US gene specialist Illumina has rejected Roche's hostile $5.70 million takeover bid, with its board describing the offer as "grossly inadequate in multiple respects".
Roche launched an unsolicited offer of $44.50 per share for Illumina last month and has said it is unwilling to go higher. However, the latter's chief executive Jay Flatley has dismissed the bid, saying it "dramatically undervalues Illumina and fails to reflect the value of the company's unique leadership position and future growth prospects".
In a lengthy reposte, he goes on to say that Illumina has "established itself as the innovation and market leader in tools for genetic analysis, with a proven track record of profitability and outperformance, resulting in significant value creation". Mr Flatley adds that "our industry is nascent, with the promise and potential to experience extraordinary growth in the years ahead as genetic information becomes broadly applied beyond molecular biology research, and into medical diagnostics, reproductive health and cancer management".
He notes that "as the growth of this industry accelerates, Illumina is singularly positioned to expand its market leadership, and to deliver value to our stockholders that is far superior to Roche's offer".
The rejection comes after Roche nominated candidates to fill the seats of four directors whose terms expire at Illumina's annual meeting this year. The Basel-based giant also wants to expand Illumina's nine-member board to 11, filling the two additional seats with Roche candidates.
In a letter to Roche chairman Franz Humer, Mr Flatley and Ilumina chairman William Rastetter said that "furthermore, we continue to believe that our highly qualified, independent directors are better positioned to act in our stockholders' interests than directors selected and compensated by you to advance your own strategic objectives".
Last month, Illumina adopted a 'poison pill', namely a shareholder-rights plan with a 15% trigger in an attempt to ward off Roche's advances. At the time of going to press, Roche had yet to respond.
Illumina profits down
Meantime, Illumina has posted financials for the fourth quarter which show that revenues slipped 4% to $250 million, while net income came in at $11.7 million, down from $38.4 million a year earlier. The company ended the fourth quarter with $1.20 billion in cash and equivalents.
Pertuzumab gets priority review from FDA
On a brighter note for the Swiss major, Roche has been boosted by the news that regulators in the USA have granted a priority review for the firm's breast cancer drug pertuzumab .
Specifically, the US Food and Drug Administration has accepted Roche unit Genentech's Biologics License Application for pertuzumab in combination with the firms Herceptin (trastuzumab) and docetaxel chemotherapy for people with HER2-positive metastatic or locally recurrent, unresectable breast cancer. If approved, it would be used by patients who have not received previous treatment or whose disease has relapsed after adjuvant therapy.
The action date is June 8 and the application is based on results from the Phase III CLEOPATRA study which demonstrated a 6.1 month improvement in median progression-free survival for people who received the aforementioned pertuzumab-based regimen compared to those who received Herceptin and chemotherapy alone. People who received the combination also experienced a 38% reduction in the risk of their disease worsening or death.
Hal Barron, Roche's chief medical officer, said "we have been researching HER2-positive breast cancer for more than 30 years, and we hope an expedited review will help us quickly bring another personalised medicine to people battling this aggressive disease."