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Aug.11

10:38 AM ET

Monday, 11 Aug 2008

Will Roche Go "Crazy" For Genentech?

Posted By:Mike Huckman

Topics:Mergers & Acquisitions | CEOs and CFOs | Pharmaceuticals

Sectors:Pharmaceuticals

Companies:Genentech, Inc.

Analysts are pretty much in agreement that Swiss drugmaker Roche is gonna have to pony up more than the 89 bucks it has already offered for the rest of Genentech [DNA Loading... () ] it doesn't currently own.

The $44 billion question, of course, is how much more. Shares of DNA keep hitting new highs as investors bet that Roche will revise. We've yet to hear a formal response from the three-member committee of independent directors that Genentech has formed to evaluate the bid.

In the meantime, I think we've got a new outlier on the speculated takeout price. Sanford C. Bernstein biotech analyst Geoffrey Porges is out with a research note to clients this morning titled, "Genentech: What would Genentech REALLY Be Worth? And Why $130/Share Is Not As Crazy As It Sounds."

Porges writes that his sum-of-the-parts analysis, which he details in the report, pegs DNA at $124 a share when he adds in drug development pipeline "opportunities" and drugs already on the market being approved in the future for other uses.

Porges gives an 80 percent chance of a deal getting done at $105/share or higher. And on his 20 percent odds that a deal falls through he sees a Genentech "stand-alone" valuation of $86 a share, which was his target price before Roche stepped in. Right now he has a $101 price target.

Elan On Eight-Eight-Oh-Eight, Etc.

A part of Bernstein owns at least one percent of DNA shares.

This morning DNA is trading around $97.

P.S. A couple of weeks ago I reported that Food and Drug Administration Commissioner Dr. Andrew von Eschenbach had accepted a CNBC invitation to guest host "Squawk Box" this Thursday.

Well, I'm disappointed, to say the least, that this morning a spokesman--not the spokesperson who had formally confirmed his appearance via email several weeks ago--told a Squawk producer/booker that the commish has to cancel because of a "scheduling conflict."

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