Biotech Notebook: Xoma, Medivation, Delcath
By Adam Feuerstein
Senior Writer
11/27/2007 2:50 PM EST
URL: thestreet.com
Xoma (XOMA) CEO Steven Engle gave me a "no comment" when I asked him on Monday if the company had received any recent takeout offers.
That leaves plenty of room for interpretation, so I asked him again if he wanted to flat-out deny a tip I received earlier this fall that Xoma had, in fact, received a $5-a-share offer from a pharmaceutical company.
Xoma, I was told, rejected that offer because the company felt it wasn't high enough.
Engle's response: "No comment."
I didn't write anything about this alleged offer after I heard about it because the information didn't seem solid enough. I bring it up now, however, because Xoma's revamped business strategy, announced Monday night in what seemed like a hastily arranged conference call, suggests that Xoma is going it alone.
Whether that's by choice or because the suitor that allegedly came a-knockin' is no longer interested isn't known.
Xoma shares closed Monday at $3. The stock is up 40% for the year, but has fallen from a high of $4.18 set on Oct. 15. The last time the stock had seen the $4 range was the summer of 2004.
There is a case to be made for a Xoma takeout. Like PDL BioPharma (PDLI) , which has publicly announced that it is seeking a buyer, Xoma has a technology platform to discover and make humanized monoclonal antibodies.
And Xoma receives royalties from Genentech (DNA) on sales of two drugs -- Raptiva and Lucentis.
This antibody technology, coupled with in-house biologics manufacturing capacity, is supposed to be the sweet nectar that has buyout-frenzied Big Pharma buzzing.
And Xoma, with an enterprise value of just under $400 million, is less expensive than PDL.
Yet the corporate strategy laid out by Engle on Monday didn't leave the impression that an acquisition was in the company's plans. That's unfortunate. Xoma's decision to accelerate development of a couple of pipeline drugs, while putting some others on the backburner, seems rational enough. The problem is that there doesn't seem to be a near-term payoff for investors. Xoma, like PDL, hasn't been very successful in developing proprietary drugs.
Full disclosure: My tipster about the supposed Xoma acquisition bid was an institutional investor who was long Xoma at the time. He clearly wants Xoma sold (or bid up on speculation of a buyout) so he can exit his position with a profit. If the company refuses to seek a buyer and the stock remains weak, I asked him if he had plans to pressure Xoma management publicly in the same way that an activist hedge fund did to PDL BioPharma.
He was hesitant to do so, he said, but that was before Monday's conference call. It will be interesting to see if he, or anyone else, pressures Xoma to sell itself now that the company seems to be signaling a go-it-alone strategy...." |
