Pharmaceutical suitors shied away from buying Cambridge, MA-based Biogen Idec (NASDAQ:BIIB) last fall because they were too afraid of the risks associated with acquiring a biotech, Biogen CEO James Mullen said in today’s Boston Globe. In San Francisco for this week’s JPMorgan investor conference, Mullen said that pharmaceutical companies are in general much more cautious than biotechnology firms, and that this culture clash ultimately contributed to sale discussions petering out. “They never would have pursued some of the drugs we pursued,” Mullen told the Globe.
Mullen hit a similar note during his conference remarks earlier in the week. Both the Globe and Reuters reported that the Biogen CEO acknowledged that potential buyers were worried about Tysabri, the MS treatment developed by the company and partner Elan. That drug was pulled from the marketplace a few years ago after being linked to a rare brain infection. Sales of Tysabri resumed in late 2006. However, Mullen told conference attendees, “I think there is a fair bit of fear, loathing and tort out there.”
In his interview with the Globe, Mullen noted that would-be buyers were also anxious about Biogen’s partnership agreements with Elan and Genentech involving, respectively, Tysabri and Rituxan, a treament for lymphoma and arthritis. Each partner has the right to buy out Biogen’s share of the co-developed drugs in the event of a change in the firm’s ownership.
Since much of Biogen’s value is associated with its share of sales of those drugs, it would be critical for a potential buyer to know Elan’s and Genentech’s intentions. But Roger Longman over at the In Vivo Blog reported back in December that Biogen evidently made potential bidders sign an agreement prohibiting them from negotiating with its key drug partners. “That means the prospect of buying Biogen wasn’t merely expensive, it was a complete crapshoot,” wrote Longman.
Although Biogen had previously declined to comment on this issue, Mullen confirmed in today’s Globe that the company did indeed block potential suitors from negotiating with its partners prior to making a bid. However, he stressed that any possible buyer would have had the chance to conduct such negotiations before finalizing a deal.
In the end, even though the company was widely expected to command a purchase price of up to $30 billion, it all added up to not a single bid. Biogen had put itself up for sale at the urging of activist investor Carl Icahn.
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