccine candidates, which include MAGE-A3 Cancer immunotherapeutic (CI) for selected patients with non-small cell lung cancer, and melanoma, RTS,S for malaria, and Herpes Zoster for shingles, are anticipated to be released over the next year or so.

Between Agenus and its partners, 18 programs are in clinical development, including many programs that contain QS-21 Stimulon adjuvant. QS-21 is being studied in clinical trials for 15 vaccine programs. They include:
Phase 3: GSK's RTS,S for malaria**
Phase 3: GSK's MAGE-A3 CI for selected patients with resected melanoma**
Phase 3: GSK's MAGE-A3 CI for selected patients with resected non-small cell lung cancer**
Phase 3: GSK's Herpes Zoster for shingles**
Phase 2: Janssen's*** ACC-001 for Alzheimer's disease

Agenus' pipeline programs include:
Phase 2: Prophage Series G-100 for newly diagnosed glioma
Phase 2: Prophage Series G-200 for recurrent glioma
Phase 2-Ready: HerpV (contains QS-21) for genital herpes

About Agenus
Agenus Inc. is a biotechnology company working to develop treatments for cancers and infectious diseases. The company is focused on immunotherapeutic products based on strong platform technologies with multiple product candidates advancing through the clinic, including several product candidates that have advanced into late-stage clinical trials through corporate partners.

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Anacor Pharma (Nasdaq: ANAC) drops as study enrollment is stopped

Tallahassee, FL 2/6/12 (StreetBeat) -- Shares of Anacor Pharmaceuticals Inc. (Nasdaq: ANAC) dropped more than 8 percent Monday after the company said its partner GlaxoSmithKline PLC (NYSE: GSK) stopped enrolling patients in studies of an anti-infection drug.

THE SPARK: Anacor said the halt resulted from "a recently identified microbiological finding in a small number of patients."

CEO David Perry said Anacor will work with GlaxoSmithKline to understand the finding, a process that could take several months. Investigators will decide if people already enrolled in the studies will continue to take the drug.

The drug, GSK2251052, is in a mid-stage clinical study as a treatment for complicated urinary tract infections. GlaxoSmithKline is also stopping enrolling patients in a mid-stage study involving patients with abdominal infections, and two studies testing the drug on healthy volunteers.

THE BIG PICTURE: Anacor, of Palo Alto, Calif., develops drugs based on the element boron to treat fungal infections and inflammatory conditions like psoriasis, as well as urinary infections. Anacor doesn't have any products on the market. It has partnerships with GlaxoSmithKline of London and Eli Lilly and Co. of Indianapolis.

GlaxoSmithKline paid Anacor $15 million to license GSK2251052 in 2010, and if the drug proceeds through development, gets approved and reaches sales targets, Anacor could get more than $250 million in other payments, as well as royalties.

Shares of Anacor fell 61 cents, or 8.3 percent, to $6.81 by midday.

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Theravance (Nasdaq: THRX) Shares Slide on Lung Drug Deaths

Tallahassee, FL 1/912 (StreetBeat) – Theravance (Nasdaq: THRX) shares slumped Monday after pneumonia-related deaths were reported in patients taking the company's experimental lung drug Relovair.

GlaxoSmithKline (NYSE: GSK), Theravance's Relovair development partner, sad it plans to seek U.S. and European regulatory approvals in the middle of the year based on the just-completed phase III program in chronic obstructive pulmonary disease (COPD) and asthma.

But questions about mixed results from these Relovair studies, safety concerns and perhaps a recognition that Theravance's chances of being acquired by Glaxo have now dimmed, all conspired to drop the value of Theravance shares by $6.72, or 33%, to $13.46 in early Monday trading.

Glaxo has been working with Theravance to develop Relovair as a follow-on drug to Advair, which brings in about $8 billion in revenue for the Big Pharma giant. Relovair is important because Advair has been gradually losing market share to AstraZeneca's (NYSE: AZN) more convenient asthma and COPD medicine Symbicort.

As reported Monday, Relovair beat Advair at all tested doses in one large phase III study of COPD patients. But in a second COPD phase III study, Relovair at its highest dose failed to beat Advair.

Glaxo said it was investigating reports of "fatal pneumonia" in patients treated with Relovair, primarily at the highest dose tested.

