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Biotech / Medical : Ligand (LGND) Breakout! -- Ignore unavailable to you. Want to Upgrade?

To: CYBERKEN who wrote (14023)	2/1/1998 6:23:00 AM
From: Henry Niman	Read Replies (3) \| Respond to of 32384

CYBERKEN, The interest in the mergers of the big boys is unreal. The website has had well over 10,000 hits ia a week, and a very healthy percent are from big boys. In fact most have already bookmarked the site. The number of lurkers on this thread is several hundred times higher than then number of posters, and they have used their mouse to place their votes on what they would like to read about. Of course the mergers will have a big impact on LGND and virtually all other biotechs, either through alliance partnerships or a shifting of the competitive environment. The merger mania right now is red hot, and most of the action involves LGND's partners. AHP may now be shifting to PNU (as reported in two articles in tomorrow's Barron's) and PNU has a strong interest in cosmeceuticals (Rogaine). AHP of course has a huge alliance with LGND and other merger talkers (SBH and GLX) also have programs with LGND. The principle drivers of most of the talks are R&D budgets and pipelines in search of the next blockbuster drug, and LGND has done well to get in on the action (for SERMs they have programs with PFE, AHP, and LLY) and of course more an more interest in combinations will emerge (Rexinoids combined with SERMs for cancer and osteoporosis or with TZDs for diabetes, cardiovascular disease, and obesity are a few examples). Obviously, some posters on this thread take an extremely narrow and short term view, but far more readers are interested in the long term, which will clearly be impacted by the unprecedented wave of mergers that should happen very soon. Of course I think that the emphasis on R&D and pipelines will benefit LGND, because they have one of the best, if not the best, pipelines in the industry.

To: CYBERKEN who wrote (14023)	2/1/1998 9:01:00 PM
From: Henry Niman	Respond to of 32384

Here's another from FT: SmithKline/Glaxo: Managers plan details MONDAY FEBRUARY 2 1998 By Daniel Green in London Teams of senior managers from Glaxo Wellcome and SmithKline Beecham plan to meet tomorrow in London to finalise the details of their œ100bn ($165bn) merger to create the world's biggest drugs company. The talks on the structure of the new company - likely to be called Glaxo SmithKline - are likely to take about two weeks. The proposed executive ap-pointments reflect the 59.5 per cent stake Glaxo's shareholders will have in the new company. Of the five board members an-nounced so far, three come from Glaxo. Sir Richard Sykes, Glaxo's chairman, is set to be Glaxo SmithKline's executive chairman, while Jan Leschly, the Danish chief executive of SmithKline would keep the same title in the new company. The talks will take place against a likely background of sharp rises in the companies' share prices today and concern among staff and trade unions over job losses. However, shares in US company American Home Products are likely to fall sharply. On January 20, when merger talks between AHP and SmithKline were confirmed, they rose 16 per cent. The announcement that those talks had been abandoned came after the New York Stock Exchange closed on Friday. Union officials have called for urgent talks with the companies this week and are especially concerned at the prospect of job losses among skilled scientists. Jobs at the companies' sites in the US and France could also be lost as both companies have extensive operations there. If the deal goes ahead, it will be only the latest in a series of big mergers and takeovers in the drugs industry since 1993, when many governments drew up plans to control the rising cost of healthcare. Previous mergers suggest that job losses at SmithKline and Glaxo of about 10 per cent are likely. The companies employ a total of 110,000. The level of cuts in the UK is likely to be higher because both companies have research and development, marketing and sales offices near London. Cuts of up to 20 per cent in the UK's 21,000 workforce are possible. It seems certain that not all the Glaxo and SmithKline sites in the north and west of London will survive. SmithKline's headquarters at Brentford looks especially vulnerable. Last year, SmithKline won permission to build large offices at nearby Stockley Park, close to Glaxo's UK marketing headquarters. Some of the two companies' manufacturing sites in the north of England and Scotland are also vulnerable. The companies hope to make the detailed merger announcement by February 17 when SmithKline Beecham is scheduled to publish its 1997 annual results, or by February 19, Glaxo's results day. It would be the largest corporate deal ever, creating the world's third-biggest company by market valuation. SmithKline is advised by Morgan Stanley and Glaxo's advisers are Lazard Brothers.SmithKline/Glaxo: Managers plan details MONDAY FEBRUARY 2 1998 By Daniel Green in London Teams of senior managers from Glaxo Wellcome and SmithKline Beecham plan to meet tomorrow in London to finalise the details of their œ100bn ($165bn) merger to create the world's biggest drugs company. The talks on the structure of the new company - likely to be called Glaxo SmithKline - are likely to take about two weeks. The proposed executive ap-pointments reflect the 59.5 per cent stake Glaxo's shareholders will have in the new company. Of the five board members an-nounced so far, three come from Glaxo. Sir Richard Sykes, Glaxo's chairman, is set to be Glaxo SmithKline's executive chairman, while Jan Leschly, the Danish chief executive of SmithKline would keep the same title in the new company. The talks will take place against a likely background of sharp rises in the companies' share prices today and concern among staff and trade unions over job losses. However, shares in US company American Home Products are likely to fall sharply. On January 20, when merger talks between AHP and SmithKline were confirmed, they rose 16 per cent. The announcement that those talks had been abandoned came after the New York Stock Exchange closed on Friday. Union officials have called for urgent talks with the companies this week and are especially concerned at the prospect of job losses among skilled scientists. Jobs at the companies' sites in the US and France could also be lost as both companies have extensive operations there. If the deal goes ahead, it will be only the latest in a series of big mergers and takeovers in the drugs industry since 1993, when many governments drew up plans to control the rising cost of healthcare. Previous mergers suggest that job losses at SmithKline and Glaxo of about 10 per cent are likely. The companies employ a total of 110,000. The level of cuts in the UK is likely to be higher because both companies have research and development, marketing and sales offices near London. Cuts of up to 20 per cent in the UK's 21,000 workforce are possible. It seems certain that not all the Glaxo and SmithKline sites in the north and west of London will survive. SmithKline's headquarters at Brentford looks especially vulnerable. Last year, SmithKline won permission to build large offices at nearby Stockley Park, close to Glaxo's UK marketing headquarters. Some of the two companies' manufacturing sites in the north of England and Scotland are also vulnerable. The companies hope to make the detailed merger announcement by February 17 when SmithKline Beecham is scheduled to publish its 1997 annual results, or by February 19, Glaxo's results day. It would be the largest corporate deal ever, creating the world's third-biggest company by market valuation. SmithKline is advised by Morgan Stanley and Glaxo's advisers are Lazard Brothers.

