NEW YORK (Reuters) - Amylin Pharmaceuticals Inc AMLN.O, which spurned a $3.5 billion takeover bid from Bristol-Myers Squibb Co (BMY.N) and is fending off a lawsuit from activist investor Carl Icahn, started reaching out to potential buyers last week, sources familiar with the situation said on Sunday.
Amylin, maker of diabetes drugs Byetta and Bydureon, has hired Credit Suisse CSGN.VX and Goldman Sachs (GS.N) as its financial advisers and Skadden Arps as its legal adviser, the sources said.
Amylin and its advisers declined to comment.
The move comes amid broader consolidation in the healthcare sector. Big pharmaceutical companies have been making aggressive bids for promising biotech firms and other targets as they look to find new products and replenish their pipelines. These big firms are also flush with cash and have easy access to debt to do deals. But often they find the targets, whose shares are sometimes depressed, holding out for a better price.
Other such bids in the healthcare sector in recent months include an aborted $6.8 billion hostile takeover attempt by Swiss drugmaker Roche Holding AG ROG.VX for genetic specialist Illumina Inc (ILMN.O), and a bid by GlaxoSmithKline Plc (GSK.L) to buy long-time partner Human Genome Sciences Inc HGSI.O for about $2.6 billion.
Human Genome rejected the bid and launched a sales process, inviting GSK to participate. Human Genome is being advised by Goldman Sachs, Credit Suisse, Skadden and DLA Piper.
Amylin has been considered a possible takeover target for some time. The diabetes market is one of the fastest-growing due to rising rates of obesity. The disease affects more than 300 million people worldwide, including nearly 26 million Americans. Diabetics run a high risk of heart disease, stroke, kidney failure, blindness and limb loss.
Pressure on Amylin increased after news of the failed Bristol-Myers bid leaked and prompted Icahn to turn his sights on the company. Icahn, whose 8.94 percent stake has made him Amylin’s third-largest shareholder, has called for a sale and sued the company, demanding the right to nominate directors.
Amylin has said that it believes Icahn’s lawsuit is without merit and that its board “continually considers all options available and is relentlessly focused on creating the greatest value for our stockholders.”
In 2009, the billionaire investor and the hedge fund Eastbourne Capital Management succeeded in placing two nominees on the Amylin board: Alexander Denner, who was nominated by Icahn and previously worked for him, and Kathleen Behrens, a former managing director of RS Investments, who was nominated by Eastbourne.
The opportunity for bidders to make their move on Amylin also got a boost when in November last year, Amylin ended a nearly decade-long partnership with Eli Lilly and Co (LLY.N).
Amylin and Lilly introduced Byetta in 2005. Bydureon, a longer-acting version, was approved recently. The dissolution of the partnership with Lilly made Amylin responsible for selling its products in the United States, while leaving the company to find a new partner outside the country.
While Amylin is still talking to companies for a partnership outside the United States, a sale is looking more likely, the sources said.
The board, heartened by early results from the Bydureon launch, wants to make sure that it can get the highest price through a sale, one of the sources said.
Analysts at Jefferies & Co and BMO Capital Markets have set respective price targets of $32 and $31 for Amylin, citing sales prospects for Bydureon. The type 2 diabetes treatment became available by prescription in U.S. pharmacies in February.
The Bristol-Myers bid valued Amylin at $22 per share, a source said previously.
Shares of San Diego-based Amylin are up nearly 50 percent since news of the Bristol-Myers bid surfaced on March 28. Its shares closed up 0.7 percent at $22.92 on Nasdaq on Friday.
Editing by Dale Hudson and Diane Craft