Biogen Idec Bid for Facet Biotech Shot Down, But the Show’s Not Over

Xconomy Boston — 

[Update: 5:26 pm Eastern, 12/17/09] Biogen Idec failed to persuade shareholders to approve its $450 million hostile takeover bid for Redwood City, CA-based Facet Biotech, but a statement today suggests that this particular corporate dance isn’t over yet.

Shareholders of Facet (NASDAQ: FACT) turned down Cambridge, MA-based Biogen’s offer of $17.50, and now that the deadline has passed, Biogen has withdrawn its offer, Facet said today in a statement.

Back in September, Biogen made its initial offer at $14.50 a share, and then it sweetened the bid earlier this month to $17.50. Facet, which controls assets formerly owned by PDL Biopharma, has been a Biogen partner since 2005 in developing daclizumab for multiple sclerosis. The buyout made some strategic sense to Biogen, the world’s largest maker of multiple sclerosis drugs, which reasoned that merging the companies would increase the odds of turning that experimental drug into a hit product. Biogen tried to acquire Facet behind the scenes in August. But Biogen didn’t appear to be happy after Facet did an independent thing by striking a separate deal with Seattle-based Trubion Pharmaceuticals to co-develop a lymphoma drug. It was after the Trubion deal that Biogen decided to go directly to the Facet shareholders with its hostile offer.

But Facet has made it clear it will listen to offers. Facet has hired a financial advisor, Centerview Partners, to “solicit additional third parties that may have an interest in a transaction that our board would find in our stockholders’ best interests,” Facet said in a statement.

And those third parties can apparently still include Biogen. “We continue to offer Biogen Idec the opportunity to engage in due diligence discussions to determine whether Biogen Idec would make a materially increased offer,” Facet said.

Financially, several analysts laughed off the original Biogen bid as a low-ball offer. Facet had $332 million in cash and investments on its books at the end of September, and that alone makes its stock worth $12.97 a share without assigning any value to daclizumab, according to an analysis by Michael King of Merriman Curhan Ford, in a note to clients Dec. 10. He calculates daclizumab is worth about $15.16 a share by itself, and after subtracting debt, he says Facet is worth $27.11 a share.

“Facet Biotech represents a unique investment opportunity in the biotech space, combining a modest enterprise value, a late-stage clinical asset with a high probability of success, a robust development-stage pipeline, and an experienced management and board team with a desire and ability to succeed,” King said in his note.

Shareholders aren’t placing as much value on the company as King, but Facet’s statement about listening to other offers did spark some speculative movement in the stock today. Shares climbed 5 percent to $17.22 at 2 pm Eastern.

[Updated comment from Biogen, 5:26 pm Eastern, 12/17/09] Biogen Idec spokeswoman Amy Reilly called after the first version of this story published to offer a brief statement from the company. “We are moving on,” Reilly said. “Beyond that, we have no further comment.”