After spurning a hostile takeover bid from GlaxoSmithKline PLC in April, Human Genome Sciences Inc. said Monday it agreed to be bought by the biopharmaceutical giant for a more lucrative offer valued at $3.6 billion.
GlaxoSmithKline boosted its offer for Rockville-based Human Genome, which uses the human DNA sequence to develop targeted drugs, to $14.25 a share from the $13 it offered in April.
"After a thorough analysis of strategic alternatives, [Human Genome] has determined that a combination with [GlaxoSmithKline] is the best course of action for our company and the best way to maximize value for our stockholders," said H. Thomas Watkins, Human Genome's CEO, said in a statement.
The sale of Human Genome, which was founded in Maryland 20 years ago, is an important moment in the state's biotechnology industry. Several biotechnology companies over the years have grown to the point where they've gone public or been acquired by competitors, including Rockville-based MedImmune, which AstraZeneca bought in 2007 for $15.2 billion.
Human Genome and London-based GlaxoSmithKline have worked together since 2006, developing a drug for the treatment of lupus called Benlysta. Last year, the Food and Drug Administration approved the sale of Benlysta.
With full ownership of Benlysta, GlaxoSmithKline said it could "simplify and optimize" research and development, and commercial and manufacturing operations to advance the product in the market. The company said it expected to achieve $200 million in cost synergies by 2015.
A spokesman for GlaxoSmithKline said it was too early to know how Human Genome's operations in Maryland might be affected by the acquisition and integration plans. Human Genome employs about 1,000 people in Rockville.
Representatives for Human Genome did not return phone calls seeking comment. The company operates large- and small-scale manufacturing facilities in Rockville, where it makes Benlysta and another drug, Raxibacumab, an anthrax-fighting medicine.
GlaxoSmithKline has two U.S. headquarters, in Philadelphia and in Research Triangle Park in North Carolina. The company has manufacturing facilities in North Carolina and other states, but none in Maryland.
There has been a spate of biotech acquisitions this year as large pharmaceutical companies seek to rebuild their pipelines. The large firms are seeking new products to replace older medicines that are going off patent in the biggest wave of such patent expirations in history.
Most recently, Bristol-Myers Squibb agreed to buy diabetes specialist Amylin Pharmaceuticals by sharing the $7 billion cost of the deal with AstraZeneca.
In addition to gaining 100 percent of Benlysta to treat lupus, GSK also gets full ownership of experimental medicines for diabetes and heart disease that are in late-stage development.
Despite bumping its offer 10 percent and paying a 99 percent premium to the share price before its interest was made public, industry analysts said GSK had got a good deal — to the frustration of Human Genome investors hoping for a price in the high-teens per share.
"I'm disappointed with the deal because I think Benlysta is actually going to be a good drug," said Carol Werther, an analyst at Summer Street Research. "Glaxo wanted to get this on the cheap and they were able to do it in the absence of other bidders."
The boards of both companies have approved the transaction, the two companies said Monday. Their statement did not specify what future Human Genome CEO Watkins had within GSK.
Human Genome, which had launched an auction process after GlaxoSmithKline's earlier bid, had come under pressure from investors to try to strike a deal with the British drugmaker in the absence of any alternative bids.
Reuters news service contributed to this article.
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