Millennium Has Nothing to Fear from a Takeda Takeover

Includes: MLNM, TKPHF
by: Derek Lowe

So Takeda (OTCPK:TKPHF) has surprised the folks at Millennium (MLNM) with a buyout offer. (They're battening down the hatches over in Japan, and looking for something new). I know several people over at the latter company, and I can imagine that Thursday was one of the less productive days around the labs. No doubt there was a lot of initial fear that this would be a Pfizer (NYSE:PFE)-style deal (see below), but as the day went on that didn’t seem to be the case. I’m told that retention bonuses are being offered, along with several other features to try to keep the Millennium operation running.

Takeda’s been increasing its US presence over the years. Signing up with Abbott (NYSE:ABT) to form TAP (Takeda-Abbott Pharmaceuticals) some years ago was one step, as was recently buying out that entire partnership. They bought San Diego-based Syrrx a couple of years ago, and now they have a foot on the ground in Cambridge for oncology research. The Syrrx site is now "Takeda San Diego", but interestingly, Millennium is apparently going to keep its name. I also find it interesting that the company hasn’t decided to put up a big research site in one location and call it “Takeda – US”, but have rather taken the retail approach.

How easy managing those sites will be depends on what approach they take. For now, it looks like they’re going to take the easier one, which is to let Millennium carry on in their own style (albeit with more money). We can debate the wisdom-to-folly ratio of that another day. But overall, it looks like the Japanese see something in the smaller US companies that they don’t have themselves, and would like to try to buy. The lighter their touch, the more likely that what they’re after will actually still be around once the checks clear.

Contrast that to, say, Pfizer’s purchase of Sugen, or Lilly’s (NYSE:LLY) purchase of ICOS, or J&J’s (NYSE:JNJ) purchase of Scios. In those cases, the larger companies were in it to buy a drug (or a few possible drugs), and that was that. Medicinal chemists? Pharmacologists? Those they already had. What they needed were the clinical candidates or marketed compounds. The folks in the small-company labs quickly found themselves getting those “What, are you still here?”. And pretty soon, most of them weren’t, voluntarily or involuntarily.