After authorizing a $20 million share repurchase last October, Biogen Idec Inc.'s board of directors approved a second stock buy-back plan, this time for a whopping $3 billion.
Biogen Idec certainly has the money for such a deal. The Cambridge, Mass.-based company reported about $2.5 billion in cash, equivalents and securities as of March 31 and generated $716 million in first quarter revenues. Yet the repurchase will be funded half through cash and half through debt, ensuring that Biogen Idec remains capable of pursuing "small to moderate-sized acquisitions," according to Jose Juves, director of public affairs.
Earlier this year, Biogen Idec acquired Waltham, Mass.-based hemophilia company Syntonix Pharmaceuticals Inc. in a potential $120 million deal. (See BioWorld Today, Jan. 5, 2007.)
Biogen Idec itself became the subject of some take-out speculation last month in the wake of AstraZeneca plc's $15.2 billion acquisition of MedImmune Inc. Analyst Christopher Raymond, with Robert W. Baird & Co. Inc., said in a research note that the stock buy-back "may serve to detract from such a scenario," which may result in a "more muted investor response" to the news. (See BioWorld Today, April 24, 2007.)
Shares of Biogen Idec (NASDAQ:BIIB) rose 5.9 percent, or $2.92, on Wednesday to close at $52.13.
The buy-back will be conducted through a modified "Dutch Auction" tender offer. Biogen Idec plans to repurchase approximately 57 million shares of common stock, or about 16 percent of its 343 million shares outstanding as of May 25. Shareholders will have the opportunity to specify how many shares they wish to tender at a price between $47 and $53. Biogen Idec will determine the lowest price per share within that range at which it can purchase the shares tendered, based on the quantities and prices specified by the shareholders. The tender offer will begin Thursday and is expected to expire June 26. Merrill Lynch & Co. and Goldman Sachs & Co. served as financial advisors for the deal and committed to the required loan.
Raymond estimated that the program, if executed in full, could boost earnings per share by 3 percent to 5 percent for 2007-2010.
Juves said the buy-back is an "opportune" way to return value to shareholders while investing in the pipeline. Other big biotechs have taken a similar view: Genzyme Corp. announced a three-year $1.5 billion share repurchase program on Tuesday, and Amgen Inc. authorized a $5 billion share repurchase program last December.
In other financing news:
• Acorda Therapeutics Inc., of Hawthorne, N.Y., filed a $150 million universal shelf registration statement. Proceeds of any future offerings are anticipated to be used for general corporate purposes, including capital expenditures. Acorda markets Zanaflex for spasticity and is conducting Phase III trials with Fampridine-SR in multiple sclerosis.
• Anticus International Corp., of Montreal, raised $400,000 through a private placement of 5.7 million units at 7 cents per unit. Each unit consists of a common share, a one-year Class A warrant to purchase a common share at 12 cents and a two-year Class B piggy-back warrant to purchase a common share at 20 cents. Proceeds will support Amicus' Prolactis technology, which uses a bioreactor to transform the sugars in liquid byproducts and expired goods into water and yeast.
• Avalon Pharmaceuticals Inc., of Germantown, Md., closed its previously announced $20 million private placement of stock and warrants. The company sold 3.84 million shares at $5.21 per share along with five-year warrants to purchase 959,694 shares at $6 per share. Rodman & Renshaw LLC served as lead placement agent with Trout Capital LLC acting as co-placement agent. The funds are expected to last two years and will be used for Phase II trials with cancer drug AVN944 and to support several preclinical programs. (See BioWorld Today, May 29, 2007.)
• Chemokine Therapeutics Corp., of Vancouver, British Columbia, is raising $25 million through a public offering of stock and warrants at a price to be determined. GMP Securities will act as the sole book-running manager and lead underwriter for the offering. Proceeds will be used for working capital, general corporate purposes and research and development, including clinical trials of CTCE-9908 to prevent cancer spread and CTCE-0214 to mobilize stem cells and neutrophils.
• DermTech International Inc., of La Jolla, Calif., said it raised "significant" funding as part of a $10 million round of financing. The funds will support the initiation of clinical trials with DermTech's non-invasive Epidermal Genetic Information Retrieval skin sampling technology for early detection of melanoma and other applications. (See BioWorld Today, Aug. 22, 2005.)
• IsoTis Inc., of Irvine, Calif., secured a three-year, $20 million credit facility consisting of a $10 million loan and a $10 million revolving line of credit from Merrill Lynch Capital and Silicon Valley Bank. IsoTis also received confirmation from the FDA that its Accell family of demineralized bone matrix products will be regulated under the device pathway. The company submitted a supplement to its 510(k), which had been on hold since February, and addressed the agency's questions regarding the product.
• Neurogen Corp., of Branford, Conn., filed a $100 million universal shelf registration statement. Proceeds of any future offerings are anticipated to be used for general corporate purposes, including clinical trials of NG2-73 for insomnia, NGD-4715 for obesity and aplindore for Parkinson's disease and restless legs syndrome.
• Sirtris Pharmaceuticals Inc., of Cambridge, Mass., completed its previously announced initial public offering of 6.9 million shares at $10 per share. Net proceeds of $62.4 million will be used to support Phase II diabetes trials with SRT501 and for other purposes. J.P. Morgan Securities Inc. served as the sole book-running manager, with CIBC World Markets Corp., Piper Jaffray & Co., JMP Securities LLC and Rodman & Renshaw LLC acting as co-managers. Shares (NASDAQ:SIRT) gained 30 cents on Wednesday to close at $12.94. (See BioWorld Today, May 24, 2007.)