The Rockville, Md. biotech said GlaxoSmithKline's $13-per-share offer, conveyed in an April 11 letter to CEO Thomas Watkins from GlaxoSmithKline CEO Andrew Witty, "does not reflect the value inherent in HGS." It said it has hired Goldman, Sachs & Co., Credit Suisse Group and law firms Skadden, Arps, Slate, Meagher & Flom LLP and DLA Piper LLP (US) to help it explore strategic alternatives and has invited GlaxoSmithKline to participate in that process.
It also said it has asked the U.K. group for information about pipeline products in which Human Genome has financial rights, including darapladib, currently in Phase 3 development for the treatment of cardiovascular disease, and albiglutide, in Phase 3 development for the treatment of type 2 diabetes.
GlaxoSmithKline's offer represented an 81% premium to Human Genome's $7.71 Wednesday closing price. The Human Genome stock was trading close to $30 a year ago but has fallen amid lackluster sales of Human Genome's first product to hit the market, the lupus treatment Benlysta, on which it has collaborated with its British suitor.
By going public with its rejection and launching the strategic review, Human Genome is ignoring an April 11 request from GlaxoSmithKline's Witty to "engage in a confidential dialogue." Its stance echoes that of San Diego gene-sequencing specialist Illumina Inc., which Wednesday forced Roche Holdings AG to abandon its unsolicited offer.
In response to Human Genome's announcement, GlaxoSmithKline said its offer would give its target's shareholders "immediate full value and certainty" and professed disappointment at Human Genome's rejection.
GlaxoSmithKline's Witty said: "Having worked together with Human Genome Sciences for nearly 20 years, we believe there is clear strategic and financial logic to this combination for both companies and our respective shareholders - and that now is the appropriate time in the evolution of our relationship for our two companies to combine."
The London company said a deal would generate $200 million in synergies by 2015 and boost its own earnings from 2013. A takeover wouldn't affect its ongoing share buyback program, it added.
GlaxoSmithKline shares rose 18.5 pence to 1,460 pence after its announcement. At that price its equity is worth £73.6 billion ($117.9 billion).
Human Genome reported revenue of $131 million for the year ended Dec. 31 and a net loss of $381.1 million.
Lazard and Morgan Stanley are advising GlaxoSmithKline and a Cleary Gottlieb Steen & Hamilton LLP team including Victor Lewkow, Benet O'Reilly, Meredith Kotler, and Kimberly Spoerri; and Wachtell, Lipton, Rosen & Katz are providing legal advice.
Washington D.C.-based attorneys Marc Gerber and Michael Rogan are leading the Skadden team advising Human Genome.
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