Human Genome Sciences, Inc.
) once again rejected
) $13 per share tender offer of acquiring all outstanding shares of
the company. Human Genome's board of directors concluded that
Glaxo's offer was inadequate and does not reflect the proper
valuation of the company.
Glaxo has extended its tender offer to July 20, 2012. Notably,
the date is after the expiration of Human Genome's process bid
deadline of July 16, 2012. Human Genome has been asking Glaxo to
participate in the process bid, which the latter refused twice.
Previously, Human Genome announced July 16, 2012 as the date for
the submission of definitive acquisition proposals. The company
sent a letter to Glaxo asking the company to participate in the
process. The letter clearly mentioned that the board of directors
of Human Genome has earlier rejected the $13 per share offer as
Glaxo's offer was first announced in April 2012. With Human
Genome's board rejecting the offer, Glaxo went ahead and commenced
a tender offer on May 10, 2012, which was initially set to expire
on June 7, 2012. Glaxo subsequently extended the tender period to
June 29, 2012.
If Glaxo succeeds in acquiring Human Genome, it would gain full
control over Benlysta (approved for treating systemic lupus
erythematosus). Glaxo will also gain control over late-stage
candidates such as darapladib (cardiovascular disease) and
albiglutide (type II diabetes).
Benlysta has significant potential, being the first lupus drug
to hit the market in more than 50 years. It was approved in the US
in March 2011, while EU approval came in July 2011. However, the
product has performed below expectations since launch. The company
recorded sales of $31.2 million in the first quarter of 2012.
We believe Glaxo's takeover of Human Genome would be beneficial.
Glaxo has been a long-time partner of the company. Apart from
Benlysta, the companies are co-developing several pipeline products
like darapladib (phase III), albiglutide (phase III) and rilapladib
However, with less than 1% of Human Genome's share being
tendered so far, Glaxo will have to raise its offer price to be
successful in its acquisition bid.
We currently have a Neutral recommendation on Human Genome,
which carries a Zacks #3 Rank (Hold rating) in the short run.
GLAXOSMITHKLINE (GSK): Free Stock Analysis
HUMAN GENOME (HGSI): Free Stock Analysis Report
To read this article on Zacks.com click here.