End of the Line for Millennium

Getting acquired at a nice premium can be a fitting end to any company's turnaround. On Thursday, Rule Breakers pick Millennium Pharmaceuticals (Nasdaq: MLNM  ) said that Takeda Pharmaceuticals was acquiring it for $8.8 billion in cash, a 53% premium to where it closed on Wednesday.

Takeda's buyout is ironic because in the past few years, Millennium has been the one trying to make acquisitions: It even failed in a bidding war with Genzyme (Nasdaq: GENZ  ) for AnorMED two years ago. Takeda's tender offer marks the end of a long turnaround for Millennium. It was a high-flying tech star early this century, only to come crashing back to earth. After that, with rival drugmaker Celgene (Nasdaq: CELG  ) competing against lead drug Velcade in treating multiple myeloma, Millennium experienced a rough couple of years.

Millennium had returned to profitability only recently, and sales of Velcade have been on the rebound after very positive new clinical trial results in early stage multiple myeloma patients and for other related indications last year. Velcade sales were up 42% year over year in the U.S. in the first quarter this year, for example. Takeda's proposed $25-a-share buyout affirms Velcade's resurgence and Millennium's steadily progressing biologics drug pipeline.

The Millennium deal is expected to close sometime this quarter. Takeda has been making a lot of bets in oncology and biotech recently, like its deal with Cell Genesys (Nasdaq: CEGE  ) last week for its prostate cancer immunotherapy compound, which is in phase 3 trials.

Over the past two years, biopharmaceutical assets have been hot commodities, compared with their small-molecule drug peers. There have been buyout rumors and interest about every single one of the biggest biopharmas that large-cap drugmakers could afford, from Genzyme to Biogen Idec (Nasdaq: BIIB  ) and ImClone Systems (Nasdaq: IMCL  ) . The premium price they are fetching (exhibit A: AstraZeneca's (NYSE: AZN  ) purchase of MedImmune last year) is partly a product of the blockbuster indications that they treat, but may have more to do with the immunity that biologics have to direct generic competition.

Millennium may be the first major biopharma acquisition of 2008, but I doubt it will be the last.


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