According to a recent Bloomberg report, it is rumored that Exelixis Inc. (EXEL) has hired Goldman Sachs (GS) to assist with the handling of possible takeover bids. Though both companies have yet to confirm the report, there is no denying that Exelixis' impressive product pipeline would be a welcome addition for any large pharmaceutical company looking to enhance its oncology portfolio's future potential.
Exelixis has been the subject of much buyout speculation this year. The company also turned many investors' heads in August of last year when there was a flurry of form 4 filings, revealing sizable insider-open-market-share-purchases. Anyone else who bought at that time should be quite pleased, as the share price has since increased by more than 270%.
There is little doubt that outside interest in Exelixis has seen an increase since the February release of some highly encouraging updated interim phase 2 clinical trial data for its prostate cancer product candidate, Cabozantinib.
Hiring an outside firm to handle any unsolicited buyout offers would seem to make sense, as the company's management team and board of directors are largely comprised of doctors with little or no expertise in advanced negotiations, and attorneys that likely have little or no experience in valuating publicly traded companies.
Bringing in an outside firm like Goldman Sachs would appear to suggest that the size of any deal, should one occur, would be large. It would also seem to imply that the number of offers already received by the company may be substantial and that, perhaps, the voracity of the bidders is intensifying as of recent (Carl Icahn is a major shareholder).
I am pleased with the stock because of the hefty gains it has generated over the last several months and a continued supporter of it due to Exelixis’ tremendous growth potential, but I would never advocate purchasing it based on buyout speculation alone.
If you don’t already own shares and due diligence tells you that this is a company you would feel comfortable owning a year (or more) from now, I would suggest that you put it on your radar and decide on a suitable entry point.
Disclosure: I am long EXEL.