Biogen Idec board may sell

The board of US biotech Biogen Idec has revealed it may sell the company after receiving some interest from potential buyers.

Biogen said in a statement that its board, while happy with the company's direction, wanted to explore whether an acquisition by a major pharmaceutical company might result in superior value in the current environment.

The 12 October announcement caused Biogen's stock to rise to over USD 81 per share in post-market trading, having closed at USD 69.43. The new share price valuation now places the company at over USD 23bn in market capitalisation.

Were Biogen acquired, the deal would be the largest ever for a biotechnology company, exceeding that of AstraZeneca (AZ) and MedImmune, which was valued at USD 15.6bn.

Biogen's primary drug portfolio consists of multiple sclerosis (MS) drugs Avonex (interferon beta-1a) and Tysabri (natalizumab), as well as rheumatoid arthritis (RA) and cancer drug Rituxan (rituximab). Biogen merged with San Diego-based Idec in 2003.

Billionnaire Carl C Icahn already holds a stake in Biogen of slightly under five per cent. In an interview with the New York Times, he said that he had made an all-cash offer to buy the whole company at a premium to the market price about a week ago.

Icahn already facilitated MedImmune's sale to AZ by threatening a proxy fight if the board did not put the company up for sale. He also gained effective control of ImClone Systems and now serves as chairman. Rituximab was the major drug that came along with the deal.

"Frankly, I think that if they put the company up for sale that they would get a better offer than I made. I believe a synergistic buyer would pay more," stated Icahn.

The interest in a successful biotech like Biogen is unsurprising. Many multinational pharmaceutical firms currently have gaping holes in their drug pipelines, so many are intent on acquiring small protein-based drugs of the type made by biotechs to make up lost sales. For example, Pfizer recently hired a biotechnology entrepreneur to head its move into that area, which makes it a potential suitor for Biogen.

A stumbling block for any company planning on acquiring Biogen would be if Ireland-headquarterd Elan, who co-developed Tysabri with the biotech, exercised its right to buy out Biogen's share of the drug.

Another hurdle would be cancer drug Rituxan, which was developed jointly with Genentech. Per the agreement, if Biogen were acquired, Genentech would have the option of placing a value on Rituxan. The new owner of Biogen would then have the right to either buy Genentech's share of the drug or to sell Biogen's share to Genentech at that value. As a result, if Genentech exercised its option, it might lose its share of one of its top-selling drugs.

Biogen, which has long been considered an acquisition candidate by Wall Street, hired Goldman Sachs and Merrill Lynch as financial advisers.