Biogen-Icahn? Pfiz-ogen or Pfiz-zyme? Is All of Cambridge Biotech Suddenly Up For Sale?

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Roche. Biogen itself isn’t naming names: it just reports receiving several “expressions of interest.” (And no wonder that at yesterday’s earnings call Mullen termed all the speculation “unsettling”.)

That any of these firms would be interested reflects the challenges confronting Big Pharma today. Drugmakers are struggling with their pipelines, especially with many blockbuster drugs coming off patent. They’re also turning their attentions increasingly toward the protein-based drugs that biotech specializes in. Biogen has a good pipeline and strong future prospects, which Mullen laid out recently. “Biogen’s size would give a buyer immediate scale in the biotech field,” the FT wrote. Indeed, several news sources have speculated that Big Pharma might be desperate enough to pay a premium for a company like Biogen, which would fit nicely into Icahn’s plans. “Mr. Icahn…is betting clear-headedness will not prevail,” the FT continued.

But there are problems with any takeover of Biogen. As Fortune and others noted, Biogen shares rights to its big cancer drug Rituxan with Genentech—and it shares rights to the multiple sclerosis drug Tysabri with Ireland’s Elan. Any change of control at Biogen, noted the Associated Press, gives its partners the ability to purchase the rest of the rights to the shared drug. Even if Elan told Icahn that it wouldn’t stand in the way of a sale, as has been reported, that still leaves Genentech.

Meanwhile, Forbes devoted an entire article to the specific subject of why Pfizer shouldn’t buy Biogen, citing the rights issues to Rituxan and Tysabri, the company’s high price, and the difficulty of assimilating the biotech into its already disorganized R&D system. We found no special reason out there why the other Big Pharma companies listed as potential suitors would find a perfect match in Biogen.

Pfizer, not surprisingly, has had little to add. But in his Q3 earnings call last Wednesday, Pfizer CEO Jeffrey Kindler said this: “And with regard to Biogen Idec, obviously we don’t comment on that kind of speculation…But, I just have to say, we will always keep eyes and ears open at any means to build our business through alliances, licensing, or acquisitions and when the right opportunities present themselves, we will act appropriately.” I’d say that goes in the definite maybe category.

In short, if you’re looking for a definite forecast, we don’t have it. Yesterday’s Boston Globe quoted David P. Southwell, chief financial officer of Marlborough, MA, biotech company Sepracor, as skeptical a sale will go through any time soon. “If I were a Biogen employee, I wouldn’t be worried yet,” he said. At the same time, the piece noted, Citigroup analyst Yaron Weber put the chance of a sale at 80 percent.

Maybe they’re both right. With Icahn around, something usually happens. But I’d be willing to bet that despite Mullen’s efforts to make the process as speedy as possible, it won’t happen that quickly. In the meantime, for all you stock traders out there, various analyst reports that we’ve seen show the company might sell for a stock price in the $85-$100 range (JPMorgan). On the other hand, without a sale, the stock might only be worth $60 (Bear Stearns). Happy trading.

We can’t wrap this up without a look at Genzyme (which reported strong growth in its Q3 earnings report this morning). The speculation that it, too, is an acquisition target seems to have started on October 15, the Monday after Biogen’s late Friday announcement that it would entertain offers. “It’s not surprising to me that investors are moving on to Genzyme because what seems to be the asset du jour for pharmaceuticals companies is biologic capability,” Cowen & Co. analyst Phil Nadeau told Reuters. But this view was countered by John McCamant, editor of the Medical Technology Stock Letter, who said Genzyme’s more diversified revenue streams didn’t fit as well with large drugmakers. “Unless you can find somebody that wants to go into these specialty niche markets, I don’t see Genzyme addressing Big Pharma’s need for a fix,” said McCamant. A Wall Street Journal Deal Journal blog entry that same day tapped, you guessed it, Pfizer as a likely Genzyme buyer.

A different Reuters article quoted another Bear Stearns research report. “Genzyme and Amgen are, in our opinion, the only major biologics companies that could realistically be purchased if Biogen disappears,” the report stated. “Genzyme seems to make the most sense as a potential target for a major pharma company looking to bulk up its biologics capabilities.”

Does that help? Genzyme itself has no comment on the subject.

Update: Go Sox!

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