London: GlaxoSmithKline Plc held talks over the weekend with Human Genome Sciences Inc. to agree to a deal to acquire it for some $2.6 billion, after pursuing the US biotech firm for three months, sources familiar with the situation said on Sunday.
Human Genome, which rejected a $13-a-share offer in April from GlaxoSmithKline, its long-time partner, has come under pressure from investors to try and strike a deal with the British drugmaker in the absence of any alternative bids.
The US company—an early pioneer of gene-based drug discovery—has set itself a 16 July deadline for finding higher bids, but interest has been limited because GSK already has marketing rights to its drugs. US biotech company Celgene was at one stage considering whether to bid, according to a source, but negative analyst and investor reaction when news of those discussions broke deterred the US group.
Without alternative bids, Human Genome shareholders have been pressing the company’s management to engage with GSK before 16 July to avoid a share price collapse—and that argument has been a trigger for the weekend discussions. A spokesman for GSK declined to comment, while officials at Human Genome were not immediately available.
Last year Human Genome and GSK won approval for Benlysta, the first new treatment for lupus in 50 years. But the drug’s launch disappointed investors and Human Genome’s shares fell from a high above $25 to a low of $6.51 in December. Glaxo made its offer a few months later, prompting Human Genome to launch an auction with the help of Credit Suisse and Goldman Sachs.
Human Genome and GSK share rights to Benlysta. They are also collaborating on two other experimental drugs in late-stage trials for heart disease and diabetes, where GSK owns a large majority of the economic interest. Buying Human Genome would give GSK full rights to these partnered drugs, underscoring the appetite among big drugmakers for biotech products to drive future sales.
GSK would be also be able to strip out costs and the company’s chief executive, Andrew Witty, told investors in May he expected to deliver “an extraordinary return” through the acquisition.
Human Genome investors have been hoping that GSK will sweeten its offer and the shares closed on Friday at $13.58—above GSK’s offer but well down on the level of more than $15 hit in April, soon after the unsolicited offer was made public.
Recently, Bristol-Myers Squibb agreed to buy Amylin Pharmaceuticals by sharing the $7 billion cost of the deal with AstraZeneca.
Soyoung Kim contributed to this story.