Biogen Loses BAIT SHOP Status, Officially & Again (BIIB, PFE)

Biogen-Iden (NASDAQ:BIIB) is seeing its shares pummeled in after-hours trading.  The company didn’t have another biotech drug crisis though.

Biogen had been under a corporate strategic review where it was evaluating strategic alternatives, but after today’s close the company issued a release that it has completed its review.  The key issue is that the company said WE ARE REMAINING INDEPENDENT.  Biogen had hired Goldman Sachs & Co. and Merrill Lynch & Co. on October 12 and at the conclusion of this process it did not receive any definitive offers to be acquired.

We gave this a preliminary review for our own Special Situation Investing newsletter long before the company announced its formal strategic review.  We had looked at this as a potential BAIT SHOP candidate (takeover candidate, not a minnow) that could have been acquired but that was after the implosion in early 2005 when the BAIT SHOP was just a free service.  We determined that after this reached back above $50 that it had become fairly valued and that after it reached north of $60 to $65 that it was priced too high.

The market cap before today’s after-hours drop was roughly $22.25 Billion, so that is going to spill over into other biotechs.  Shares of Pfizer (NYSE:PFE) are actually up almost 1% because Pfizer had been the believed would-be acquirer by many on Wall Street.  With the problems Pfizer has now and with its aging pipeline we think that this is the best $22 Billion that Pfizer never spent.  They need another biotech player with a better pipeline.

Shares of Biogen-Idec (NASDAQ:BIIB) are down a massive 27% in after-hours trading at levels around $55.00.  The valuation on this just went well under its "review date announcement" share price, mainly as many had already speculated the company was going to try to sell.  The value is better, but this one still isn’t a value stock.

We’ve also covered some of these developments for our open email distribution list as well.

Jon C. Ogg
December 12, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.