Glaxo goes hostile on HGS with $2.6B bid

Prepare yourself for a drawn-out buyout battle--and lots of debate about the lupus treatment Benlysta. GlaxoSmithKline ($GSK) plans to launch a hostile bid for Benlysta partner Human Genome Sciences ($HGSI), without hiking its $2.6 billion offering price.

HGS stiff-armed Glaxo's friendly offer of $13 per share last month. The U.S.-based company said the price undervalued a., Benlysta's sales potential, and b., the promise of two in-development drugs it's working on with Glaxo. HGS then brought in the investment bankers for advice on its quote-unquote strategic alternatives.

Glaxo's answer to that strategic review? Count us out. "There is clear strategic and financial logic to this combination and HGS shareholders should have the opportunity to decide for themselves," Glaxo said in a statement. But it's willing to sit down and talk, if HGS wants to: It "values the long relationship it has with HGS" and woud prefer to make a deal "on a friendly basis."

The bid comes at a time when Benlysta's vaunted prospects have not materialized. Early sales have been slow, as some doctors take a wait-and-see approach and some payers refuse to cover it. Last week, cost-effectiveness gatekeepers in the U.K. and Germany both voted down Benlysta reimbursement. The drug's sticker price is $35,000 annually.

Glaxo CEO Andrew Witty (photo) said last month that his primary goal in chasing HGS is simplifying the Benlysta relationship, Bloomberg reports. But the two experimental drugs involved--one for hardening of the arteries, the other for diabetes--are also key; analysts figure the heart drug, darapladib, could be a home run, but only if it proves out, of course.

- see the GSK release
- get more from The Wall Street Journal
- read the Bloomberg article