HGS snubs $2.6B buyout offer from Benlysta partner GSK

Human Genome Sciences ($HGSI) is entertaining bids after rebuffing partner GlaxoSmithKline's ($GSK) $2.59 billion buyout overture, thinking that its pipeline of antibody drugs and its Benlysta business are worth a higher premium than GSK offered.

This is one the industry has been expecting for years, given the strategic ties between the London-based drug giant and HGS.

The U.S. biotech company has hired Wall Street advisers to steer the process of finding other bidders, but analysts questioned whether another pharma would be willing to enter the fray. GSK and HGS have deep ties already, with the 50-50 split on the Benlysta business and several promising product candidates in development.

GSK's bid of $13 per share was an 81% premium on the closing price of HGS' stock on April 18, the Financial Times reported. HGS' stock was as high as $30 roughly a year ago, but the price has fallen amid a disappointing launch of the company and GSK's lupus drug Benlysta, and HGS management has been lowering expectation for the product.

GSK boss Andrew Witty sounds like he's taking a gentle approach with his longtime collaborators at HGS, penning a note to his HGS counterpart seeking a friendly transaction, the Times reported. But in these types of transactions, money talks and friendships only get you so far.

- read the Financial Times report (reg. req.)
- and Reuters' coverage