Takeda Buys Millennium - NYT PDF

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New York Times Takeda Pharmaceutical of Japan to buy Millennium Pharmaceuticals for $8.8 billion By Andrew M. Pollack

LOS ANGELES — The largest drug company in Japan, Takeda Pharmaceutical, agreed on Thursday to pay $8.8 billion in cash for Millennium Pharmaceuticals, one of the earliest American genomics companies, in a deal that spurred a more general rise in biotechnology stocks. The $25 per share deal represented a 53 percent premium to Millennium's closing price Wednesday. It immediately set off speculation that other U.S. biotechnology companies might be acquired at high valuations, particularly by non-U.S. companies that can take advantage of the weak dollar. The Amex Biotechnology Index was up more than 5 percent at midday. "Any way you cut it, it's expensive based on today's numbers," said Kurt von Emster, portfolio manager for the MPM BioEquities Fund. He said the deal showed that biotechnology companies "are valued more greatly by strategic buyers than they are by investors." The acquisition will give Takeda control of Millennium's cancer drug Velcade, which is used to treat multiple myeloma, a blood cancer. Sales of Velcade in the United States reached $83.5 million in the first quarter of 2008, up 42 percent from a year earlier, in part because of new data showing the drug's effectiveness. Velcade is the only approved drug that Millennium sells. Johnson & Johnson has the marketing rights for the drug outside the United States. Takeda, based in Osaka, Japan, has been aggressive in acquisitions and licensing of products, in part to prepare for the loss of patent protection in the next few years of Actos, its diabetes drug, and Prevacid, for ulcers. It is making a particular thrust into the cancer area. On March 31, Takeda agreed to pay $50 million initially and up to $270 million later for the rights to an experimental "vaccine" to treat prostate cancer that is being developed by Cell Genesys. In February, Takeda agreed to spend as much as $1.2 billion to acquire Amgen's Japanese unit and the rights to up to 13 of Amgen's experimental drugs for cancer and other diseases. For Millennium, based in Cambridge, Massachusetts, the acquisition brings to a close a wild ride that did not turn out as initially planned. The company was started in 1993 to harness the emerging field of genomics to develop drugs. Millennium struck about 20 alliances with other drug companies, which collectively paid Millennium a total of about $2 billion to provide leads for new drugs.

In 2000, the year the completion of the Human Genome Project was announced, biotech stocks soared on the expectation that genomics would revolutionize drug discovery. Millennium's stock rose to about $90 a share that year. But Millennium's genomics effort yielded meager pickings. The genomics bubble popped and the stocks of Millennium and its competitors plunged. Millennium's shares have not been above $25, the price Takeda will pay, since around the end of 2001.!...