LONDON, March 26 (Reuters) - Oxford GlycoSciences Plc (London:OGS.L - News) said on Wednesday it was in talks with a further three potential bidders, throwing open the fight for control of the biotechnology business.
OGS has already received rival bids from Cambridge Antibody Technology Plc (London:CAT.L - News) and Celltech Group Plc (London:CCH.L - News) in the first bid battle in the 20-year history of the British biotech sector.
Now an international pharmaceutical company, a U.S.-based biotechnology company and a European private equity house have also entered the frame.
As a result, OGS told shareholders to take no action in relation to Celltech's 101.4 million pound ($160 million) cash offer, which has a first closing date for acceptance of March 31.
Chief Executive David Ebsworth said he hoped to secure a better offer for the Oxford-based company, which specialises in teasing out relations between proteins and disease.
"I'm not asking for a vast amount of time but I hope the shareholders will bear with me as I try to get one or several of these other players to make an offer," he told Reuters.
All three parties have signed non-disclosure agreements in preparation for carrying out due diligence on OGS.
Ebsworth, who plans to step down whoever wins control, declined to identify the new potential bidders.
But industry sources said they did not include French privately owned biotech group Immuno-Designed Molecules, which indicated its interest earlier, or U.S. group Medarex Inc (NasdaqNM:MEDX - News), which has a partnership deal with OGS.
DEAD CAT?
Shares in OGS rose 3.7 percent to 194-1/2 pence by 0940 GMT as investors bet a new bid would emerge to top Celltech's 182p per share cash offer.
CAT's chances of success, however, receded as it revealed that U.S. partner Abbott Laboratories Inc (NYSE:ABT - News) wanted to use some royalties due to CAT in order to pay third parties. CAT shares tumbled 12.3 percent to a new three-year low of 376p.
CAT is contesting the issue but Chief Executive Peter Chambre told Reuters that, if Abbott prevailed, royalty income from arthritis drug Humira could fall from mid single digits to low single digits. CAT is due to receive first payments from Abbott in October.
"It's going to make life difficult for them," said Sam Fazeli, a biotech analyst at Nomura.
"First of all, the share price has fallen and therefore the value of the deal will be lower. And secondly, who would want to take their paper not knowing what the outcome of this is going to be?"
Chambre said he would evaluate his options following the Humira problem and the emergence of other potential bidders.
"It is disappointing... There is an offer out there for OGS and we will now have to consider that offer in the light of the news we have had to make public today," he said.
CAT launched an agreed all-share offer for OGS in January but a decline in its stock to its lowest level in more than three years has seen the value of its offer erode from 110 million pounds to around 75 million.
OGS finally withdrew its backing for the CAT offer earlier this month and urged CAT to improve its bid. Ebsworth said CAT would now have to take decisive action if it was to stand a chance of winning.
"If CAT want to win this, the ball is absolutely in their court. They will not win it by sitting there doing nothing," he said.
CASH IS KING
Industry sources said CAT needed to offer cash in addition to shares if it wanted to stay in the race.
Both CAT and Celltech's bids are still pitched below OGS's cash reserves, which stood at 136 million pounds at December 31. However, this sum is dwindling every month and prospective buyers will also need to make provisions for restructuring.
Europe's biotech industry is currently struggling with a deep downturn in investor confidence and limited success in the clinic, increasing the pressure for consolidation and placing cash resources at a premium in the sector.
Celltech shares were one percent firmer at 293-3/4p. |
