Biogen Idec has made a $14.50 per share unsolicited cash offer to acquire partner Facet Biotech Corp, having had a previous $15 bid rejected.

The companies have been working together since 2005 on developing daclizumab for relapsing multiple sclerosis and M200 (volociximab) for the treatment of solid tumours. On August 21, Biogen sent out a letter offering to buy Facet for $15 per share, saying “it is very important” to the firm that Facet “does not undertake any material commercial or strategic transactions between now” and the consummation of the deal.

Facet rejected that proposal on August 25, and Biogen chief executive James Mullen claims that his counterpart at the Redwood City, California-based company, Faheem Hasnain, had suggested that they speak again on August 28. However that day, Facet announced a collaboration with Trubion Pharmaceuticals to develop the latter’s TRU-016, which is in Phase I for chronic lymphocytic leukaemia.

Under the terms of that deal, Trubion will receive an upfront payment of $20 million and up to $176.5 million if the compound succeeds and Facet, which was formed in December 2008 as a spin-off from PDL BioPharma, has also paid an additional $10 million to take a stake in the company.

Given all this, Biogen has come back with a lower hostile bid of $14.50 per share, which still represents a premium of 64% over the closing price of Facet’s common stock on September 3. It is clearly miffed by the Trubion deal which it believes lowers Facet's value, “as apparently do Facet’s investors, as evidenced by the 22% reduction in Facet’s stock price since announcing the Trubion collaboration”, hence the lower bid.

Nevertheless, Biogen is still keen on a purchase and Mr Mullen said that it makes “compelling business sense for both companies and is in the best interests of their respective shareholders”. He added that the offer “represents an extremely attractive opportunity for Facet’s shareholders to realise today the future value of their company”.

In a letter to Mr Hasnain, Mr Mullen said he is prepared to set up a meeting “to answer any questions you may have about our offer”. He went on say that “We would like to complete a transaction expeditiously and we are prepared to commit all necessary resources to achieve this goal”, adding that “if you are interested in negotiating…please call me as soon as possible”.

It is unlikely that the call will be a particularly positive one. Facet said it will respond promptly to the Biogen offer but it rejected the higher bid saying that it “places negligible value on” daclizumab,“which we recently decided jointly with you to advance into Phase III”. It also undervalued “our pipeline, which includes multiple products in clinical trials, our protein engineering technologies and our scientific capabilities”.

Analysts believe that an offer in the region of $18 per share would be needed to tempt Facet. News of the approach certainly excited investors as Facet’s stock leapt 74.4%
to close at $15.38, well above Biogen’s offer.