|AstraZeneca CEO Pascal Soriot|
With rampant speculation that Pfizer ($PFE) might renew its effort to buy AstraZeneca ($AZN), one might assume the takeover target's CEO, Pascal Soriot, would be locked up in meetings, devising a strategy for fending off the latest offer.
Not so. Instead Soriot has been hobnobbing at the European Society of Cardiology congress in Barcelona, doing his best to demonstrate that AstraZeneca can thrive as an independent company.
"We are making good progress with the pipeline and everything so far--touch wood--is going in the right direction," Soriot told Reuters during the meeting. "We're back to normal."
"Normal" might be a bit of an overstatement. The expectation that Pfizer will return with a buyout offer--after its roughly $117 billion offer was repeatedly spurned earlier this year--has driven AstraZeneca's shares up 10% in the last two weeks to $74.64 a share.
Now, traders are buying bullish options in the company, which is yet another sign of optimism that Pfizer will take another shot. Last week, the cost of bullish AstraZeneca options, or calls betting that the stock would rally 10%, reached an all-time high compared with its bearish options, according to Bloomberg.
So how much might Pfizer offer this time? John Boris of SunTrust Robinson Humphrey has a new report out predicting that the New York drug giant will bid $96.28 a share, or $127 million, according to Benzinga. British rules say Pfizer can now make a "knock-out" bid that's likely to be accepted, or AstraZeneca can invite its suitor to resume merger talks. Or, starting in November, Pfizer can start a traditional bidding process yet again.
There's little doubt that Pfizer is weighing a major deal of some sort. With revenues falling and pipeline in a stall, the company has been looking for opportunities to bolster its balance sheet. In July, it picked up Baxter's ($BAX) vaccines portfolio for $635 million, gaining products to prevent meningitis and encephalitis. And it's rumored to be eyeing a possible takeover of generics maker Actavis ($ACT).
As for AstraZeneca, management continues to insist the company will do just fine on its own. Soriot took the opportunity of the cardiology meeting in Spain to talk up AstraZeneca's pipeline, focusing largely on its new blood thinner Brilinta. AstraZeneca had predicted the drug could ultimately bring in $3.5 million a year, but its pickup has been slow: Sales totaled just $216 million in the first half of 2014.
The U.S. Department of Justice cast a shadow over Brilinta's launch when it launched an investigation late last year into allegations of data tampering during a pivotal trial of the drug. In August, the DOJ closed out its investigation, delivering the good news that AstraZeneca can continue marketing Brilinta without the risk of additional label warnings. Now analysts are hoping for a quick turnaround in the product's sales.
Soriot told Reuters he believes the key to improving Big Pharma's prospects is not consolidation but rather the continued invention of game-changing medicines. "Turning to a model of slash-and-burn I don't think is the way forward for the industry," Soriot said. "I think there is enough innovation."
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