Replies to post #67962 on Biotech Values

[DewDiligence]

A Biotech Prowls for Biotechs

[AMGN hasn’t done a big acquisition since the Immunex deal almost seven years ago.]

http://www.bloomberg.com/apps/news?pid=20601087&sid=an00ESi9Yekw

›4-Nov-2008 16:10 EST
By David Olmos

Nov. 4 (Bloomberg) -- Amgen Inc., with more cash than all but two U.S. pharmaceutical industry rivals, is seeking to snatch up distressed biotechnology companies at bargain prices.

Amgen sees ``attractive opportunities'' in the ``challenging environment for biotech companies needing to raise cash,'' said David Polk, an Amgen spokesman, in a Nov. 3 e-mail. The company has $9.76 billion in cash and marketable securities, according to data compiled by Bloomberg. That puts it in place to compete for purchases with Pfizer Inc., Bristol-Myers Squibb Co. and Wyeth, three drugmakers that pledged last month to step up their acquisition activity.

Amgen's sales rose 3.5 percent in 2007 after a 15 percent jump a year earlier as safety concerns cut demand for the company's anemia drugs. Investors say they would support an acquisition push, and Shiv Kapoor, an analyst with Morgan Joseph & Co. in New York, said the world's biggest biotechnology company has an advantage in landing smart deals.

As a biotech, ``they are sort of the frontrunners in being able to value technology from other companies,'' Kapoor said in an Oct. 28 telephone interview. ``As one of the largest companies out there with a large amount of cash, I believe they are in a unique position to be acting.''

Pfizer, Wyeth Cash

Only New York-based Pfizer with $26.2 billion and Wyeth of Madison, New Jersey, with $13.5 billion have more cash and marketable securities on hand among the five biggest U.S. pharmaceutical companies. [NVS had a lot of cash too, but it recently spent a huge amount to buy a 52% stake in Alcon.]

…One Amgen target may be Cytokinetics Inc., a South San Francisco, California-based company, said Christopher James, an analyst at Rodman & Renshaw in New York. Amgen paid $33 million to acquire a 9 percent stake in January 2007. Amgen also agreed to pay $50 million for an option to develop the company's experimental heart-failure treatment, currently in clinical trials, and as much as $600 million more in milestone payments.

It could cost ``several hundred million dollars'' to conduct a final-stage clinical trial for the Cytokinetics drug, James said. That may force it to consider help from an acquirer like Amgen, he said.

``I think that would be an attractive deal,'' James said.

Cash Available

About one in four of 370 publicly held U.S. biotechnology companies has less than six months' cash on hand, according to the Biotechnology Industry Organization, a Washington-based trade group.

``Disarray'' among biotech companies in a tough economic climate works to Amgen's advantage, said Jordan Schreiber, managing director of BlackRock Investment Management's Healthcare Fund, which holds 4.8 million shares. Acquisitions could help Amgen reignite sales and broaden its product pipeline, he said in a telephone interview.

Amgen could combine its financial muscle and its knowledge of the biotech culture to land bargains, said Mark Oelschlager, a portfolio manager at Oak Associates Ltd., an Akron, Ohio, investment adviser that holds almost 1.1 million Amgen shares.

``There are opportunities out there where they could pay a lot less today for some of the small biotechs than they would have paid a few months ago,'' Oelschlager said in an Oct. 21 telephone interview.

Previous Acquisitions

Amgen has spent more than $20 billion on acquisitions and licensing agreements since its 2002 purchase of Immunex Corp. for $16.8 billion. [They mean more than $20B including the Immunex deal.] That brought Amgen the rheumatoid arthritis drug Enbrel, which generated $3.2 billion in sales last year. The company's $2.2 billion purchase of Abgenix Inc. in 2006 added the cancer medicine Vectibix, a $170 million seller.

Sales of Amgen's best-selling anemia drug Aranesp fell 25 percent last year and 13 percent in the first nine months this year after studies linked high doses of anemia drugs to heart attack and stroke.