To: CYBERKEN who wrote (14023)	2/1/1998 9:05:00 PM
From: Henry Niman	Respond to of 32384

FT is already talking about the NEXT biggest merger (after Glaxo SmithKline): The UK drugs champion MONDAY FEBRUARY 2 1998 There is no shortage of superlatives to apply to the proposed merger between Glaxo Wellcome and SmithKline Beecham. For a start it is by far the biggest deal in corporate history and would create a pharmaceuticals giant more than 50 per cent larger than its nearest competitors, Merck and Novartis. So, in global terms, regulators will have plenty to think about if, as all observers expect, the two sides conclude their negotiations successfully. For British industrial and science policy, the merger's implications are enormous. Those promoting the deal in the UK are already playing the nationalist card, pointing out that it would create a British champion in a fast-growing research-based industry, with a formidable lead over international competitors. In contrast, SmithKline's aborted merger talks with American Home Products would probably have led to a US-based company. However, there may be a price to pay in terms of job losses. By merging with Glaxo rather than AHP, SmithKline has somewhat tilted the balance of likely losses away from the US toward the UK. Although the unions were exaggerating their scale yesterday, it does seem possible that 2,000 to 3,000 jobs could go, including those of scientists at the research centres in Stevenage and Harlow. The combined research and development budget of Glaxo and SmithKline is almost œ2bn a year - three times more than the next largest UK spenders on R&D, Zeneca and Unilever. No other industrialised country will be so dependant on a single company for the health of its research base. Another domestic concern is that the "cluster effect", which has spurred fruitful competition between a handful of international drugs companies based in England, disappears if the UK industry is reduced to Glaxo SmithKline and Zeneca (which is about one-fifth its size). This does not matter as much as it would have in 1971 when Beecham bid unsuccessfully for Glaxo, because the industry is so much more global today, but the government may still be worried about the loss of competitive pressure. None of these issues is sufficiently serious to block the merger on anti-trust grounds. Glaxo SmithKline would have less than a 9 per cent share of the world pharmaceutical market, and the competition authorities should be satisfied if the combined company agrees to sell off products in the few areas where both Glaxo and SmithKline are strong, such as herpes medicines and anti-emetics. But they will have to be vigilant if the UK merger triggers another wave of consolidation in the industry. Glaxo SmithKline may not be the world's biggest drug company for long.

