Biogen Idec Will Remain Independent; Shares Plunge (Update3)

By Luke Timmerman


Dec. 12 (Bloomberg) -- Biogen Idec Inc., the maker of the multiple sclerosis drug Tysabri, plunged 28 percent in extended New York trading after the biotechnology company said it didn't get any ``definitive'' takeover offers.

The developer of drugs for cancer and MS said in a statement today it will no longer pursue a sale, and that its business strategy is working. The Cambridge, Massachusetts-based company fell $20.93 to $54.95 at 5:39 p.m. in extended trading. Pfizer Inc., the world's biggest drugmaker, and Sanofi-Aventis SA had been considered potential acquirers.

Big drugmakers may have been turned off by complications stemming from Biogen's partnership with Genentech Inc. to market the cancer drug Rituxan and with Elan Corp. on Tysabri, said Eric Schmidt, an analyst with Cowen & Co. in New York. The price may also have been too high, he said.

``Perhaps there just weren't many big pharma companies interested in paying as much as AstraZeneca did for biotech assets like MedImmune at $58 a share,'' Schmidt said in a telephone interview. He rates the stock ``neutral,'' and said the stock market's reaction was ``appropriate.''

London-based AstraZeneca Plc bought MedImmune in June for about $14.7 billion.

Biogen said Tysabri may generate at least $2.8 billion annually by 2010, and that the company plans to introduce four new products or existing drugs for new diseases during that time. Financially, Biogen said it can produce 15 percent compound annual sales growth, and 25 percent compound annual growth in earnings per share.

`Calling It Off'

``It's very hard to announce a company is for sale, and then say `oops, we're calling it all off and going back to business as usual,''' said Geoffrey Porges, an analyst with Sanford Bernstein & Co. in New York, in an interview last week. Employees have been looking for other jobs or waiting for a buyout, he said. ``It's so disruptive.''

The company put itself up for sale in October after billionaire investor Carl Icahn expressed interest in buying the company for $23 billion.

The idea was short-lived. Icahn made his interest known before the company announced his bid Oct. 12, then he withdrew his interest that same day, said Naomi Aoki, a Biogen spokeswoman, in an interview. Biogen later approached him again, and he declined to make an offer, Aoki said.

Biogen ``did not receive any definitive offers'' after a strategic review and decided its current strategy ``will result in attractive value for stockholders,'' the company said in its statement.

In October, Biogen hired Goldman, Sachs & Co. and Merrill Lynch & Co. to manage a possible sale.