At second glance, that big, prospective Roche offer to buy Alexion looks less and less likely to the market.
On Monday Alexion's share price ($ALXN)--fattened by stories on Friday that Roche ($RHHBY) was prowling the perimeters and looking for the cash needed to make an offer--was significantly trimmed after a number of analysts began to wonder why the biotech could command the kind of money needed now to close a deal. The stock slid 5.5% and was stuck at a little under $108 this morning.
Adam Feuerstein at TheStreet was one of the first to throw some cold water on the fire, tweeting at one point that the consensus view is that it's a bad idea at the prices being discussed. And early on ISI's Mark Schoenebaum checked in with his crowd and found a surprising level of resistance, with many saying that a deal like this--at the prices discussed--looked awful for Roche.
That skepticism tinged most of the follow-up reviews.
Robyn Karnauskas of Deutsche Bank told PMLive that there weren't a lot of "synergies" in an Alexion-Roche marriage. Roughly translated, that means that Roche wouldn't find a lot of places to hack away at Alexion's cost base, a prime factor in any acquisition. Geoff Porges at Bernstein hit the same note. And Karnauskas, like others, notes that Alexion's share price--which gives the company a $21 billion market cap this morning--means any deal would require big bucks. Roche, which walked away from Illumina on the price, doesn't fit the profile of a company willing to pay desperation prices.
As Bloomberg points out today, a successful Alexion bid would require anywhere from $130 to $148 a share, making it the most expensive potential buyout since Takeda bought Millennium for 137 times Ebitda. And if Alexion can live up to extraordinarily high expectations on the earnings side, the biotech could be worth it.
"Everybody knows this is a very valuable asset," Oppenheimer's David Ferreiro tells Bloomberg, which broke the story. "It's just a matter of who's comfortable with the valuation."
The pro-deal case remains focused on the company's success in making Soliris, a drug for an ultra-rare condition, a blockbuster with the world's highest price. There's a solid shot at multiplying its revenue. Analysts see much more potential with their experimental asfotase alfa and a follow-up indication for Soliris as a new treatment for neuromyelitis optica, with a potential approval closer than it may first appear, could further boost revenue.
There's no question Alexion is a tempting target. The question now is how much is it worth?
- here's the story from PMLive