Biogen Idec Shares Enjoy Nice Pop; Forget Rumors of Being Acquired, Company Hasn’t Given Up on a Major Acquisition of Its Own

9/7/07Follow @bbuderi

Biogen Idec (NASDAQ: BIIB) stock surged nearly 6 percent yesterday, rising $3.66 to $66.53, as CEO Jim Mullen predicted strong growth throughout the decade at a major healthcare conference. But overshadowded by these main remarks was an interesting comment that Mullen made about Biogen’s future acquisition plans.

Yesterday I wrote about Mullen’s talk at the Thomas Weisel Partners Healthcare Conference in Boston—and about how the Biogen CEO fended off a question about Carl Icahn, who recently took a small stake in Biogen in a move many believe signals the famous investor’s intent to push for Biogen to be acquired. But this morning I went back through the audio of Mullen’s talk yesterday and glommed on to one other detail he mentioned—the possibility Biogen may be the one announcing a major acquisition in the not-terribly-distant future, and how that fit into the company’s recent moves.

Mullen noted that many analysts were taken by surprise by Biogen’s $3 billion Dutch auction stock buyback, which was completed in June. “I’ve heard a lot back from the Street, you know, ‘Boy we were expecting you to do some big acquisition out there,’” he said. Such a move would of course help Biogen fill its pipeline, and the company has acquired two companies in the last 16 months—San Diego-based Conforma, which developed cancer drugs, and Syntonix, of Waltham, MA, which was working on long-acting treatments for chronic diseases such as hemophilia. But both were relatively minor purchases of $150 million or less, and apparently many analysts expected a much bigger move this year.

To an audience consisting largely of analysts and investors, Mullen said “I wouldn’t discount the fact that we might do a large acquisition in the future.” However, he said that before deciding on the Dutch auction Biogen looked for an acquisition target that was a good strategic fit at a good valuation.”We haven’t found that combination, so I don’t think that’s going to occur in the very near future, and as such we thought a better allocation of the capital in the near term was the Dutch auction. So that’s one perspective. The second perspective is any one of these major acquisitions that we could do is going to require me to go back out and sell it to you guys. And if we need to raise equity, I’d rather raise equity at wherever we are today, $63, than $48 or something when we went out to do the Dutch auction. So we thought we were undervalued. I think so far that’s proven to be the case and we like the prospects going forward.”

You can sign up to hear the entire talk here.

Mullen will be speaking again on Monday at the Bear Stearns Healthcare Conference in New York. In today’s early trading, Biogen shares were off 73 cents, at $65.79.

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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