To: CYBERKEN who wrote (14023)	2/1/1998 9:08:00 PM
From: Henry Niman	Respond to of 32384

This one sizes things up: Drug highs: Glaxo Wellcome/ SmithKline Beecham MONDAY FEBRUARY 2 1998 Splicing together Glaxo Wellcome and SmithKline Beecham will create a powerhouse, the likes of which the pharmaceutical industry has not seen before. The combined company will have a market capitalisation of more than œ100bn ($165bn), combined sales approaching œ20bn and an annual research budget of around œ2bn. At first glance, the division of spoils looks fair. The 59« per cent of the enlarged cake going to Glaxo shareholders is almost exactly in line with current market values. In the boardroom, Glaxo is getting three of five executive directors, with its Sir Richard Sykes as chairman and SmithKline's Jan Leschly becoming chief executive. That the two know each other well is a good sign. And while this is not a cost-cutting deal on the lines of Glaxo and Wellcome in 1995, annual savings should still comfortably reach œ1bn. This really is a merger of the strong with the strong. Both companies are growing at an underlying rate of 14 to 15 per cent a year - excluding the patent expiry of Glaxo's Zantac anti-ulcer drug; both have full research pipelines; and well-regarded management. That they have decided to get together nonetheless, underscores the industry's rapid change - with huge improvements in R&D productivity in prospect for those with the financial muscle to invest in new technologies. As far as the rest of the industry is concerned, all bets are off. If two companies of this size are merging, even the largest of their rivals will have to reassess their independence.

To: CYBERKEN who wrote (14023)	2/1/1998 9:11:00 PM
From: Henry Niman	Respond to of 32384

Here's more on AHP's future: American Home Products: Jilted bride may attract other partners MONDAY FEBRUARY 2 1998 By Tracy Corrigan in New York American Home Products' share price is expected to open lower in New York today amid disappointment that its talks with SmithKline Beecham have been called off, analysts said yesterday. AHP's shares had rallied nearly 15 per cent last week to close on Friday at $95 7/16, after it emerged that the company was in talks with SmithKline. However, analysts said that after an initial correction, the share price should be well supported. "Now that we know the company wants to merge or do something sooner rather than later, I think a lot of people will take this opportunity to get into the stock," said Mariola Haggar, pharmaceuticals analyst at Deutsche Morgan Grenfell. The stock fell sharply late last year, after the company withdrew its anti-obesity drugs Redux and Pondimin following evidence that they cause heart valve defects. The company now faces litigation and, potentially, legal liabilities totalling as much as $4bn, according to estimates. Fears that these potential liabilities blocked the progress of the SmithKline talks - and may jeopardise any future deal - could further hurt AHP's share price. Hemant Shah, an analyst at pharmaceuticals specialist HKS, believes it will be extremely difficult to do any deal until the potential liabilities have been quantified and capped. The need to dilute its potential liabilities may be one factor behind AHP's inclination to find a merger partner. But analysts say it is not the only one. They add that the need to secure the management succession, and the increasing difficulty all pharmaceutical companies face in producing strong earnings growth while maintaining heavy investment in research and development, may be equally important issues. Although AHP has a less than glowing reputation for innovative research, analysts say that its R&D has improved in recent years and the company now has what Ms Haggar calls "one of the broadest pipelines" in the industry, with about 60 drugs. However, although several drugs are due to be launched this year and next, a substantial impact on earnings, as these drugs gain market share, will not be felt for some time. Among drugs due to be launched this year are Sonata, a sleeping pill which offers faster action and fewer side effects than competitors, and Neumega, a blood platelet treatment. Analysts estimate that these could have sales of $500m and $300m in three to five years time. A hypertension drug, also due to be launched this year, will be in a bigger but highly competitive segment of the market. None of these products are expected to be blockbusters. However, two drugs that are likely to be launched next year may be, according to analysts. A vaccine for middle ear infection in children - the first of its kind - could gain sales of about $1bn, while Enbrel, an arthritis treatment, is expected to win a market of more than $500m. Despite AHP's much-improved pipeline, however, Ms Haggar cautions: "The only difference between AHP and an industry leader is that Merck or Pfizer have a demonstrated record of being able to commercialise and convert [discoveries] into multi-billion dollar products." Although it has done so in the case of Premarin, AHP does not have a comparable record. According to analysts, the broad array of AHP's businesses means that it would fit well with many potential suitors. However, given the latest move at the top of the pharmaceuticals league, mid-market players - such as Schering-Plough in the US, and Astra and Zeneca in Europe - would be obvious beneficiaries of a deal with AHP. Certainly, the sudden demise of its talks with SmithKline leaves AHP in a somewhat awkward position. Other pharmaceutical companies may now view the company as being in play, and AHP may have to act rapidly if it is to keep control of its own destiny.

