Amylin Pharmaceutical (AMLN) shares shot up 54.45% on rumors regarding a take-over bid by Bristol-Myers Squibb (BMY). According to Bloomberg, which cited unnamed sources, Bristol-Myers had made an offer of $22 per share ($3.5 billion). However, the offer was rejected by Amylin’s board of directors last month.
Why Amylin?
Following the termination of Amylin’s exenatide agreement with Eli Lilly (LLY) in November 2011, Amylin has been considered to be a potential takeover candidate for companies with a focus on diabetes. Amylin’s exenatide franchise consists of Byetta and Bydureon (once-weekly exenatide). While Byetta sales have been lagging expectations, Bydureon, which was launched earlier this year in the US, could very well be a blockbuster.
Amylin is currently looking for ex-US partners for the exenatide franchise, which should help maximize the value of the product.
Meanwhile, Bristol-Myers has been pretty active on the acquisition front over the past few quarters. Earlier this year, the company acquired Inhibitex. Other acquisitions in the recent past include Medarex, Inc., ZymoGenetics, Inc., and Amira Pharmaceuticals, Inc.
With Bristol-Myers already having a presence in the diabetes market (Onglyza and Kombiglyze), the Amylin acquisition would make sense. Bristol-Myers is facing a major patent cliff with its lead product, Plavix, slated to lose US exclusivity in May 2012.
Our Take
Amylin could be an attractive takeover target for companies with a focus on the diabetes market. Chances remain that other companies could express an interest in acquiring Amylin and a deal could be sealed in the late 20s.
We currently have a Neutral recommendation on Amylin, which carries a Zacks #3 Rank (short-term “Hold” rating).
AMYLIN PHARMA (AMLN): Free Stock Analysis Report
BRISTOL-MYERS (BMY): Free Stock Analysis Report
LILLY ELI & CO (LLY): Free Stock Analysis Report
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