Wednesday, April 8, 2009

Is Sanofi Eyeing Biogen Idec?

. Wednesday, April 8, 2009

By stockOzone team

Shares of Biogen Idec (NASDAQ: BIIB) have rallied in past few trading session on mounting speculation that European pharma giant Sanofi Aventi is interested in the acquisition of Cambridge-Massachusetts based biotechnology company.

In the options market too, heavy call buying activity was witnessed, indicating that traders are betting upon a possible takeover.

Biogen Idec develops, manufactures, and commercializes novel therapeutics in the areas of oncology, neurology, immunology, and cardiology in the United States and internationally.Biogen Idec's products include multiple sclerosis treatments Avonex (interferon beta-1a) and Tysabri (natalizumab); the latter is also approved for treatment of Crohn's disease, and is co-marketed with √Član. Biogen Idec also makes Rituxan (rituximab), a treatment for non-Hodgkin's lymphoma which is also approved for rheumatoid arthritis; Rituxan is co-marketed with Genentech.

Early in February, Biogen reported strong fourth-quarter results that beat Wall Street consensus. Net income totaled $207 million, an increase of 3% from $201 million in the same quarter of 2007. Revenue climbed 23.2% to $1.1 billion. Looking ahead, Biogen expects to earn more than $2.80 per share in 2009. On an adjusted bass, it put its forecast at more than $4.00 per share. Also, the company expects to register a revenue growth of high single digits in year 2009. Biogen is scheduled to report first quarter 2009 financial results on Thursday, April 16, 2009, after the financial markets close.

Late in 2007, Biogen said that it was looking for a potential buyer. The search was prompted by activist investor Icahn, but ended without any definitive offers.

It is being contented that Sanofi is desperate for a major acquisition to drive its growth as it faces the loss of patents on a number of its products. The world's third largest pharmaceutical company has been facing stiff competition from generic drugmakers and it is being speculated that the French drugmaker could bid at least $75 a share for Biogen.

Thanks to the opportunities created by depressed valuations of smaller pharma companies, health care sector is rife with M&A activity.

In March, Swiss pharma giant Roche Holding AG agreed to buy 44% stake in biotechnology company Genentech Inc (NYSE: DNA). In the same month, Merck (NYSE: MRK) announced its plan to acquire Schering-Plough Corp (NYSE: SGP) for $41.1 billion. Biopharmaceutical company Gilead Sciences (NASDAQ: GILD) acquired CV Therapeutics for $1.4 billion. However, it was the acquisiton of Wyeth (NYSE: WYE) by drug maker Pfizer (NYSE: PFE) in late January that started it all.

Shares of Biogen Idec rose $1.17 or 2.28% to $53.30 in afternoon trade on Wednesday.

Disclosure: Author does not own any of the stocks discussed here.

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