To: CYBERKEN who wrote (14023)	2/1/1998 9:14:00 PM
From: Henry Niman	Respond to of 32384

Here's the R&D analysis: R&D: Combination creates research powerhouse MONDAY FEBRUARY 2 1998 By Clive Cookson, Science Editor Commentators may be focusing on cost savings and job cuts resulting from the proposed merger of Glaxo Wellcome and SmithKline Beecham. But the companies themselves emphasise the scientific justification for getting together. They would have much the largest research and development organisation in the pharmaceutical industry, with a combined R&D budget of almost œ2bn a year - 50 per cent more than their nearest competitors, Novartis of Switzerland and Merck of the US. The rapidly rising costs of R&D have forced even large drug companies to specialise in developing new products for certain diseases and to ignore other areas. SmithKline, for example, no longer tries to discover new drugs in gastric ulcers, the area that made its fortune with Tagamet in the 1980s. The Glaxo-SmithKline combination, on the other hand, could afford to operate across the board, leaving no important field of medicine untouched. It would also have the industry's most formidable array of the new technologies being used to find better drugs for the next century. SmithKline led the whole pharmaceutical industry with its move into genomics - discovering how genes work together to cause disease - through its 1993 collaborative agreement with Human Genome Sciences, a leading US biotechnology company. SmithKline has also been most active in building up resources in bioinformatics: the use of information technology to make sense of the vast volumes of genetic and biological data pouring out of research laboratories. Glaxo, meanwhile, has been the industry leader in applying combinatorial chemistry, the decade's most exciting new chemical research technique. It is a way of miniaturising and automating chemical synthesis, creating a huge diversity of compounds for testing as drug candidates. Its expertise in combinatorial chemistry and high-speed testing of drug candidates for biological activity - combined with SmithKline's gene-based ability to produce biological targets, such as receptors on cells - should greatly accelerate the flow of new medicines into clinical trials. Traditionally, international drug companies such as Glaxo and SmithKline have launched new drugs at the rate of about one a year. Glaxo has already set itself the target of launching three innovative products a year; in combination with SmithKline, it might be able to achieve five significant introductions a year. When Glaxo took over Wellcome in 1995, many analysts expected the combined group to cut its R&D budget. That did not happen - even though the former Wellcome research centre in Beckenham was closed and many scientists lost their jobs - because Glaxo Wellcome contracted out more of its R&D and invested more in equipment to improve efficiency. The same thing may happen again, but on a larger scale, if Glaxo and SmithKline get together. The merger could be good news for the biotechnology industry, which can look forward to more collaborative agreements, and for the contract research and development sector that lives off the pharmaceutical giants. The medical fields in which Glaxo and SmithKline have strong research pipelines look remarkably complementary. For example, SmithKline's fast-growing vaccines business, one of the two largest in the world, has no counterpart in Glaxo. Antibiotics, another SmithKline strongpoint, is only a relatively small field for Glaxo. However, anti-biotic research is notable for being the area in which the two companies first decided to co-operate, in June 1996, after decades of all-out competition. They signed an agreement to work together on investigating the genetics of bacteria, with the aim of finding chinks in the armour of antibiotic-resistant germs. Glaxo and SmithKline made clear then that, although the genetic data would be pooled, they would work "independently and in open competition" to convert the information into drugs. Now their researchers are set to go the whole way together, in antibiotics and every other field.