This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Amylin Spurns Bristol Bid, But What's Next?

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

SAN DIEGO ( TheStreet) -- Diabetes drug maker Amylin Pharmaceuticals (AMLN) turned down a $3.5 billion takeout offer from Bristol-Myers Squibb (BMY - Get Report), according to Bloomberg, which cited two people with knowledge of the deal.

Nice scoop. Well done, guys. Amylin shares are up 47% to $22.65. Some additional thoughts:

Bristol's rumored $3.5 billion (that excludes debt) offer values Amylin at $22 per share, or a 46% premium to the company's closing stock price of $15.39 on Monday. That's a nice bump in value, which begs the question: How can Amylin's board justify turning down an offer like that?

Answer: Amylin's board obviously believes its diabetes drug franchise, most notably the newly launched once-weekly drug Bydureon, is worth more.

Deutsche Bank biotech analyst Robyn Karnauskas (a longtime Amylin bull) says Amylin is worth $31 per share, assuming cost synergies (whack SG&A expenses by 80% and R&D costs by 40%) and Bydureon generating peak U.S. sales of around $1.5 billion.

A counter argument: "If the deal is predicated on Bydureon sales of $1.5 billion, I don't think it makes sense because sales won't get there," says healthcare investor (and TheStreet contributor) Nathan Sadeghi-Nejad.

The Bydureon commercial launch is still early, but scripts to date show the drug lagging behind its chief competitor, Novo Nordisk's Victoza.

Bristol's interest in Amylin make sense to Diabetics Investor's David Kliff because the pharma giant wants a bigger presence in the diabetes treatment market.

"Bristol came to the market with Onglyza way too late, it has no chance," he says, referring to the Type 2 diabetes drug that is essentially a me-too version of Merck's (MRK - Get Report) Januvia.

Bristol was a big player in the diabetes market with its metformin drug Glucophage, but that business was lost to generics, Kliff adds.

"With the way Bydureon is right now, a mid-$20s bid for Amylin seems fair to me," said Kliff, although believes Bydureon's true potential won't be realized until a more convenient pen-injector version of the drug is launched at the end of the year.

Amylin rejecting a $3.5 billion offer today likely means that the company and its board believes a slow Bydureon launch understates the value of the drug which will ramp higher once the pen version is available.

If not Bristol, other potential Amylin acquirers might include Takeda, Astrazeneca (AZN - Get Report) or GlaxoSmithKline (GSK - Get Report), says Kliff.

Don't forget about Carl Icahn, who owns about 10% of Amylin and controls two board seats.

--Written by Adam Feuerstein in Boston.

>To contact the writer of this article, click here: Adam Feuerstein.

>To follow the writer on Twitter, go to

>To submit a news tip, send an email to:

Follow TheStreet on Twitter and become a fan on Facebook.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BMY $65.26 0.00%
AZN $70.07 0.00%
GSK $47.02 0.00%
MRK $57.75 0.00%
AAPL $123.25 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs