Staff Writer

Three months after Biogen Idec Inc. failed to acquire Facet Biotech Corp. for $17.50 per share, Abbott is getting the job done with a $27-per-share offer.

That's a 67 percent premium over Facet's closing price on Tuesday and a whopping 206 percent above where the biotech's stock was trading six months ago, before all the buyout speculation began. And despite hostile relations between Facet and Biogen, the former has the latter to thank for its dizzying valuation hike.

"Biogen put us in play," Facet President and CEO Faheem Hasnain conceded.

After spinning out of parent company PDL BioPharma Inc., Facet boasted a rich pipeline of Phase I and Phase II antibodies for multiple sclerosis and cancer and $371 million in its coffers. Yet as of Sept. 3, 2009, Facet's shares were trading at $8.82, giving the Redwood City, Calif.-based biotech a market capitalization of about $215 million. That gross undervaluation by the Street had spurred one investor to pressure the company to liquidate.

The next day, Biogen revealed that it was attempting to acquire Facet for $14.50 per share, or about $355 million. Facet's board had previously rejected a $15-per-share offer from Biogen, so it was no surprise when they rejected the lower offer as well. Biogen launched a hostile takeover attempt, eventually upping its offer to $17.50 per share, or about $438 million. (See BioWorld Today, Sept. 8, 2009, Sept. 22, 2009, and Dec. 7, 2009.)

Relations between Biogen and Facet grew visibly strained during the takeover negotiations, which was ironic given the close ties between the two companies. They were partners on Facet's two lead antibodies, daclizumab for MS and volociximab for cancer, and Facet CEO Hasnain had previously served as executive vice president of Biogen's Oncology/Rheumatology Strategic Business Unit.

But despite what appeared to be a good strategic fit, Biogen and Facet couldn't come to terms on price. Facet's two largest shareholders, the Biotechnology Value Fund and Baupost Group LLC, helped it fend off Biogen's hostile takeover attempt.

They are now reaping their rewards.

Abbott's offer "makes a mockery of the recent unsolicited bid from Biogen," wrote Merriman Curhan Ford & Co. analyst Mike King in a research note.

At $27 per share, it values Facet at about $722 million. Backing out Facet's remaining $272 million cash balance makes Abbott's cost more like $450 million. The boards of directors for both companies have approved the deal, which is expected to close in the second quarter.

Facet's stock (NASDAQ:FACT) jumped $10.80, or 67 percent, to close at $27.01 on Wednesday.

Hasnain acknowledged that "people were a little surprised" about Facet's choice of Abbott as an acquirer, but he noted the Abbott Park, Ill.-based pharma has "a real interest in oncology and a strong presence in immunology."

On the immunology side, Abbott's best-selling product by far is Humira (adalimumab), an antibody for rheumatoid arthritis, psoriasis, Crohn's disease and ankylosing spondylitis. It generated sales of $5.5 billion last year but will face generic competition in 2015.

Daclizumab, Facet and Biogen's anti-IL2 antibody for MS, should be a nice complement. Recently published Phase II data showed adding daclizumab to interferon-beta significantly reduced the number of new or enlarged MS lesions. A Phase IIb monotherapy trial is under way, with data expected in the second half of 2011. A Phase III trial is slated to begin in the second quarter.

Facet also has a preclinical antibody targeting CS1 glycoprotein, PDL241, that may be applicable in immunologic indications.

On the oncology side, Abbott's own pipeline includes Bcl-2 antagonist ABT-263, PARP inhibitor ABT-888 and multikinase inhibitor ABT-869. The pharma also inked a deal last month with Pierre Fabre SA for a preclinical anti-cMet antibody for cancer.

Facet will add to the mix volociximab, an antibody targeting alpha-5-beta-1 integrin that has shown encouraging survival signals in a Phase I non-small-cell lung cancer trial. That product is partnered with Biogen, and Hasnain said the parties are in discussion regarding the initiation of a Phase II trial.

Facet's cancer pipeline also includes the anti-CS1 antibody elotuzumab, which is partnered with Bristol-Myers Squibb Co. and recently entered Phase II for multiple myeloma, as well as PDL192, a Phase I antibody targeting the tumor necrosis factor-like weak inducer of apoptosis receptor. Additionally, the biotech owns half of the rights to Trubion Pharmaceuticals Inc.'s Phase I chronic lymphocytic leukemia drug TRU-016, as well as other CD37-directed protein therapeutics.

Published  March 11, 2010