Genentech shares dropped three percent today or $2.85 to $81.24 after Roche showed somechutzpah and lowered its bid for DNA. Recently, there'd been reports that the Swiss drugmaker, which already has a majority stake in the California biotech, was going to raise the offer to around $94. So, it was surprising and, some might say, shocking when Roche announced this morning that it was willing to pay $86.50 a share instead of the original $89.
Late today, Genentech put out a press release urging shareholders to tell Roche to take a hike. Dr. Charles Sanders, the chairman of the special committee of the DNA Board of Directors that's been set up to deal with Roche, called Roche's move "unilateral and opportunistic...in an attempt to take advantage of current market conditions."
But in a research note to clients, Bill Tanner at Leerink Swann said investors should take the money. "We believe the shares are fundamentally overvalued." Leerink Swann may trade in DNA.
Other analysts and investors believe Genentech's stock could rally this spring when test results are expected on the cancer drug Avastin as an add-on treatment for colon cancer. If the data are good and the drug gets approved for that use, it could substantially increase Avastin sales. Genentech recently announced that the numbers could be available in April. I'm guessing they'll unveil the so-called topline data at that time and save the details to make a huge splash at this year's American Society of Clinical Oncology meeting.
Geoffrey Meacham at JPMorgan says if that Avastin study goes well that Genentech shares could be worth more than a hundred bucks. "We do not expect the majority of shareholders to participate in this tender offer, where most of the core holders have held the stock for several years and are believers in the adjuvant (add-on Avastin colon cancer treatment) opportunity and the long-term value of the company." JPM has done and wants to do more investment banking for DNA and it makes a market in DNA options, which were apparently active today.
And another Geoffrey...Geoffrey Porges at Sanford C. Bernstein writes, "This is clearly another high risk hardball negotiating strategy by Roche. We believe it has a significant risk of failing to impress sufficient Genentech independent shareholders to close the deal." A part of Bernstein owns at least one percent of DNA.
Now, I'm really looking forward to my live interview next Friday morning with the new Roche CEO Severin Schwan.
That'll be "First on CNBC" on "Squawk Box" at around 7:15 a.m. ET.
It's the first time he's talked to CNBC U.S. since he took over last year and launched the bid for DNA.
If you had the chance, what would you ask him?
Send me your questions or comments to Pharma@cnbc.com