Why Industry Insiders are not Convinced Regarding BioMarin’s Takeout Rumors?

There are some speculations that Sanofi is eyeing BioMarin as a potential buy out company, but industry insiders are not so convinced.

BioMarin Pharmaceutical, an orphan drug maker saw a high trading volume and increase in their stock prices last Friday morning after the rumors of take over came out.

Ben Harrington, Betaville’s financial blogger and former market’s Editor at Daily Telegraph and M & A, reported that Sanofi may drop its $9.3 aggressive bid for Medivation or MDVN and consider BioMarin as a potential replacement.

Harrington wrote in his article that according to his reliable sources, Sanofi, a French Pharmaceutical giant has started looking on for another US-Based biopharmaceutical company that specializes in rare diseases. The French drug maker may have chosen another alternative for Medivation because they become frustrated with the outcome of their hostile takeover bid.  Medivation continues to resist the insistent advances of Sanofi.

The shareholders of BioMarin had a positive reaction regarding this speculation. BioMarin’s share was at $83.68 on the midday trading.  The share was 3.66 percent or $2.88 higher when the trading started.

People familiar with this matter, is not totally convince with the speculations. Wedbush Securities, Liana Moussatos, an industry insider says that Sanofi will not drop its bid for Medivation just like that because it hasn’t even started doing research on BioMarin. She noted that Sanofi will have to pay 13 times more for a company that would take them 10 to 13 years to get paid back and that is too long.

Moussatos noted that BioMarin has $1 billion annual sales and $13.5 billion market cap, and take out cap which will definitely too high for Sanofi to acquire.  She added that Sanofi could not even attempt to take risk on that massive takeover bid. Moussatos asked what Sanofi would get out of that? She pointed out that BioMarin offers an interesting pipeline but they are trading on a premium price.

Another industry insider said that, perhaps Sanofi is the one behind all these rumors. They leaked these speculations to drive down the share price of Medivation. The insider believes that it is not surprising if this is one of the tactical games that Sanofi plays to get Medivation. Sanofi may be driving these rumors to pull Medivation’s stock down, if the stocks are lower, they could also lower the second bid offer. More so, the way Sanofi tries to buy out Medivation shows that this kind of tactic is not far from happening.

Buy Out Rumor Not New for BioMarin

The takeover rumors are not actually new for BioMarin. Moussatos of Wedbush Securities noted that few years back, there were also speculations that Roche will buyout the company. But Roche CEO denied these rumors, and said that BioMarin is too expensive company to acquire.

Moussatos added that BioMarin has three drug pipelines that look attractive for acquisition.

They have drug that is used for the treatment of PKU, a birth defect disease that builds up amino acid in the body while others can be used as treatment for achondroplasia, which is a common type of dwarfism in children. Another drug is used to treat Batten Disease, a neurodegenerative disorder.

Batten’s disease showed promising result for the initial phase 3 trial.  The result has significant result that prompted FDA to allow the company to submit a drug application for approval.  Moussatos said that BioMarin will likely do that next year.

Sanofi was 0.5% down on the trading last Friday with $38.21 per share.  The French company has a $98.47 billion market cap. While Medivation was down 0.05% with a trading price of $59.33 per share, the company has $9.79 billion market cap.

BioMarin and Medivation are not yet giving any official statement regarding this matter. While Sanofi declined to give any comment.

The Public Eye is on Medivation and Sanofi Saga

The dramatic takeover bid of Sanofi to Medivation has taken another new direction. Now, BioMarin is included in this saga. There will be more rumors or speculations that may come out because Sanofi seems not ready yet to give up Medivation.



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