Sector News

Shareholder asks Amgen to split into two businesses

October 22, 2014
Life sciences
Amgen is keeping its own counsel after one major investors, hedge fund Third Point, urged the biotech to consider splitting into two separate businesses.
 
High-profile activist investor and Third Point founder Daniel Loeb sent out a letter to backers about Amgen, claiming that the fund is now “one of the company’s largest shareholders”. He wrote that “the obscured fundamental value and investor scepticism that have led to Amgen’s valuation discount can be easily unlocked, saying the biotech needs to focus its R&D efforts and reduce “a bloated cost structure”.
 
Aside from this, however, Mr Loeb is in favour of “a more radical” approach, namely splitting the company in two, one being Amgen’s “assets–cash‐generative mature products and the other an “R&D‐intensive growth products” unit.
 
The letter says Amgen stock could get to $189 a share by the end of 2016 and $218 by the end of 2017 if the company cuts costs and makes R&D more efficient. However, with a split, Third Point believes it could be worth $249 a share in two years; Amgen ended the day up 4.8% after the hedge fund report at $144.09.
 
Board described as ‘open-minded’ by Loeb
 
Mr Loeb was not making an aggressive attack and praised Amgen for taking some steps to cut costs, describing the board as being “open‐minded and receptive to our ideas”. Still, “we firmly believe that the company is at an inflection point,” he wrote, and “we hope to maintain our constructive dialogue with management as the company moves towards closing its valuation gap”.
 
Amgen quickly released a statement “with respect to media inquiries concerning Third Point equity position in Amgen”, saying it has “always appreciated the perspectives of all of its shareholders, including Third Point, and welcomes constructive input toward our common goal of enhancing shareholder value”.
 
The firm added that the board “frequently receives input from shareholders, including ideas like those offered by Third Point” and “continually assess Amgen’s strategic priorities – and, when appropriate, take action”. More on Amgen’s “strategic priorities and update on our restructuring plans” will be laid out “at our business review on October 28”.
 
By Kevin Grogan
 
Source: Pharma Times

comments closed

Related News

September 25, 2022

Rise of the machines: Novo Nordisk pledges $200M to create first quantum computer for life sciences

Life sciences

Big Pharma has long seen the potential for AI and machine learning to accelerate drug development. But Novo Nordisk is going a step further by channeling $200 million toward the creation of a computer that will outrun anything in existence.

September 25, 2022

Mount Sinai AI uncovers new brain analysis method to predict dementia, Alzheimer’s disease

Life sciences

Current methods for diagnosing Alzheimer’s disease rely on a complex combination of self- and caregiver-reported symptoms, a physical examination and either a PET scan or a spinal tap to look for evidence of amyloid plaque build-ups in the brain. But a new artificial intelligence-based method may make the diagnostic process a much more objective one.

September 25, 2022

New AstraZeneca-backed report finds big money behind diverse owners and entrepreneurs in Europe

Life sciences

There is lots of talk about diversity and inclusion in business, including in pharma and medtech. A new report by the Open Political Economy Network (OPEN), a think tank focusing on migration and diversity, released its “Minority Businesses Matter: Europe” report highlighting the successes and challenges of ethnic minority-owned businesses in Europe.