Straight talk with...Joseph Schwartz.

Abstract

On 17 May, Human Genome Sciences (HGS) formally rejected a $2.6 billion unsolicited takeover offer by GlaxoSmithKline. The Maryland-based biotech firm had long partnered with the UK drug giant to develop drugs including Benlysta (belimumab), HGS's first drug on the market and the first new medicine approved to fight lupus in 50 years. But, at $13 a share, GSK's bid was deemed "inadequate" by the HGS board. Recent history in the biotech sector shows how high the stakes are in such negotiations. Since last November, six biopharma buyouts have exceeded $1 billion each, with Gilead Sciences' purchase last year of the hepatitis C specialist Pharmasset topping the charts at a whopping $11.2 billion, the highest ever paid for a clinical-stage biotech and an 89% premium to its share price at the time. More recently, in April AstraZeneca paid $1.3 billion for Ardea Biosciences, a company with cancer and gout drugs in the pipeline but nothing on the market.One person watching the upward clime of such deals is biopharma analyst Joseph Schwartz, a managing director at Leerink Swann in Boston. Mark Ratner sought out Schwartz, who was named the top stock picker for pharmaceuticals in the last year's FT/StarMine Analyst Awards, for his views on what's behind the recent buyout spending.