Biogen Idec Isn’t Sweating Possible Sale of Genentech to Roche
Big biotech news came yesterday from Basel, Switzerland, where pharmaceutical giant Roche announced an unsolicited $43.7 billion bid to buy the rest of South San Francisco-based Genentech (NYSE: DNA) that it doesn’t already own. The news has a ripple effect in Massachusetts for smaller biotechs that have partnerships with Genentech, the industry’s pioneering company. That includes Cambridge, MA-based Biogen Idec, (NASDAQ: BIIB) which co-markets the lymphoma drug Rituxan with Genentech in the U.S.
If Roche succeeds in acquiring all of Genentech, then Biogen will simply get a new partner for co-marketing Rituxan in U.S., says company spokeswoman Naomi Aoki. The drug generated $2.3 billion in U.S. sales last year, with Biogen keeping about 40 percent of revenues. Roche markets the product overseas, under the brand name MabThera, and pays Biogen a “low double digit” percentage royalty on sales in those territories, Aoki says.
“We already work closely with Roche on clinical trials, and data rollouts,” Aoki says. “We have a very productive relationship with them. We don’t anticipate any problems.”
Biogen doesn’t have what’s called a “change of control” right that could throw a wrench in to the deal. Genentech has such a right with regard to Biogen, as you may recall from that company’s proxy fight with Carl Icahn. What it means is that if Biogen is taken over by someone else, Genentech has the right to set a price on the product and the acquirer then would have to decide to buy out Genentech’s ownership stake in the product or sell its ownership split to Genentech, Aoki says. Irish drugmaker Elan, Biogen’s partner on marketing the multiple sclerosis drug Tysabri, has a similar buyout right if Biogen gets bought, although a third-party would have to set the value of Tysabri, and Elan has the right to decide whether to buy or sell, Aoki says.