Late Friday, Reuters, citing its own unnamed source, reported that Celgene was one of two possible bidders for Human Genome Sciences, which is trying to fight off a hostile, $13-per-share offer from GlaxoSmithKline (GSK).
Celgene has no interest in an acquisition of Human Genome or a merger of equals between the two companies, according to my source, contradicting the Reuters story. More likely, bankers working for Human Genome are planting speculative rumors in the press to compel Glaxo to raise its offer price, my source adds.
Human Genome has set a July 16 deadline for takeover offers from suitors other than Glaxo.Investors would likely react with horror and anger if Celgene were to make a run at Human Genome. "Crazy. Nuts. Horrid. Putrid," is how one analyst who covers Celgene described the potential of a takeover of Human Genome. The analyst asked not to be quoted by name. A biotech hedge fund analyst asked to describe his reaction to a possible Celgene-Human Genome deal, was equally blunt: "Awful! Dumbest thing ever!" Investors aren't necessarily dead-set against Celgene making acquisitions, but Human Genome would add little value to Celgene's core cancer drug business headlined by the multiple myeloma pill Revlimid. Human Genome and Glaxo sell the lupus drug Benlysta, but sales have been weak. The two companies are also partnered on a heart drug in late-stage clinical trials. Celgene is developing a drug for autoimmune diseases so adding Benlysta might make sense if the drug's commercial performance can be improved. Having to share rights to Benlysta with Glaxo, however, would be a financial and operational hindrance. Investors haven't been too happy with the returns from some of Celgene's most recent acquisitions, particularly the $2.9 billion paid to buy Abraxis BioScience and the smaller takeover of Gloucester Pharmaceuticals. Celgene is also struggling with U.S. and European regulatory delays to expand Revlimid in the first-line multiple myeloma treatment market. "We don't think such a deal would make sense for Celgene and we highly doubt that Celgene will bid," said ISI Group analyst Mark Schoenebaum, referring to the rumors of a takeover of Human Genome in an email to clients. "To be clear, we would peg the odds of Celgene actually bidding at less than 10% at this point." Shares of Human Genome closed Friday at $13.62. Celgene shares closed at $64.77. -- 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 http://twitter.com/adamfeuerstein. >To submit a news tip, send an email to: firstname.lastname@example.org. Follow TheStreet on Twitter and become a fan on Facebook.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV