UPDATED: Biogen gains sharply on Merck, Allergan takeout rumors

Biogen

Biogen ($BIIB) was up steeply on rumors that a highly anticipated acquisition of it might actually be in the works. Merck ($MRK) and Allergan ($AGN) are both reportedly in talks with Biogen regarding a potential purchase, The Wall Street Journal reported, citing unnamed sources familiar with the matter.

The biopharma’s shares quickly added as much as 10% in afternoon trading on Aug. 2. That amounts to a roughly $6 billion gain in market cap in a scant few hours, attesting to the pent-up expectations for such a transaction.

But this is just the latest step up; Biogen shares have climbed by almost half since late June largely on acquisition expectations. During that period, the company’s market cap climbed to more than $72 billion from $49 billion.

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A sale of Biogen was much speculated about on the announcement late last month that CEO George Scangos will be leaving the company “in the coming months” after a replacement is identified.

Scangos is credited with turning around the multiple sclerosis franchise at Biogen, including for Tecfidera. It had a stellar launch a few years ago, but has seen sales slow with increased competition.

Biogen did score a big win earlier this week with positive Phase III data for antisense therapy nusinersen to treat spinal muscular atrophy with partner Ionis Pharmaceuticals ($IONS). The trial was unblinded early at an interim endpoint due to significant improvement in motor milestones in treated versus untreated infants.

The biopharma exercised its option to the drug, which is expected to reach more than $2 billion in peak annual sales. Ionis is eligible for undisclosed tiered royalties on nusinersen sales up to a mid-teens percentage, in addition to up to $150 million in regulatory milestones.

Biogen is now responsible for all nusinersen development, regulatory and commercial activities and costs. Ionis is slated to complete the Phase III testing and to aid Biogen with regulatory filings. The clinical programs for nusinersen will be transitioned to Biogen.

In after hours trading on Aug. 2, Biogen slipped about 3% after CNBC reported that Allergan is unlikely to pursue an acquisition of the company.

- here is the Wall Street Journal story (sub. req.)
- here is the CNBC video

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