Biogen up on talk of takeover, competitive edge
By Stephanie O'Brien, CBS MarketWatch
Last Update: 6:48 PM ET May 13, 1999 Also: NewsWatch
CAMBRIDGE, Mass. (CBS.MW) -- Shares of Biogen rose Thursday amid speculation that the company may now have an edge in developing a lupus drug and that it could be a takeover target, analysts said.
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Speculation that Biogen may become a target stems from the apparent dissolution of merger talks between Johnson & Johnson (JNJ: news, msgs) and Centocor (CNTO: news, msgs), analysts said. Johnson & Johnson, based in New Brunswick, N.J., reportedly was considering buying the company for more than $3 billion in stock. See related story.
Talk about Biogen's potential acqusition was discounted by analysts.
La Jolla shares halved
Meanwhile, shares of La Jolla Pharmaceutical Co. (LJPC: news, msgs) were cut in half after the company said it had decided with partner Abbott Laboratories (ABY: news, msgs) to end enrollment in a phase II/III trial of a drug to treat lupus, following a discussion with the U.S. Food and Drug Administration.
The companies decided to abandon the trial after they didn't see the clinical benefit they expected, said Richard Krawiec, a spokesman for La Jolla Pharmaceutical.
La Jolla shares fell 1 23/32, or 52 percent, to 1 19/32 Thursday.
The companies said they plan to analyze data from the trial, which involved more than 200 patients.
Lupus, a chronic, potentially fatal disease that causes the body to attack itself, can affect the joints, skin, kidney, brain, heart and gastrointestinal tract.
Cambridge, Mass.-based Biogen develops and markets drugs including Avonex, which is used to treat multiple sclerosis. The company is also developing drugs to treat inflammation, pulmonary diseases, kidney diseases and disorders, and central-nervous-system disorders.
"There was speculation that Biogen would emerge as the winner in this market," said Jay Silverman, an analyst at BancBoston Robertson Stephens.
Biogen is conducting phase II trials of a lupus drug, but it is still uncertain whether the drug will eventually get FDA approval for sale, Silverman said.
Genesis of Biogen buyout talk
The talk that Biogen might be acquired was disseminated on Internet message boards, among other places. Silverman described the speculation as "ridiculous."
Lehman Bros. analyst C. Anthony Butler said he'd also heard the talk. He dismissed it as "garbage."
Butler said, however, that talks between Johnson & Johnson and Centocor may not be over but simply stalled, perhaps having hit an impasse on the price of the deal.
Butker said he wouldn't be surprised if the two companies were to "dust their pants off and come back to the table."
Stephanie O'Brien is a reporter for CBS MarketWatch.
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