Analysts don't expect brisk revenue growth to return until at least 2011, when Amgen's experimental osteoporosis drug denosumab may boost annual sales by $500 million or more. The company plans to seek regulatory approval of denosumab in the U.S. and Europe early next year.

Paring Debt

Besides acquisitions, the company may seek to use the cash to pare some its $11.2 billion in debt. The company has $1 billion in floating-rate notes due in November. Amgen may need to refinance an additional $3.5 billion in borrowing that is due by 2011, Mark Schoenebaum, an analyst at Deutsche Bank in New York, wrote in a note to investors on Oct. 7.

Michael Cuggino, portfolio manager for Pacific Heights Asset Management in San Francisco, which holds 315,000 Amgen shares in its funds, said he would like to see Amgen use some of its cash for paying a dividend. Amgen hasn't paid a cash dividend since its initial public offering in 1983.‹

[DewDiligence]

YMI Receives Unsolicited Buyout Offer

[The suitor, BBMO.OB, is a “roll up” company with no actual business operations. What’s peculiar about this offer is that YMI itself has effectively become a shell company after the failures of its clinical programs. Evidently, BBMO wants YMI so it can bolster its own cash balance for pursuit of still other acquisition opportunities. The cash portion of the offer, $.50/sh, is an 85% premium to yesterday’s closing price of YMI. The stock portion of the offer, 0.375 shares of BBMO, is hard to value because BBMO’s stock hardly ever trades. The offer includes the threat of going hostile with a tender offer if YMI’s BoD does not cooperate.]

http://biz.yahoo.com/prnews/081113/ny45987.html

›BBM Announces Offer to Acquire YM BioSciences Inc.

Thursday November 13, 10:44 am ET

NEW YORK, Nov. 13 /PRNewswire-FirstCall/ -- BBM Holdings (OTC Bulletin Board: BBMO ) announced today that it has made an offer to acquire YM BioSciences Inc. (Amex: YMI ) by a letter to YMI's Chief Executive Officer, Dr. David Allan.

Under BBM's proposal, BBM would acquire in a merger all of the outstanding shares of YMI common stock for consideration per share of $0.50 in cash plus 0.375 share of BBM common stock (aggregating for all YMI stockholders approximately 45% of the combined company's outstanding stock after giving effect to the merger). All options from YMI will be replaced with equivalent options and the options of the YMI board members and management will be replaced with BBM options at the most recent BBM closing price prior to announcement of the final agreement on the merger. The offer is subject to the negotiation and execution of definitive agreements, approval of the agreement by our respective boards of directors, completion of limited confirmatory due diligence, approval of the merger by your shareholders and regulatory approval. BBM anticipates funding the cash portion of this transaction through short-term debt financing with affiliates of BBM stockholders, subject to final negotiation.

The cash portion of BBM's proposal represents a premium of 84.5% above the closing price of YMI common stock of $0.271 on November 12, 2008 (and a substantially greater premium taking into account the value of the BBM stock issued in the merger). BBM is pursuing a new acquisition strategy to create a large rollup of small biotechnology companies.

Alternatively, if YMI's board of directors prefers not to negotiate a merger as proposed, BBM is willing to undertake a tender offer at a cash price of U.S. $0.60 per share for at least 90% of the shares of YMI Corporation, subject to confirmation by YMI that it has not entered into any agreement to sell equity securities or incur any indebtedness since the date of its most recently published financial statements, declared any cash dividends nor entered into any commercial or other agreements outside of the ordinary course of business during that period, and that it will not do so going forward.

