Human Genome Sciences (HGS) has told its shareholders not to accept GSK’s hostile $13 per share tender offer.

Its Board of Directors insist the $2.6bn offer is inadequate, undervalues the company and is not in the best interests of HGS or its shareholders.

H. Thomas Watkins, HGS President and CEO, said its Board “has concluded unanimously” that the offer “does not reflect the value inherent in Human Genome Sciences”.

HSG rejected GSK’s initial takeover approach towards the end of April, forcing the pharma company to go back and target the company’s shareholders.

In the meantime, HGS instructed Wall Street advisors to search for potential suitors as part of a strategic review process – something GSK refused to participate in.

On reaching its recommendations to shareholders, HGS’s Board considered numerous factors.

Its Directors decided that its main product Benlysta – which it is in partnership with GSK – has “substantial growth opportunities” and pointed towards HGS’s “substantial financial assets”.

GSK were also accused of “opportunistically” capitalising on recent share price dislocation and capturing for itself the “significant upside opportunity for upcoming value-driving products”.

“The HGS Board of Directors has determined that the GSK offer is not in the best interests of our stockholders and recommends that they not tender shares to GSK,” said Mr Watkins.

GSK will table a hostile $2.6bn takeover bid for Human Genome Sciences after refusing to participate in its strategic review process.

Instead, Glaxo intends to press ahead with its $13 per share offer to HGS’ shareholders, despite the company’s board having previously rejected the same offer.

The bid offers a premium of 81% of HGS’s share price in mid-April, GSK says, and the pharma giant now hopes to evolve its relationship with the Maryland-based firm.

The two are in partnership for the diabetes drug Benlysta. GSK says it “values the long relationship” it has with HSG and would prefer to conduct takeover “on a friendly basis in a timely fashion”.

HSG rejected Glaxo’s initial $13 per share offer on the grounds it undervalued its potential and instructed Wall Street advisors to search for potential suitors, sources claim.

But GSK say their decision not to participate in the review process and to target HGS’s shareholders is unnecessary as there is “clear and strategic logic” to the combination of the companies.

It added that a month has passed since its original offer and that “provides a reasonable amount of time” for HGS to complete its review process.

GSK says it continues to believe that it has made a “full and fair offer” which provides “immediate liquidity” to shareholders in HSG.

NICE’s decision not to recommend the use of Benlysta (belimumab) for the treatment of systemic lupus erythematosus (SLE) in final draft guidance has been called ‘devastating’ by GSK.

Benlysta failed to get NICE backing after its clinical benefits compared with standard options and cost effectiveness to the NHS were both questioned by the regulator – weeks after the SMC came to the same decision.

Simon Jose, General Manager, GSK UK, says the recommendations are “devastating decisions for patients with lupus whose disease is currently uncontrolled by existing therapies”.

SLE is an incurable autoimmune condition which currently affects around 15,000 people in England and Women – 90% of whom are women.

Benlysta is the first new treatment licensed in the UK for lupus in half a century after the European Commission granted marketing authorisation in July 2011.

But NICE questioned the health benefit for patients and the cost of the treatment in relation to its clinical effectiveness after analysing evidence and consulting with people with the condition and clinical specialists.

Sir Andrew Dillon, NICE Chief Executive, commented: “Whilst recognising the severity of the disease, the Committee concluded that based on this evidence, belimumab could not be considered a good use of NHS resources compared with current clinical practice.”

GSK insist that failure to recommend Benlysta sees patients being left behind those from Germany and Spain, where the treatment is already approved for use. “We remain committed to creating solutions that will help ensure that the small number of patients across the UK who we believe will benefit most, are able to access this important new medicine,” Simon Jose said.

Human Genome Sciences’ (HGS) decision to reject GSK’s $2.59 billion acquisition offer highlights the future potential biotech companies believe they possess, analysts have said.

HGS rebuked GSK’s $13 per share offer and have now instructed Wall Street advisors to try and find other potential bidders, sources claim.

