Replies to post #72545 on Biotech Values

[corpstrat]

<<DNA counter-offer> I'll bet many a DNA-er has fantasized similarly. If there were any justice or economic logic, in terms of who runs the more value-creating organization, a reverse takeover would be the solution. But the Swiss bankers seem to have all the cards.

If DNA stock falls on a walk away, then so will Roche's tend to fall, since ROC's chunk of DNA accounts for a big chunk of their own value. (Countervailing, if 'the market' feared ROC over-paying for DNA and rallied in relief at ROC walking away.)

As you imply, Novartis should be asking whether a Roche-run Genentech is likely to be as successful as an independent Genentech. But even if they could exit the Swiss mindset and get the right answer, not clear they could do much about it, since the Roche family retains control. If Novartis dumped their 30% it would hurt them more than the Roche family, presumably, who would have only a paper reduction in wealth. Interesting that we usually think of long-term shareholders as a good thing, but here they do not lead to what appears to be the value-maximizing outcome.

[DewDiligence]

LOL re this statement from Roche’s CFO on yesterday’s CC:

http://blogs.wsj.com/health/2009/02/04/roche-talks-up-genentech-deal-again/

…on the Genentech transaction, it’s not only our impression which is confident, it’s actually the management team which is confident that we will achieve what we want with this transaction. And sorry for answering with a counter-question: Over the last seven, eight years did you ever see that this management team did not achieve a major task which we have announced to you? So maybe with this we’ll go to the next question.