HGS rejects GSK takeover offer, eventual sale considered likely
GSK offered $13 per share for HGS, which is currently developing an anthrax treatment for the U.S. government. The offered price is 81 percent premium to the HGS closing price of $7.17 per share as of April 18, according to InwardInvestment.Pharmaceutical-Business-Review.com.
HGS, which once partnered with GSK in the development of a lupus treatment, said that it carefully reviewed the GSK offer, but determined it did not reflect the company's true value. HGS also said it is taking advice on prospects for selling the company and has invited GSK to take part in the process.
As investors began to predict that the sale would eventually take place, HGS's stock price rose nearly 100 percent to over $14 per share, according to the Washington Post.
"Symbolically, Human Genome Sciences was the little engine that could, and now it looks like it's going to get bought out," Stephen Fuller, the director of the Center for Regional Analysis at George Mason University, said, the Washington Post reports. "It's a pattern that's widespread here."
If the sale does go through, HGS will join a handful of biotech companies that have been bought out by larger pharmaceuticals in the Rockville, Maryland, region.
Investors initially had high hopes for HGS, but it fell short of expectations. The company went public shortly after raising $31 million. At one point, its stock topped $200 a share.
"The history, you can argue, has been one of disappointment," Christopher Raymond, a senior biotechnology analyst at Robert Baird, said, the Washington Post reports. "It didn't live up to expectations in terms of the number of drugs or the velocity of what was developed."