The FDA gave the go-ahead to broader use of OSI Pharmaceuticals' (NQ: OSIP) cancer drug Tarceva. But that alone isn't enough to inspire a higher buyout bid from suitor Astellas Pharma.
Astellas already factored the new Tarceva indication into its first hostile bid of $52 a share, or $3.5 billion, the company tells Bloomberg. If so, Astellas was one of the only observers that took the FDA decision for granted. After all, the agency's advisory panel voted 12-1 against the new indication as a maintenance treatment after chemotherapy. Although the FDA doesn't always take its expert advisers' advice, it usually does. And at least one investment firm--Morningstar--expects to boost its valuation of OSI as a result of the new approval.
But Astellas gave itself an out: If its limited peek into OSI's books supports a higher offer, then Astellas will act accordingly. "We will not raise our offer based on the approval, though we still may change the offer based on the outcome of our ongoing due diligence under our confidential agreement with OSI," Astellas spokesman Ryuji Samukawa tells Reuters.