Millennium Pharma turns down takeover offer
Thu Jun 15, 2006 3:52 PM ET

June 15 - Millennium Pharmaceuticals Inc.(Nasdaq Stock Symbol MLNM) said on Thursday that it has turned down an offer to be acquired.

Shares of the Cambridge, Massachusetts-based biotechnology company had risen $1.46, or 15.6 percent, to $10.83 on Nasdaq before being halted, but the gain slipped to about 8 percent shortly before the close of trading with the shares at $10.10.

"We had an unsolicited offer. Every public company has a fiduciary duty to explore strategic opportunities," said Millennium spokeswoman Theresa McNeely, who did not name the potential buyer.

The company said it had ended the process of exploring a sale and will continue to focus on increasing sales of its cancer drug Velcade and on its drug development pipeline.

"Our strategy hasn't changed. We are still building for the long term," McNeely said.

She declined to comment on reports that Millennium has hired investment banking firm Morgan Stanley.

Earlier on Thursday, Lehman Brothers analyst Craig Parker had upgraded the company's stock to "overweight," from "equal weight," and raised his 12-month price target to $14 from $10 a share, citing sales trends for Velcade and the company's research into new drugs.

David Witzke, an analyst at Bank of America, said he expected the stock to give back Thursday's gains.

"We continue to believe management's 2006 U.S. Velcade sales guidance of $225 million to $250 million is aggressive," he said in a report.

The company has been a target of takeover speculation since last year, triggered in part by Pfizer Inc.'s (NYSE Stock Symbol PFE) announcement in June 2005 that it would acquire biotechnology company Vicuron Pharmaceuticals Inc. for about $1.9 billion.

That deal sparked renewed confidence that big pharmaceutical companies would invest in smaller-capitalized biotechs.

Chris Raymond, an analyst at Robert W. Baird, said on Thursday that he would expect biotech stocks overall to rally.

"Any time you see rumors of a takeout and/or a takeout there tends to be a spillover effect," Raymond said.

The American Stock Exchange Biotech Index was up 2.9 percent shortly before the close of trading.

Raymond said he didn't think Millennium was a target.

"I don't think it's in play. I don't think there's a bidding war," Raymond said. "This specific instance seems to have come and gone."

Raymond said the most likely candidate to have been the suitor is Johnson & Johnson (NYSE Stock Symbol JNJ), which owns the European rights to Velcade and may be on the prowl for an acquisition after failing in its bid to acquire medical devices company Guidant.