Likewise, a large phase III trial program in asthma didn't produce pristine results. A 12-week study of Relovair versus placebo failed to demonstrate a statistically significant difference in lung function. Likewise, a 24-week study of Relovair compared to another asthma medicine failed a predefined superiority test of lung function.

"Having undertaken an initial assessment of these data we believe they support our plan to seek global approvals of this once-daily medicine for the treatment of patients with COPD and asthma," said Glaxo's Darrell Baker, in a statement.

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GSK Sells North American Brands to Prestige (NYSE: PBH)

Orlando, FL 12/20/11 (StreetBeat) – GlaxoSmithKline (NYSE: GSK) said it agreed to sell a clutch of North American non-prescription drugs for 426 million pounds ($661.6 million) to Prestige Brands Holdings (NYSE: PBH), and remains in talks regarding the sale of similar European assets.

The world's no.2 drugmaker said on Tuesday the sale of the business to the U.S. personal care firm would generate cash proceeds of 242 million pounds, which it will return to shareholders in 2012.

GSK had been expected to sell the North American and European consumer health brands all together for between 1.5 billion and 2 billion pounds, according to initial analyst estimates.

"Active discussions continue with other potential buyers for the remaining assets," Chief Financial Officer Simon Dingemans said.

The company said the assets it disposed of generated sales of around 134 million pounds in 2010, while those it is still marketing to buyers had a turnover of 400 million in the same period.

Shares in GSK traded down 1.5 percent to 1,427.5 pence at 1339 GMT, lagging Britain's bluechip index which was 0.14 percent lower.

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Some LargeCap Stocks to Keep an Eye on Today

Time Warner, the media giant, said fourth-quarter net income rose 22% to $769 million, or 68 cents a share, from $631 million, or 53 cents a share, a year earlier. On an adjusted basis, earnings in the quarter were 67 cents a share. Revenue rose about 8% to $7.81 billion from $7.21 billion. The Wall Street consensus called for earnings of 62 cents a share on revenue of $7.48 billion. The stock was up 3.5% to $33.45.

Hershey Foods said fourth-quarter net income increased about 7% to $135.5 million, or 59 cents a share, from $126.8 million, or 55 cents a share, a year earlier. On an adjusted basis, earnings were 61 cents a share. Net sales increased about 5% to $1.48 billion from $1.41 billion the year before. Analysts, on average, expected earnings of 61 cents a share on revenue of $1.48 billion. Shares of the company were unchanged at $47.14 in premarket trading Wednesday.

Mattel said fourth-quarter net income fell about 1% to $325.2 million, or 89 cents a share, from $328.4 million, or 89 cents, a year earlier. Net sales rose 9% to $2.12 billion from $1.96 billion. Analysts, on average, expected Mattel to report earnings of 86 cents a share on revenue of $2.09 billion. Mattel shares rose 1.5% to $24.50 in early trading.

Whirlpool, the appliance maker, said fourth-quarter earnings jumped 80% despite a dip in sales in North America. Whirlpool shares fell 4.5% to $81.61 in premarket trading Wednesday.

Borders Group could file for bankruptcy protection as soon as next week, according to Bloomberg. Shares of Borders were falling 14.9% to 40 cents in premarket trading Wednesday.

NaviSite agreed to be acquired by Time Warner Cable for $230 million. NaviSite shares surged 32.5% to $5.47 in premarket trading Wednesday. Time Warner cable finished the previous trading session at $68.73, up 1.3%.

GlaxoSmithKline said Wednesday it sold its entire stake in Quest Diagnostics for $1.7 billion. Quest Diagnostics was flat at $56.95 in premarket trading. GlaxoSmithKline was down 1% to $37 early Wednesday.

Yum! Brands is scheduled to report quarterly earnings after the markets close Wednesday. The company is expected to have a difficult conference call because of the recent Taco Bell lawsuit claiming its taco beef is only 35% beef and the rest is fillers. Yum! stock was up 0.9% to $47.83 in premarket trading.

Visa reports its quarterly results after the closing bell. The current average estimate of analysts polled by Thomson Reuters is for a profit of $1.21 a share on revenue of $2.23 billion in the December period. The credit card issuer has beat Wall Street's profit expectations in the past eight quarters. The stock was up 0.4% to $71 in premarket trading.

Amazon is working towards a film streaming service that would put it in direct competition with Netflix, according to the Financial Times. Shares of Amazon were down 0.2% to $171.80 during premarket trading, while Netflix fell 1.3% to $210.20.

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