Human Genome Rejects $2.6B Bid From GlaxoSmithKline (Update 1)

Updated with further information on GlaxoSmithKline's unsolicited bid for Human Genome

NEW YORK ( TheStreet) -- Human Genome Sciences ( HGSI) received an unsolicited buyout proposal of $13 a share in cash, or about $2.6 billion, from GlaxoSmithKline ( GSK) but rejected the offer saying the bid "does not reflect the value inherent" in the company.

The Glaxo bid represents an 81% premium to Human Genome's closing price Wednesday of $7.17.

Human Genome shares were up 104% to $14.67 in pre-market trading.

Human Genome, in a press release Thursday, said its board has authorized the exploration of strategic alternatives, "including, but not limited to, a potential sale of the company." Glaxo has been invited to take part in the process.

Human Genome and Glaxo are partners on the lupus treatment Benlysta, approved in March 2011. The commercial launch of Benlysta, however, has been slowed by lackluster interest from doctors and reimbursement hurdles; sales have fallen short of Wall Street expectations so far.

Until today's Glaxo bid, Human Genome shares had lost 75% of their value since Benlysta's launch.

Benlysta's poor sales made Human Genome a rich target for short sellers, who controlled 22% of the stock's float, according to Bloomberg. That's the 10th-highest short interest among biotech and drug stocks.

Goldman Sachs and Credit Suisse have been hired as advisers to Human Genome.

--Written by Adam Feuerstein in Boston with assistance from Joseph Woelfel in New York.

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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; click here to send him an email.