Human Genome Sciences (NYSE: HGS) is embracing a “poison pill” defense in its fight to avoid being taken over by GlaxoSmithKline (NYSE: GSK).
The Maryland-based company also said Thursday that it is in talks with “major” pharmaceutical and biotechnology companies about a potential transaction.
Human Genome entered into confidentiality agreements with certain parties and is providing those parties an opportunity to engage in due diligence reviews, the company said today in a statement. Its board of directors unanimously said shareholders should reject Glaxo’s “inadequate” $2.6 billion offer.
“The board believes that GSK acted to take advantage of the company’s depressed stock price levels,” the statement reads.
GSK began a hostile bid on May 9 for Human Genome, its partner on the Benlysta drug for lupus. Glaxo offered $13 a share in cash, or 81 percent more than Human Genome’s closing share price on April 18.
“Our Board of Directors has concluded unanimously that the GSK offer is inadequate and does not reflect the value inherent in Human Genome Sciences,” said H. Thomas Watkins, the chief executive officer. “We remain very confident in the commercial and therapeutic potential of BENLYSTA. We believe it will ultimately transform the standard of care for SLE as the first drug designed to treat the underlying disease of SLE rather than individual symptoms. We also believe HGS holds great potential beyond BENLYSTA for SLE, including potential new indications for BENLYSTA and a number of emerging mid- and early-stage products in our internal pipeline. In the GSK clinical pipeline, we have substantial financial rights to darapladib, which if successful could address a potential population of more than 40 million patients in the U.S., and to albiglutide, a potential treatment for Type II diabetes, which affects 25 million patients in the U.S.
“We announced on April 19 that our Board has authorized the exploration of strategic alternatives in the best interests of stockholders, including a potential sale of the Company,” he added. “We invited GSK to participate in this process, which is well underway. Instead, GSK chose to commence an unsolicited tender offer at a price that undervalues our Company. The HGS Board of Directors has determined that the GSK offer is not in the best interests of our stockholders and recommends that they not tender shares to GSK.”
Human Genome also adopted a so-called “poison pill” shareholder rights plan that permits Human Genome stockholders, except an acquirer, to purchase common stock having a market value of twice the exercise price of the rights.
The plan will dilute holdings if anyone attempts to acquire 15 percent or more of Human Genome’s stock without board approval.
“The rights plan will not prevent any offers or transactions that the Board determines to be in the best interest of HGS and its stockholders,” the company said today in a separate statement.
GSK operates its U.S. headquarters in RTP.
(Bloomberg and The Associated Press contributed to this report.)