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12:00 AM
Sep 07, 2009
 |  BioCentury  |  Finance

Ebb & Flow

If Facet Biotech Corp. (NASDAQ:

FACT) succumbs to Friday's unsolicited takeover bid from Biogen Idec Inc. (NASDAQ:BIIB), it doesn't look like it will be a marriage made in heaven.

While the $14.50 a share bid is 64% above Facet's share price of $8.82 on Thursday, and values Facet at $356 million, the company's shares have been trading well below cash. The company had $371 million in cash, including long-term securities and restricted cash, at June 30, and was valued Thursday at $217 million.

The bid also is well off the closing price of $18 last Dec. 10, Facet's first day of trading after it spun out of PDL BioPharma Inc. (NASDAQ:PDLI), when its market cap was $442 million.

In fact, the bid price is below an earlier offer that Facet rebuffed. According to an SEC filing from the biotech, the two companies have been in acquisition talks since mid-August. On Aug. 21, Biogen Idec made a $15 per share cash offer, which included a condition that "Facet does not undertake any material commercial or strategic transactions between now and the consummation of this transaction."

Facet's board rejected the bid on Aug. 25 after consulting financial and legal advisors, according to an SEC filing from Facet.

Facet then proposed that President and CEO Faheem Hasnain and Biogen Idec President and CEO James Mullen talk again on Aug. 28.

When the day arrived, Facet instead announced it had partnered with Trubion Pharmaceuticals Inc. (NASDAQ:

TRBN) to develop the latter's TRU-016, which is in Phase I trials.

Following the deal, Facet shares tumbled $2.47 (22%) to $8.82 by last Thursday's close.

Biogen Idec's response was last Friday's offer. The company said it reduced its bid because the Trubion collaboration "reduces the value of Facet."

Facet could not be reached for comment after the bid was announced. In an SEC filing, the company urged its shareholders to "await a further response from Facet before making any decisions."

Daclizumab dealings

Biogen Idec and Facet are not exactly strangers, as parent company PDL partnered with Biogen Idec in August 2005 to develop daclizumab. That molecule went with Facet in the spinout.

In fact, Biogen Idec spokesperson Jennifer Neiman told Ebb & Flow that one reason the company is now looking to acquire Facet is an independent safety monitoring committee's recent recommendation for the continuation of the Phase IIb SELECT trial of daclizumab to treat multiple sclerosis (MS) based on a planned interim futility analysis of a subset of data.

The recommendation was disclosed in early August, along with plans to start a Phase III trial in 1H10. FDA is reviewing a proposed SPA for the trial design. When the trial starts, Facet is eligible for a $30 million milestone payment from Biogen Idec.

A second molecule from that partnership, volociximab, is in Phase II testing for solid tumors.

Under the deal, Facet is entitled to milestones of up to $660 million.

Neiman said Biogen Idec is interested in getting 100% of the potential revenue stream from daclizumab.

Staying TRU

The Trubion deal that irked Biogen Idec is for TRU-016, a humanized small...

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