Human Genome ($HGSI) RBC says current GSK bid for Human Genome undervalues sum of parts over long-run ($14.64)

• The firm sees $15-23 fair value but notes that a CVR might make sense for GSK if no compromise can be made. RBC believes GSK could raise its bid at least once but assumes that HGSI wants the higher end of RBC's valuation range. However, the firm notes there is no guarantee GSK will raise its bid and they don't see any other serious bidders that would bid materially higher.
• Rating is sector perform for HGSI. Target raised to $15 from $10.
• Analyst is Michael J. Yee

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JMP Securities issues update on Human Genome ($HGSI)

JMP Securities is a full-service investment bank that provides equity research, institutional brokerage and investment banking services to growth companies and their investors. They issued the following update on HGSI:

Human Genome Sciences, Inc.

HGSI - $7.17, $1,424M market cap

Liisa A. Bayko; +1 312 768-1785; lbayko@jmpsecurities.com

"Let the bidding begin GSK makes a move for Human Genome Sciences (HGSI); reiterate Market Outperform rating and $20 price target for HGSI . This morning, HGSI announced an unsolicited proposal from GSK to acquire HGSI at $13 cash per share. We remind investors that GSK and HGSI share in the profits for Benlysta, and HGSI has up to 30% rights to the drug candidate, darapladib, in an event driven Phase 3 study for coronary heart disease, which we expect to report data within 12 months, as well as a small royalty in abiglutide for diabetes. The launch of Benlysta has gotten off to a slow start but our market research suggests there is a potentially larger market for Benlysta amongst lupus patients for an subcutaneously delivered formulation, which is currently in Phase 3 development. Our price target of $20 is based on a risk adjusted discounted cash flow model based solely on contributions from Benlysta and so there could be significant upside to our model should darapladib have a positive read out in its Phase 3 study. HGSI has rejected the initial offer from GSK and has formerly initiated a process to find higher bidders for the company. In our view, the value proposition to GSK likely trumps those from other companies given the leverage it can gain from HGSI's sales and marketing efforts against Benlysta and potentially Darapladib."

Human Genome ($HGSI) announces rejection of unsolicited offer from Glaxo (GSK) to acquire HGSI for $13/sh cash

Human Genome Sciences (NASDAQ: HGSI) exists to place new therapies into the hands of those battling serious disease.

• HGSI announced that it has received an unsolicited proposal from GSK to acquire HGSI for $13.00 per share in cash.
• The New York Times Deal Book is now saying it has been rejected - SEE NY TIMES DEAL BOOK
• The HGSI board, in consultation with independent financial and legal advisors, has carefully reviewed and considered the GSK offer and has determined that the offer does not reflect the value inherent in HGSI
• HGSI also announced that its board has authorized the exploration of strategic alternatives in the best interests of shareholders, including, but not limited to, a potential sale of the company.
• HGSI has retained Goldman, Sachs & Co. and Credit Suisse Securities (USA) LLC to assist in this process, with Skadden, Arps, Slate, Meagher & Flom LLP and DLA Piper LLP (US) serving as legal counsel.
• GSK has been invited to participate in this process and HGSI has requested additional information regarding investigational products in GSK’s clinical pipeline to which HGS has substantial financial rights, including darapladib, currently in Phase 3 development for the treatment of cardiovascular disease, and albiglutide, currently in Phase 3 development for the treatment of type 2 diabetes.
• There can be no assurance that any transaction will occur or if so on what terms.
• HGSI does not intend to discuss the status of its evaluation unless and until a specific transaction has been approved
• StreetAccount notes there have been a number of rumors over a period of time regarding a potential bid by GSK for HGSI as the two companies are commercialization and development partners in Benlysta

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