Andrew Limpert, interim CEO of BBM stated: "We believe a combined BBM and YMI will make a powerful Biotech combination. The scientific synergies and collective management skills, with the recent addition of Dr. Hirschman to BBM, combined with the already impressive team at YMI will create significant value creation for all stake holders involved. We look forward to working with YMI and also on future acquisitions of promising pharmaceuticals." Dr. Shalom Z. Hirschman, consultant to BBM leading its acquisition program, added, "A creative approach to the clinical development of YMI's most promising chemotherapeutic agents can add great benefit to the treatment of particular neoplasms and enhance shareholder value. The science underlying YMI's products meshes very well with the technology recently acquired by BBM."

The full text of the offer letter was filed by BBM in a Form 8-K today.

About BBM Holdings:

BBM Holdings (OTC Bulletin Board: BBMO ) has been exploring acquisition possibilities. It was formerly a telecommunications engineering and service company.‹

[DewDiligence]

Recent Biotech Buyouts

[Added Archemix-NTMD deal at the bottom of
table; the premium is subjective according to
what one thinks Archemix (a private co.) is worth.]

 
 Acquired         Premium    Deal         iHub  
 Company  Buyer   to Market  Value  Date  Reference  
 GNLB     GSK       465%     $57M  10/08  #msg-33209281 
 KOSN     BMY       233%     $190M  5/08  #msg-29647147 
 COLY     PFE       167%     $165M 11/07  #msg-24600805 
 IOMI     Intercell 147%     $190M  5/08  #msg-29232165  
 BTRX     Stiefel   136%     $150M  6/08  #msg-30201906 
 SGXP     LLY       119%     $64M   7/08  #msg-30547648 
 ENCY     PFE       118%     $350M  2/08  #msg-26978155 
 TRCA     Ipsen     104%     $660M  6/08  #msg-29795183  
 CRY.to   MDT        97%     $380M  9/08  #msg-32421462 
 Speedel  NVS        94%     $880M  7/08  #msg-30588524 
 SIRT     GSK        85%     $620M  4/08  #msg-28705020  
 Ventana  Roche      72%     $3.4B  1/08  #msg-30912677 
 Jerini   Shire     *71%     $520M  7/08  #msg-30452872 
 Acambis  SNY        64%     $550M  7/08  #msg-30990498 
 SCRX     Shionogi   61%     $1.4B  9/08  #msg-31859174 
 MEDI     AZN      ‡‡53%     $15.2B 4/07  #msg-19020387 
 MLNM     Takeda     53%     $8.8B  4/08  #msg-28365383 
 PCOP     LGND    ***52%     $75M   9/08  #msg-32404474 
 IMCL     LLY     †††51%     $6.5B 10/08  #msg-32662830 
 LEVP     VPHM     ††49%     $440M  7/08  #msg-30704409 
 PHRM     CELG       46%     $2.9B 11/07  #msg-24645394      
 BRL      TEVA     **42%     $9.0B  7/08  #msg-30792830 
 MOGN     Eisai      39%     $3.9B 12/07  #msg-25163775  
 CGPI     Galderma   30%     $420M  2/08  #msg-28286522 
 APPX     Fresenius †29%     $940M  7/08  #msg-30498388 
 Zentiva  SNY      ‡‡26%     $2.6B  9/08  #msg-32327005 
 ARI.to   Roche     ‡15%     $190M  7/08  #msg-30904056 
 NTMD     Archemix *‡n/a     *‡n/a 11/08  #msg-33656969 
  
 *‡Premium is subjective according to what 
 one thinks Archemix (a private co.) is worth. 
   
 *199% premium to volume-weighted 
 price during preceding 3 months. 
  
 **Premium based on 7/16/08 close;  
 $9B price includes assumption of debt. 
  
 ***Premium excludes 0.50/sh contingency. 
  
 †Premium reaches 63% if earn-out met. 
  
 ††Premium reaches 103% if earn-out met; 
 base price subject to collar. 
  
 †††Premium relative to 7/30/08 close, the 
 day before BMY announced first buyout offer. 
  
 ‡Number is misleading inasmuch as Arius announced in 
 May 2008 that it was pursued by an unnamed suitor. 
  
 ‡‡Premium relative to commencement of bidding.