Astellas not to raise offer for OSI despite FDA approving Tarceva

Japanese pharmaceutical company Astellas Pharma said yesterday that it will not raise its $3.5-billion hostile takeover bid for OSI Pharmaceuticals (OSI) despite the US Food and Drug Administration (FDA) approving the broader use of OSI's cancer drug Tarceva.

Astellas said that it had already taken into account Tarceva clearance when it made its bid on 2 March 2010.

"We will not raise our offer based on the approval, though we still may change the offer based on the outcome of our ongoing due diligence under our confidential agreement with OSI," Astellas spokesperson Ryuji Samukawa told Reuters yesterday.

Tokyo-based Astellas Pharma, Japan's second-largest pharmaceutical company after Takeda Pharmaceutical had last month launched a $3.5-billion hostile takeover bid for US drug company OSI, a researcher and developer in molecular targeted therapies for oncology, diabetes and obesity. (See: Astellas launches $3.5-billion hostile bid for OSI Pharmaceuticals) On April 16, the FDA approved as a maintenance treatment of OSI's non-small cell lung and pancreatic cancer drug Tarceva.

Astellas' tender offer for OSI ends on 23 April, but under the confidential agreement signed on 29 March between both companies to review non-public information of OSI, Astellas may extend the deadline to 15 May to continue with its due diligence.

But analysts say that the Japanese drug maker may have to raise its $52 per share offer to at least $60 per share since OSI's main revenue is derived from Tarceva and the Melville, New York-based OSI's share price has gone up by 60 per cent since Astellas announced its unsolicited bid in March.