Actually the stock is trading at a pretty skimpy discount from the $45 deal price. Guess the arbs have decided that this deal is just going to go ahead smoothly.
Turns out the JNJ has seen the results from the Fusion study:
Dow Jones Business News
J&J/Scios Call: J&J Has Seen Data From Natrecor Study
Monday February 10, 11:13 am ET
By Hollister H. Hovey, Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Johnson & Johnson and Scios Inc. (NasdaqNM:SCIO - News) - the small biotechnology company that the drug and consumer goods giant said on Monday it will buy - believe that sales of Scios' only branded drug, Natrecor, can rise above and beyond current expectations with J&J's marketing team pushing the treatment.
J&J, whose drug pipeline has recently been considered weak compared with its medical device segment, said Monday it signed a definitive contract to acquire the Sunnyvale, Calif., company for $2.4 billion in cash. Scios shareholders will receive $45 for each company share owned.
Speaking on a conference call with analysts, officials from both companies said Scios will retain its name, management and identity. J&J will add the marketing muscle of its Centocor and Ortho Biotech sales forces, which currently push J&J's heart drugs, to the 170 sales people Scios currently has promoting Natrecor, a congestive heart failure drug.
At the end of the third quarter, the company said it expected 2002 Natrecor sales of $92 million to $95 million, which would then grow to around $160 million or $170 million in 2003. Scios said it would offer further Natrecor guidance on its Feb. 13 fourth-quarter results conference call.
Both companies hope that results of a study called "FUSION", which are due sometime this quarter, will convince physicians to use Natrecor in the outpatient setting for patients with less severe heart failure, in an effort to keep them out of the hospital. J&J officials have seen the data from this study, they said on the call, though those results haven't been made public.
Scios was in fairly dire straits before it brought Natrecor to the market in 2001. But since, the stock has been on a tear. Scios' share price has more than doubled from a year ago.
The Wall Street Journal on Friday reported that the companies were in talks for the $45-a-share acquisition. Scios' shares on Friday shot up 21.6% to $ 42.20, and are ahead an additional $1.52, or 3.6% Monday to $43.72, which represents a 2.8% discount to the offer price.
J&J shares recently changed hands up 48 cents, or 0.8%, to $52.24.
An editorial in the Monday edition of the Wall Street Journal brought up concerns that investors have shorted Scios stock lately, citing lingering questions about Natrecor's growth prospects, cost effectiveness and safety.
Adding to comments Scios representatives made in the Journal piece, J&J officials stood by the safety and efficacy of the drug during the conference call, downplaying the contents of a small interpretative study, to be presented at the American College of Cardiology meeting next month, that raises a question about Natrecor's safety.
The study, which is the re-interpretation of data submitted to the Food and Drug Administration when the company was seeking approval of Natrecor, says it appears Natrecor-treated patients are at higher risk of death within 30 days of administration compared with patients given other treatments. The details aren't yet public.
"We have been aware of the data in an abstract publication and have studied this issue very carefully," Christine Poon, world-wide chairman of J&J's pharmaceuticals group, said on the call. "We concur with the FDA's findings...the FDA voted unanimously without any cautions for mortality."
Scios granted U.K. drug giant GlaxoSmithKline PLC the European rights to Natrecor, and this deal doesn't change the details of that agreement.
Richard Brewer, Scios' Chief Executive, said that Glaxo filed for European Union approval of the drug at the end of the third quarter last year, but doesn't expect to receive approval until the second quarter of 2004. "As far as we know they're on track," he said.
Scios and J&J will hold the rights everywhere else in the world, officials from both concerns said.
It isn't only Natrecor that drew J&J to the biotech company.
Scios is now testing a rheumatoid-arthritis drug called SCIO-469 in the same class as Amgen Inc.'s (AMGN) and Wyeth's (WYE) Enbrel and J&J's Remicade. Scios' version would be taken as a pill while the others have to be taken as a shot or an infusion.
Brewer said the company plans to release the results of its phase IIa study of the drug during a conference call in April.
In a press release Monday, Johnson & Johnson said the transaction will have a dilutive effect of 5 cents a share in 2003 and 2004. In addition, the company will incur a one-time charge of about $700 million, or 23 cents a share, for in- process research and development.
J&J officials declined to offer 2004 guidance, but did say that 2003 full-year earnings-per-share estimates excluding charges remain the same despite the dilutive impact of the Scios acquisition.
The full-year 2003 Thomson First Call mean estimate for operating income is $ 2.62 a share, which the company endorsed in January. Estimates among 19 analysts range between $2.55 and $2.69 a share.
-Hollister H. Hovey, Dow Jones Newswires, 201-938-5287; hollister.hovey@dowjones.com
Peter |
