Human Genome Sciences, Inc. (HGSI) recently responded to GlaxoSmithKline plc’s (GSK) extension of its unsolicited tender offer to acquire the company’s outstanding common shares. Human Genome mentioned that approximately 474,029 shares of the company, which is less than I% of the shares outstanding, were tendered.
Glaxo has extended the tender period to June 29, 2012. Earlier, the tender offer was scheduled to expire on June 7, 2012.
Human Genome’s board of directors continued to advise its stockholders against Glaxo’s tender offer.
Earlier, in April 2012, Glaxo had made an offer to acquire Human Genome for $13 per share in cash. However, Human Genome’s board had rejected the offer as they believed that the offer price undervalued the company. Glaxo went ahead and commenced a tender offer on May 10, 2012, which was set to expire on June 7, 2012.
If Glaxo succeeds in acquiring Human Genome, it would gain full control over Benlysta (approved for treating systemic lupus erythematosus). Glaxo will also gain control over late-stage candidates such as darapladib (cardiovascular disease) and albiglutide (type II diabetes).
Glaxo recently announced results from the Harmony 6 phase III study comparing albiglutide to prandial insulin (Lispro). Results showed that the effect was sustained up to 52 weeks. Results from the Harmony 7 phase III study, comparing albiglutide (50 mg) to once-daily liraglutide (1.8 mg), were also presented.
Our Take
Benlysta has significant potential, being the first lupus drug to hit the market in more than 50 years. It was approved in the US in March 2011, while EU approval came in July 2011. However, the product has performed below expectations since launch. Human Genome recorded sales of $31.2 million in the first quarter of 2012.
We believe the Glaxo takeover of Human Genome would be beneficial. Glaxo has been a long-time partner of the company. Apart from Benlysta, the companies are co-developing several pipeline products like darapladib (phase III), albiglutide (phase III) and rilapladib (phase II).
We currently have a Neutral recommendation on Human Genome, which carries a Zacks #3 Rank (Hold rating) in the short run.
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