By Jim Shrine

Immunex Corp. rejected American Home ProductsCorp.'s $263 million buyout offer late Monday, well afterit got recommendation for approval to expand thelabeling for its flagship product, Leukine.

The $14.50-per-share unsolicited offer made Nov. 1,1995, by American Home Products (AHP) wasimmediately panned by analysts as too low. AHP alreadyowns 54.6 percent of Immunex. Analysts said at the timethe company is worth at least $16 per share and possiblymore than $20. (See BioWorld Today, Nov. 3, 1995, p.1.)

A committee of non-AHP board members voted 6-0 toreject the offer. A letter sent Monday to Madison, N.J.-based AHP said, "The purchase of the shares of Immunexcommon stock held by minority shareholders at the priceyou have proposed would appear to create value for theshareholders of AHP at the expense of the minorityshareholders of Immunex."

"American Home is trying to get a cheap deal," saidEdmund Debler, an analyst with New York-based Mehta& Isaly. "The $14.50 bid was insulting."

Earlier Monday, Leukine was recommended for approvalin an indication that might benefit the company's profilemore than its bottom line.

Amgen's Neupogen Also Recommended

The FDA Biological Response Modifier's AdvisoryCommittee recommended approval of the white bloodcell stimulant for use in peripheral blood stem cell(PBSC) mobilization and also for use aftertransplantation of PBSC. The committee Monday alsorecommended approval of Amgen Inc.'s Neupogen inPBSC mobilization, and agreed to recommend approvalof labeling showing Neupogen increases neutrophils andplatelets.

Amgen's Neupogen is a granulocyte-colony stimulatingfactor that has annual sales approaching $900 million.Leukine is a granulocyte macrophage-colony stimulatingfactor with annual sales of nearly $50 million. Thespecific labeling for both in PBSC transplantation issubject to negotiation with the FDA.

The growth factors already are being used off-label in thePBSC setting, which is an alternative to harvesting stemcells from the bone marrow. The stem cells are present insmall quantities in peripheral blood, and the growth factorcan enhance the cells before they are collected from theblood for reinfusion later. The procedure was performedbetween 4,000 and 9,000 times in the U.S. in 1994, and isbecoming the preferred alternative to bone marrowtransplants.

"It's not going to make a significant difference to thesales of either product," Debler said. "But in a sense it's apositive for Leukine in that it continues to validate its usein clinical settings."

Also, Debler said, the recommendation enhances theimage of Leukine, which can only help Immunex in itsdiscussions with AHP.

Last week Immunex, of Seattle, released data showingLeukine reduced infections in high-risk prematureinfants. And Wednesday Immunex will present data froma recently completed Phase II trial showing its tumornecrosis factor receptor was effective in rheumatoidarthritis.

Peggy Phillips, Immunex's vice president, pharmaceuticaldevelopment, said the timing of the variousannouncements helps substantiate the value of thecompany, and "we hope in some way it contributes to thevaluation of Immunex."

Immunex's stock (NASDAQ:IMNX) moved close to $16per share the day the AHP offer was made public and hasstayed near there since, indicating that investors didn'tbelieve the deal would go off at the original offer price.On Monday it gained 6 cents to close at $16.06. Therejection of the AHP offer was made after the marketclosed.

Mike King, a vice president at New York-based Dillon,Read & Co. Inc., said he didn't expect Monday's news tohave much effect on Immunex's stock, especially sincelast week's announcement on Leukine for neonatal sepsisdidn't move the price.

Monday's news, King said, "is important psychologicallybut not significant as far as additional revenues andearnings." A positive is that Immunex showed it iscapable of getting additional indications for the drug, hesaid.

Immunex's product license application was based on aretrospective analysis of data collected over five yearsthat showed Leukine decreased the time to neutrophilrecovery and decreased the days to the final red blood celland platelet transfusions.

David Kaye, associate director of corporatecommunications for Thousand Oaks, Calif.-basedAmgen, said the committee's recommendation forlabeling that shows increased neutrophil and plateletrecovery gives Neupogen an advantage over Leukine.

Amgen's stock also gained 6 cents Monday, closing at$50.44.

Meanwhile, the next move in the AHP offer forImmunex, if there is one, is AHP's. Debler said hedoesn't believe there will be meaningful discussion untilthe offer is around $18 per share.

Debler said Immunex doesn't need to do the deal now,and could hold out a few years, particularly with themoney coming in from American Home. With the recentPixykine failure (see BioWorld Today, Oct. 30, 1995, p.1), there's not much else that can go wrong at Immunex,Debler said. n

(c) 1997 American Health Consultants. All rights reserved.