) --


(CELG) - Get Report

is not buying

Human Genome Sciences


, according to a source in contact with Celgene management.

Late Friday,


, 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


(GSK) - Get Report


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


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.

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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;

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