Updates on the Healthcare/Biotech Mergers

Before I get to my favorite biotech saga, there are noteworthy, if not newsworthy, press releases out this morning from two takeout targets. Genentech (DNA) put out a statement from the special independent board committee that's been appointed to handle the Roche (RHHBY.PK) buyout offer.

To no one's surprise, the panel says 89 bucks a share ain't enough. But the three directors would consider a higher number. The stock hit another new high of 99 dollars yesterday morning.

In the meantime--and I think this item in the last paragraph of the release is the most interesting--Genentech is going to do what it can to try to keep employees from sending out their resumes and running for the exits. "In light of the tremendous importance of Genentech's employees to the company's success, the special committee has approved the implementation of a broad-based employee retention program to address any employee concerns created by the Roche proposal." Genentech's CEO Art Levinson has consistently defended the company's pre-existing, widespread employee stock options program.

Deutche Bank's Mark Schoenebaum is already out with a blitz note to clients. He thinks negotiations will start soon and that "resolution" will come within one to two months, "but not assured", he adds parenthetically. Schoenebaum says the press release has a friendly tone and so, he concludes, "consummation of a deal continues to seem likely to us."

Before that release went out, ImClone Systems (IMCL) announced--drumroll, please--that the first patient has now been treated in a late-stage study of an experimental drug for breast cancer. This looks to me like a not-so-veiled negotiating tactic to tout the value of the company's drug development pipeline as part of its effort to get Bristol-Myers Squibb (BMY) to up its offer. I mean, come on, does IMCL really think that a press release trumpeting the fact that the first woman in a clinical trial is now on drug is something that's going to get media play? Aside from my mention of it here, of course. The stock's hovering around $64, which is $4 higher than BMY's "full and fair" bid.

And finally to Dendreon (DNDN). After the company reported earnings late Tuesday, analysts are out with research notes to clients about the upcoming sneak-peek at the results of the pivotal study of DNDN's prostate cancer drug Provenge. Jonathan Aschoff at Brean Murray Carret & Co. is reiterating his "Sell" rating on DNDN. On the conference call, Dendreon officials reportedly said the so-called interim analysis of the Provenge test will occur in October. But Aschoff writes, "We do not expect positive interim results...or positive final results in (the second half of 2009) for overall survival...." Overall survival is the clinical term for "how much longer people live" and is considered the gold standard in cancer drug studies. Brean Murray makes a market in DNDN and would like to do investment banking for the company.

Joel Sendek at Lazard Capital Markets agrees that the interim checkup won't show a statistically significant improvement in overall survival. But he believes in the final analysis there's a chance the drug may achieve its main goal. He's got a "Hold" rating on DNDN. Lazard has banked DNDN and makes a market in the stock. If the interim analysis is strong enough, though, Dendreon plans to file for Food and Drug Administration approval of the drug based on those results.

Comments

[nova:]

Mike Huckman,

Your incompetence and ignorance are on par with your stupidity.

You are doing great disservice to both retail investment and patients communities. Thanks to you and you alike, good many patients do not get the right medical treatment they so badly need.

Your promotion of Genentech's Avastin is just disgusting. This highly expensive and highly ineffective drug does not offer any survival benefits to colorectal, lung and breast cancer patients when used with the latest chemotherapy.

At the same, ImClone's Erbitux has shown substantial survival benefits in many settings:
- 3rd-line metastatic colorectal cancer survival benefits were increased by 5 months in wild-Kras patient population
- Head & Neck cancer patients saw their survival benefits increased by 2 years being treated by Erbitux combined with radiation
- Non-small cell lung cancer patients survival benefits were increased by 8 weeks for very diverse and difficult to treat Caucasian patient population.

Very fortunately for American cancer patients, American oncology community pays close to no attention to your highly inaccurate, biased and quite often dishonest commentaries.

To call ImClone Phase III clinical trials to develop so much needed treatments capable of helping to women with breast cancer "a not-so-veiled negotiating tactic" is just outright disgusting.

2008 Aug 16 09:43 PM