Genentech: Roche Needs Us More

Without Genentech(DNA Quote), Roche is nothing.

That's an exaggerated statement but only to an extent. Genentech used an investor meeting Monday to drive home the company's view that Roche's hostile tender offer of $86.50 a share is too low. Two slides from the company's four-hour presentation illustrated the point perfectly.

Genentech's CFO David Ebersman posted a slide of Roche's current drug pipeline, showing 78 different drugs or disease indications from phase II and phase III studies through to drugs in ongoing regulatory review.

Of those items, a whopping 73% are derived from drugs developed by Genentech. When Ebersman altered the slide to erase the Genentech drugs, Roche's remaining pipeline looked rather bare.

In his summation, Genentech CEO Art Levinson put up a slide showing the percentage of Roche revenue derived from Genentech products. A full 66% of Roche sales in 2008 was Genentech-derived, an increase from 21% in 2000.

"We do not believe that the Roche tender offer adequately reflects the value and future potential of Genentech's business," Levinson said.

Genentech executives, including Levinson, made no mention Monday of the $112-a-share counteroffer the company made to Roche. Instead, the company used its investor meeting Monday to systematically and fundamentally rebut each and every assertion made by Roche recently that Genentech was over-reaching on price.

Levinson and his management team were polite yet assertive. While not using these exact words, the take home message for Roche was pretty clear and went something like this:

Roche, screw you. If you want to buy us, pay up!