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A single shareholder is trying to stop Japanese drug giant Takeda Pharmaceutical Co. Ltd.'s latest deal in its tracks by bringing suit to thwart the company's planned $8.8 billion takeover of Millennium Pharmaceuticals Inc.
According to a regulatory filing April 16, Eleanor Turberg, who claims to be an individual shareholder in Cambridge, Mass.-based Millennium, filed a suit seeking certification as class action against Millennium and the company's directors in the Superior Court for Middlesex County, Mass., alleging the board breached its fiduciary duties. The suit seeks to enjoin the board from proceeding with the takeover, to rescind the buyout to the extent it has been implemented and -- for the plaintiff -- seeks damages and legal fees. Millennium agreed April 10 to a $25 per share buyout by Osaka, Japan-based Takeda, Japan's largest drug company, which came at a 53% premium to the target's close ahead of the deal. ELEANOR TURBERG: ACTIVIST SHAREHOLDER? The suit's argument centers around the timing of the buyout announcement, which was released ahead of first-quarter sales results for the target's flagship product, bortezomib, sold as Velcade. The suit charges the announcement of the buyout was timed "so that the rise in Millennium's share price due to the takeover announcement would mask the inevitable rise due to the positive news about Velcade." Shortly after the deal's announcement April 10, Millennium said Velcade posted U.S. net sales of $83.5 million for the first quarter of 2008, up 42% over the year-ago period and a 13% increase over the fourth quarter of 2007. The suit also points to a Thomas Weisel & Co. report that estimated worldwide sales of Velcade would approach $1 billion for fiscal 2008. Revenue related to the drug, used in the treatment of blood-borne cancers, reached nearly $400 million last year, $265 million of which came from direct U.S. sales. The report banks on the assumption that "the drug will receive U.S. approval as a front-line treatment of multiple myeloma in June as well as European clearance during the second half of the year," the suit said. Further, the suit said the $247.3 million termination fee the deal carries is a deterrent to other potential bidders, while Millennium has agreed not to solicit proposals from third parties and to "certain restrictions" on its ability to respond to proposals. Millennium said it intends to "vigorously defend" against the lawsuit. DEALS DEALS DEALS Should it go through, the deal would be the largest ever by a Japanese drug company. It would also give Takeda, which faces the loss of patent protection on two of its flagship drugs in 2009 and 2011, Velcade, which Johnson & Johnson markets outside the U.S., and a pipeline of at least six other compounds for cancer, as well as autoimmune and heart diseases, which are in clinical tests. As The Deal's Alex Lash and Andrew Bulkeley wrote upon the deal's announcement:
The company is also sitting on a pile of cash worth nearly $20 billion, and the deal marks its third with a U.S. drug group of late. Takeda also plans to purchase up to ¥60 billion of its own shares. Alongside Abbott Laboratories,Takeda in March announced the two companies would unwind their 31-year-old U.S. joint venture, TAP Pharmaceutical Products Inc. of Lake Forest, Ill., with plans to eventually divide the value of it 50-50. Abbott would get the rights to prostate cancer treatment Lupron Depot and take payments on some of TAP's other and future products. Takeda would get the rights to heartburn medicine Prevacid and the rights to the JV's future drug pipeline. Takeda said its plan was to integrate TAP into U.S. subsidiaries: Takeda Pharmaceuticals North America Inc. and Takeda Global Research and Development Center Inc. In March, Takeda signed a development deal with Cell Genesys Inc. for GVAX immunotherapy for prostate cancer treatment. Takeda pledged $50 million up front and up to $270 million in milestone payments. In February, Takeda picked up the Japanese subsidiary of beleaguered Amgen Inc., which is recovering from its worst year to date, and the local rights to much of its pipeline. The two struck a deal through which Takeda would shell out $300 million, and potentially a lot more, for an experimental cancer drug. Lash wrote:
Here's a snapshot of several years of Takeda's dealmaking: 2007:
2006:
2005:
2002-2004:
VENTURING OUT Meanwhile, Takeda Research Investment Inc. of Palo Alto, Calif., the drug group's venture arm, has hosted several drug groups in its portfolio since it was established with $100 million to kick off investments beginning Jan. 1, 2002: A few include:
And then there's Tobira Therapeutics Inc., founded in 2006 by Domain Associates LLC partner Eckard Weber in Princeton, N.J., to develop drugs licensed from Takeda. It launched in August 2007 with plans for a pair of HIV drugs and a $31 million first round of funding from Domain, Frazier Healthcare Ventures of Seattle, Montreux Equity Partners of Menlo Park, Calif., and Canaan Partners of Rowayton, Conn. - Carolyn Murphy
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