Abcam founder Jonathan Milner, PhD

The battle over who should control Abcam (ABCM), is being rekindled by the company’s founder Jonathan Milner, PhD, who this week came out against the planned $5.7 billion acquisition of the “Amazon of antibodies” by Danaher (DHR).

Milner, who owns 6.14% of Abcam stock, said he will request that Abcam’s Board of Directors instead hold a General Meeting (EGM) to consider his counterproposal of replacing the board—including CEO Alan Hirzel, non-executive chairman Peter Allen, and CFO Michael S. Baldock.

In a statement, Milner said he decided to oppose the Danaher buyout based on “extensive feedback received from many shareholders and analysts, who share his belief that the $24 per share offer announced on August 28, 2023, by the company substantially undervalues Abcam.”

“When considering the potential of the company as an independent entity with an effective Board and Executive Leadership, the proposed acquisition price falls significantly short of its inherent worth,” Milner added.

Milner founded Abcam in 1998, oversaw its going public in 2005, and served as CEO through 2014, when he was succeeded by Hirzel, then the company’s chief marketing officer. Milner later served as deputy chairman before leaving the board in 2020. He began pressing for changes to Abcam’s board and direction in May, in hopes of lifting a share price that had plunged by nearly half (47%) between January 3, 2022, when shares closed at $23.89, and May 9, when the price stood at $12.69.

Milner would maintain Abcam‘s listing of American Depositary Shares traded on Nasdaq, but also add back the company’s main market listing on the London Stock Exchange, reasoning that a dual listing will help it augment shareholder value across short, medium, and long-term horizons—in part by better serving U.K. financial institutions and take advantage of regulatory changes.

Abcam responded to Milner’s opposition with a statement calling it “surprising” that the founder had come out against the Danaher buyout before full details get published in a “Scheme Circular” to be circulated to investors.

Abcam also defended the Danaher deal as well as the “competitive and comprehensive” sales process that led to it. Through that process, Abcam said, it engaged over 30 counterparties, including more than 20 potential strategic acquirers, leading to an unspecified number of “multiple” bidders.

“After receiving offers from multiple bidders, Danaher’s all-cash offer of $24.00 was the highest and best price. The company believes the recommended all-cash offer provides value maximization and certainty of outcome for all shareholders, as well as a positive outcome for employees and customers,” Abcam declared.

Analyst: Danaher deal likelier

Matt Larew, a partner with William Blair, told Reuters that though the founder’s announcement injected more uncertainty into the future of Abcam, the acquisition deal was more likely to close as a result. Larew added that he did not expect another bidder to emerge.

The rekindled battle over Abcam has yet to move investors one way or another judging from the fact Abcam shares have plateaued in the high $22-per-share range since Danaher and Abcam announced the acquisition on August 28.

Abcam ADS shares on Thursday dipped by a nickel (0.2%), closing at $22.74, and continued their slow slide on Friday, declining by another nearly 0.5% to $22.64 as of 3:11 p.m.

One likely reason: Danaher had been among several companies speculated as potential buyers for Abcam, as another senior research analyst with Baird, Catherine Ramsey Schulte, wrote in an August 29 research note. Other potential buyers discussed among market watchers earlier this year were Agilent Technologies (A), Thermo Fisher Scientific (TMO), and Merck KGaA, Darmstadt, Germany (MRK; Frankfurt Stock Exchange’s Xetra trading platform).

“We believe this would be an attractive addition to DHR’s portfolio, with accretive growth and margin profiles and 100% consumables focus. Valuation seems appropriate to us, especially with DHR adding some conservatism to ABCM’s previously stated FY24 outlook,” Schulte wrote.

Taking a dimmer view of the Danaher deal, however, is Puneet Souda, a senior managing director covering life science tools and diagnostics at Leerink Partners. Soon after the acquisition announcement, Souda downgraded his firm’s rating of Abcam shares from “Outperform” to “Market Perform,” but kept the 12-month price target at $24.

Souda based the downgrade on concerns that at least some of the other companies interested in Abcam could make higher bids than Danaher—but did not take issue with terms of the Danaher deal itself.

“We view the price as attractive for what we view as a highly accretive asset for DHR longer-term as the company applies its DBS tools to drive operational improvements at ABCM,” Souda wrote in a research note.

According to that outlook, which Abcam issued on June 26, the company expects 2023 revenue to range between approximately £420 million ($520 million) to £440 million ($545 million), 16% to 22% above 2022 revenues of £361.7 million (about $448 million). Abcam also issued 2024 revenue guidance of between approximately £475 million ($588 million) to £525 million ($650 million), up 8% to 13% above the projections for this year.

Ambitious forecasts

That guidance is lower than Danaher’s forecast for Abcam, which calls for $550 million in revenue in 2024. A consensus of market watchers cited by Schulte is offering an even more ambitious projection of $611.7 million in revenue next year. Danaher has also said it plans to generate about $75 million in annual cost cuts or “synergies” by the fifth year following closing of the deal, which is expected to close in mid-2024.

Abcam has suspended offering guidance to investors due to the pending Danaher deal. Danaher shares first rose 2% when the deal was announced, to $261.50 from $255.53 the previous trading day, but have fallen 3% since then, closing Thursday at $253.48 before inching up 1% to $256.12 as of 2:35 p.m.

Abcam said in its statement that it is expected to operate as a standalone company and brand within Danaher’s Life Sciences segment upon closing of the deal, adding to Danaher’s 5,500-person workforce in the U.K.—since Danaher has committed to keeping Abcam headquartered within the kingdom.

Danaher said its Life Sciences segment offers a broad range of instruments and consumables that are primarily used by customers to study DNA, RNA, nucleic acid, proteins, metabolites, and cells, in order to understand the causes of disease, identify new therapies, and test and manufacture new drugs, vaccines, and gene editing technologies. The segment also provides products and consumables used to filter and remove contaminants from a variety of liquids and gases in many end-market applications.

Abcam earned its “Amazon of antibodies” nickname because of its selection of over 110,000 products to research protein targets, from antibodies to proteins, lysates, biochemicals, kits, and assays—enough, it says, to supply two-thirds of the world’s life scientists.

Leaders & laggards

  • Crinetics Pharmaceuticals (CRNX) shares nearly doubled, leaping 92% over two days from $15.97 on September 8 to $30.59 on Tuesday, after the company reported positive results from its Phase III PATHFNDR-1 trial (NCT04837040) showing that its oral once-daily acromegaly candidate paltusotine met the study’s primary endpoint and all secondary endpoints. In the primary endpoint, the proportion of participants taking paltusotine who maintained an insulin-like growth factor 1 (IGF-1) level ≤ 1.0 times the upper limit of normal (xULN) was 83%, compared to just 4% of patients randomized to placebo. If results from its Phase III PATHFNDR-2 study also prove positive when released in the first quarter of 2024, Crinetics said, it plans to submit an NDA to the FDA next year.
  • Rocket Pharmaceuticals (RCKT) shares jumped 57% over two days, from $15.29 on Tuesday to $24.05 on Thursday, after the company announced an agreement with the FDA on how to conduct its planned Phase II pivotal trial of RP-A501 for Danon disease. Rocket said the agreement “marks the first-ever regulatory pathway to approval for a genetic treatment for heart disease.” The trial will be a 12-patient, single-arm, open-label study with a biomarker-based co-primary endpoint to be assessed at 12 months—namely improvements in LAMP2 protein expression—as well as reductions in left ventricular (LV) mass. Key secondary endpoint will be change in troponin.
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