Id biomedical, a Canadian vaccine maker with 100 employees in Bothell, has agreed to be acquired by pharmaceutical giant GlaxoSmithKline...
ID Biomedical, a Canadian vaccine maker with 100 employees in Bothell, has agreed to be acquired by pharmaceutical giant GlaxoSmithKline, the companies said yesterday.
Glaxo will pay $1.4 billion, or $29.49 a share, for the Vancouver, B.C.-based company, and assume $77 million in debt. Some analysts said the price was too low considering the company’s strong position in the robust influenza-vaccine market.
CEO Anthony Holler said in an interview that the fate of the company’s Bothell operations is still to be determined. ID Biomedical operates a pilot manufacturing facility and conducts research and development of vaccines, including work with the Department of Defense on a vaccine for the plague.
“I expect by the time this transaction closes at the end of the year we’ll have a better idea, but it won’t be until then,” Holler said.
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ID Biomedical also owns state-of-the-art vaccine-manufacturing facilities in Quebec, which could produce up to 75 million doses of vaccine by 2007. That asset in particular made the company an attractive acquisition target for London-based Glaxo, which, like several other large pharmaceutical companies, is increasing its presence in the vaccine market.
David Miller, president of Biotech Stock Research in Seattle, called ID Biomedical’s team in Bothell “particularly good.” He expects it to remain intact, either as part of Glaxo or as its own entity.
The sale price is 13 percent above ID Biomedical’s Tuesday close of $26 a share, a record high until the sale announcement. The news pushed the stock to a peak of $31.05 yesterday, as some investors predicted another bidder could sweeten the deal, but shares closed at $29.46.
Holler said during a conference call yesterday that ID Biomedical is not in negotiations with other bidders, but it can consider superior offers, which Glaxo would have the opportunity to match. The deal requires shareholder approval.
Glaxo CEO Jean-Pierre Garnier said in a statement the company “has moved quickly over the past few months to meet the growing demand for flu vaccines worldwide and to transform GSK into one of the leading global influenza-vaccine manufacturers.”
He called the deal with ID Biomedical “a unique strategic opportunity to increase current capacity of classic flu vaccines, to provide us with increased capacity for next-generation vaccines under development and to help GSK prepare for the threat of a flu pandemic.”
Last week, the federal Centers for Disease Control (CDC) reported that four manufacturers, including Glaxo, are expected to put 92 million to 100 million doses of flu vaccine on the U.S. market for the 2005-06 season.
The CDC recommends about 98 million people in “priority groups,” including children, seniors, health-care workers and pregnant women, be vaccinated. It warned of uncertainties in production and distribution and recommended vaccinations be limited to those groups until Oct. 24.
Miller, who in a recent analysis placed ID Biomedical at the top of 21 biotechs he covers, said the sale price was too low given the company’s manufacturing capacity and long-term supply contracts with three major U.S. vaccine distributors. Its flu vaccine, approved in Canada, is on a fast track for approval from the U.S. Food and Drug Administration.
Using the same metric with which Swiss pharmaceutical company Novartis calculated a rejected bid for flu-vaccine maker Chiron last week, Miller said the price should be 4.5 times 2007 sales. That would be $48 to $50 a share, assuming ID Biomedical sells what it will be capable of producing in 2007.
Todd Patrick, ID Biomedical’s president, said during yesterday’s conference call that the sale price was fair, given the company’s flu vaccine hasn’t been approved in the U.S. and that sales in Canada are expected to be flat.
Also, to continue competing in the flu-vaccine market, Holler said the company would need several hundred-million dollars in additional financing, “which could have diluted our projected future value in terms of share price.”
The Glaxo acquisition “largely if not entirely” eliminates the potential risks to ID Biomedical shareholders, he said.
Benjamin J. Romano: 206-464-2149 or email@example.com