Despite the buildup following Biogen Idec Inc.'s October announcement that it would seek potential buyers, the company reported late Wednesday that it would continue to operate independently after failing to attract any bids.
That news sent shares of Biogen (NASDAQ:BIIB), which had climbed amid buy-out speculation over the last few months - they hit a 52-week high of $84.75 Oct. 15 - tumbling 23 percent, or $17.97, Thursday, closing at $57.91.
The Cambridge, Mass.-based firm said it did not receive "any definitive offers," either from big pharma or from billionaire investor Carl Icahn, who was rumored to have taken an interest in the firm back in October. At that time, Icahn held about a 1 percent stake in the company - later increased to 3 percent - and published reports said he put a $23 billion offer on the table. (See BioWorld Today, Oct. 16, 2007.)
Biogen didn't disclose any details as to what might have dissuaded potential buyers, but analyst William Tanner, of Leerink Swann & Co. in New York, wrote in a research note that "myriad issues, including change of control provisions for Rituxan and Tysabri, may have influenced the outcome."
Contracts with marketing partners South San Francisco-based Genentech Inc. for rheumatoid arthritis drug Rituxan (rituximab) and Dublin-Ireland-based Elan Corp. plc for multiple sclerosis drug Tysabri (natalizumab) both include options for those partners to take over rights to their respective compounds should control of Biogen change.
The FDA's delay in reviewing Tysabri in Crohn's disease in order to examine the drug's risk management program, followed by Biogen's lower-than-expected third-quarter earnings due mainly to disappointing Avonex sales - and then compounded by the inflated stock price - also might have had made would-be purchasers wary, despite the firm's attempts to play up its pipeline opportunities.
Biogen has highlighted the fact that it has 15 programs in or beyond Phase II development, and added additional programs through recent collaborations, including a July deal with Philadelphia-based Cardiokine Inc., in which it picked up a late-stage oral vasopressin receptor antagonist for hyponatremia in congestive heart failure patients and a deal with Zurich, Switzerland-based Neurimmune Therapeutics AG for antibody drugs targeting Alzheimer's disease. (See BioWorld Today, July 3, 2007, and Nov. 21, 2007.)
Biogen could not be reached for comment, but the firm stated in a press release that it believes its "business strategy is working" and that "continued execution of the company's business plan will result in attractive value for stockholders."
Among its goals for the next three years, Biogen anticipates seeing 100,000 patients on Tysabri, four new products or existing products launched in new indications and generating revenue growth at a 15 percent compound annual growth rate.
Analyst Adam Walsh, of New York-based Jefferies & Co. Inc., however, remained skeptical. He wrote in a research note that Biogen's "long-term guidance is overly aggressive and unlikely to be achieved."
And Christopher Raymond, of Chicago-based Robert W. Baird & Co. cited ongoing competition to Avonex - competition that includes Tysabri - and wrote that Biogen's goal of having 100,000 patients on Tysabri therapy by the end of 2010 is "unrealistically high guidance," adding that "we - and we believe most on the Street - model closer to one-fourth that amount."
Biogen reported total revenues of $789 million for the third quarter, falling short of the $803 million predicted by analysts. Avonex sales totaled $455 million, Rituxan sales were $235 million and sales of Tysabri grew to $93 million of which Biogen recognized $63 million in revenue per its agreement with Elan.
As of Sept. 30, Biogen had cash of $671.3 million.