Paul Chapman, Partner at Marks & Clerk LLP, said the “stark dismissal” of GSK’s offer shows how biotech companies “value their portfolios and pipelines, and how much potential they see for the future”.

GSK’s offer was an 81% premium on the closing price of HGS’ stock on 18 April, the Financial Times reported. Its stock was as high as $30 per share around a year ago. But prices fell after the disappointing launch of its lupus drug – in partnership with GSK – Benlysta.

A statement from HSG said that the billion dollar offer from GSK does not reflect the company’s value – despite its high premium. Ana Nicholls, a healthcare analyst at the Economist Intelligence Unit, agrees.

She commented: “HGS’ decision to turn down the offer, which it says doesn't reflect its true value, suggests that it thinks it can get a better offer, either from GSK or elsewhere. It may be right. HGS’ two late-stage pipeline drugs, for diabetes and cardiovascular disease, have plenty of potential in large markets.”

The rejection of GSK’s offer comes a matter of days after Roche indicated it was considering abandoning its £6.8bn hostile bid for Illumina. Paul Chapman expects to see more takeover bids by pharmaceutical companies of biotech and biopharma firms in the future. “Major players in the pharmaceutical industries are in a bind,” he said. “The patent cliff is approaching fast and existing pipelines in more traditional areas of R&D seem insufficient to replace lost revenue. They need to rejuvenate pipelines and absorbing smaller, promising biotech firms is an attractive way of doing so.

“It could be that the likes of HGS and Illumina are quite aware of the advantageous position they are in, and are playing their hand accordingly. Glaxo can afford to return with a revised offer, the question is will they?”

GSK’s Benlysta (belimumab) has not been recommended in draft guidance for treating systemic lupus erythematosus (SLE).

Questions were raised by NICE’s independent Appraisal Committee over concerns about the medication’s cost and clinical effectiveness against standard treatment options.

Professor Carole Longson, Health Technology Evaluation Centre Director at NICE, says evidence “did not persuade the Committee that belimumab was good value for money”.

A Patient Access Scheme had been agreed between GSK and the DH for the treatment, although details of the agreement have been kept confidential at the request of Glaxo.

SLE is an incurable autoimmune condition, which mainly affects women. There are believed to be around 15,000 people in England and Wales with SLE, nine-out-of-ten are female.

The whole body is affected by SLE as the immune system attacks healthy parts of tissue and organs which may lead to serious internal damage.

It is a complex, poorly-understood condition and may be difficult to diagnose as symptoms are often similar to more common conditions.

“Systemic lupus erythematosus (SLE) is a debilitating condition which severely affects an individual’s quality of life,” said Professor Longson. “NICE’s independent appraisal committee has looked very carefully at the evidence provided on the use of belimumab for treating SLE, including the views of people with the condition, those who represent them, and clinical specialists.”

Although it is not licensed, certain patients with severe cases of the disease are treated with MabThera (rituximab). The Committee considered it relevant to compare Benlysta with MabThera, however NICE says there is no reliable data to show the relative efficacy between the two.

“Whilst recognising the severity of the disease, the Committee concluded that based on this evidence, belimumab could not be considered a good use of NHS resources,” added Professor Longson.

The decision is now open for consultation.

The first drug for 50 years to treat systemic lupus has been approved in the US – and may be on its way to Europe.

Benlysta (belimumab) has been approved for adults with active, autoantibody-positive systemic lupus erythematosus (SLE) who are receiving standard therapy.

H. Thomas Watkins, President and CEO, Human Genome Sciences (HGS), who co-markets the inhibitor with GSK, says the two companies are “honoured” to bring the product to the US.

GSK submitted a Marketing Authorisation Application for Benlysta to the European Medicines Agency in June 2010. Applications have also been submitted, and are currently under consideration, in Canada, Australia, Switzerland, Russia, Brazil and The Philippines.

Moncef Slaoui, Chairman, GSK Research and Development (pictured), said, “The approval of Benlysta is an important step for appropriate lupus patients. Patients have been waiting for new treatment options to help manage this chronic disease.”