GREENWICH, Conn., Oct. 2, 2013 /PRNewswire/ -- Sarissa Capital issues the following letter regarding Astex Pharmaceuticals, Inc. (NASDAQ: ASTX):
We are one of Astex's largest shareholders, owning approximately 5% of the outstanding shares of the company. We believe the recently announced merger transaction with Otsuka Pharmaceutical significantly undervalues Astex and therefore we do not intend to tender our shares.
It seems clear to us from both analyst commentary and press reports in response to the announcement of the Otsuka transaction that many shareholders concur with our view of the valuation of Astex and perhaps share our concerns about both the timing of the auction process and the manner in which it was conducted. With regard to timing, Astex's recent report on August 28th of clinical data on SGI-110, the company's second-generation DNA methyltransferase inhibitor, suggested the promise of the drug. However, it is the clinical studies to be reported in December 2013 and in 2014 that could most definitively illustrate the value the drug will confer to Astex. The fact that Astex is trying to consummate the sale process before these data are available is inexplicable and disturbing. With regard to the manner in which the auction was conducted, we believe that the process was flawed. It is our view that Astex did not reach out to all potentially interested bidders, and we are troubled by the carefully worded language in the various public disclosures by Astex that suggests that the auction process may have been inappropriately biased towards a transaction that would preserve the existing infrastructure of Astex rather than obtain the highest value transaction for shareholders. Among the many troubling aspects of the process is the fact that only a small number of bidders entered into a confidentiality agreement with Astex (perhaps in part because of the extraordinarily long three year standstill and the fact that under the agreement, bidders could not even ask to modify the terms!).
Astex's latest disclosures include many amendments and corrections to their previous version of events that led to the proposed transaction that increase our concerns about the integrity of the process and their apparent cavalier attitude toward disclosing important facts.