March 25, 2023

DealBook: Bristol-Myers Executive Is Accused of Insider Trading

Federal prosecutors have charged a Bristol-Myers Squibb executive with insider trading, saying he had profited from confidential information about pending deals by the pharmaceutical company.

Robert D. Ramnarine, the executive, was accused of buying call options in ZymoGenetics, Pharmasset and Amylin Pharmaceuticals before the companies were acquired by Bristol-Myers Squibb. Call options give their buyer the right to buy a stock from their seller at a specific price and time. Mr. Ramnarine sold the options and made more than $300,000 on the illegal trades, according to the complaint filed in Federal District Court in Newark.

Mr. Ramnarine, who lives in East Brunswick, N.J., was arrested on Thursday morning and appeared in court in the afternoon. He did not enter a plea and was released on bail into his wife’s custody.

His lawyer, Peter Carter, a court-appointed federal public defender, could not immediately be reached for comment.

The case comes amid a broader crackdown by the federal government on insider trading. The United States attorney’s office in Manhattan has won a number of major cases against big investors, corporate executives and others. Those include recent victories against Raj Rajaratnam, the billionaire hedge fund manager who founded the Galleon Group, and Rajat K.Gupta, the retired head of the consulting firm McKinsey Company and a former director at Goldman Sachs.

In the case of the Bristol-Myers executive, investigators identified a pattern to the trades, which took place from 2010 to 2012, according to a complaint. Mr. Ramnarine, an assistant director of capital markets at Bristol-Myers, bought call options through personal brokerage accounts, it said. After the deals were announced, he collected the profit on those positions, the complaint said.

Mr. Ramnarie apparently had some apprehensions. According to the complaint, he searched the Internet last year for the terms “can stock option be traced to purchase inside trading,” and “insider trading options trace illegal.” The court document also says he viewed an article on the blog Zero Hedge about insider trading in options of Ann Taylor.

The Securities and Exchange Commission has filed a civil action against Mr. Ramnarine. The agency is seeking a court order to freeze the executive’s brokerage account assets.

“Ramnarine tried to educate himself about how the S.E.C. investigates insider trading so he could avoid detection, but apparently he ignored countless successful S.E.C. enforcement actions against similarly ill-motivated individuals who paid a heavy price for their illegal trading,” said Daniel M. Hawke, the chief of the enforcement division’s market abuse unit.

United States v. Robert Ramnarine

Securities and Exchange Commission v. Robert Ramnarine

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DealBook: Glaxo Is Said to Be Near a Deal for Human Genome Sciences

10:43 p.m. | Updated GlaxoSmithKline of Britain is near a deal to buy the biopharmaceutical company Human Genome Sciences on friendly terms for about $2.8 billion, potentially ending a long hostile takeover campaign, a person briefed on the matter said on Sunday.

Under the new terms of the deal, GlaxoSmithKline would pay about $14 a share in cash, this person said.

An agreement could be announced as soon as Monday morning, this person said, cautioning that the talks might still fall apart.

A friendly deal between the two mark the end of Human Genome’s efforts to find an alternative buyer for the company. It would also end months of jockeying between the two drug companies, who are partners in developing the lupus drug Benlysta.

Biopharmaceutical companies like Human Genome have been in demand by acquirers in recent years. Bigger drug makers have been seeking to restock their product pipelines with new offerings as older treatments lose patent protection. Two weeks ago, Bristol-Myers Squibb agreed to a $7 billion deal to buy Amylin Pharmaceuticals, which has been developing a new drug to treat diabetes.

In April, GlaxoSmithKline first proposed to pay $13 a share to acquire Human Genome, 81 percent above its closing share price the day before the bid was announced. The British drug maker was seeking to take advantage of a steep drop in Human Genome’s share price in the last 12 months, a decline driven in part by high marketing costs for Benlysta.

But Human Genome swiftly rejected the bid as insufficient and instead put itself up for sale, inviting GlaxoSmithKline to participate in the auction process. Human Genome also put up defenses like a shareholder right’s plan aimed at thwarting a hostile takeover bid.

Still, GlaxoSmithKline decided to take its bid directly to Human Genome’s shareholders. It has extended that offer several times, and its latest extension is scheduled to expire on Friday.

Last week, Human Genome and GlaxoSmithKline began talks about a potential friendly transaction, the person briefed on the talks said. The deadline for takeover offers had been set for Monday.

Representatives for GlaxoSmithKline and Human Genome were not immediately available for comment.

Some analysts and investors have said that GlaxoSmithKline would be the natural buyer of Human Genome. The two split profits from sales of Benlysta, and are working together on two other treatments, for heart disease and for diabetes.

The lupus drug received approval from the Food and Drug Administration, making it the first new treatment for the disease in about 50 years. But sales have been slow and have fallen far short of expectations.

Human Genome’s heart disease drug, darapladib, has also been seen as a potentially promising new product, though it is still in clinical trials.

Any other drug maker would need to either buy out GlaxoSmithKline’s 50 percent stake in Benlysta and the other treatments, or content itself with sharing proceeds from the sales of the drugs.

But given Human Genome’s strenuous objections to GlaxoSmithKline’s bid, investors have long expected the British company to raise its offer price above $13 a share. Human Genome’s shares have traded above that level since the proposal was first announced, closing on Friday at $13.58.

News of the revived talks was reported earlier by The Telegraph of London and Reuters.

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DealBook: Bristol-Myers to Acquire Inhibitex for $2.5 Billion

Bristol-Myers Squibb agreed late on Saturday to buy Inhibitex, a maker of a hepatitis C treatment, for about $2.5 billion in cash, as major drug companies seek to bolster their pipelines with more profitable specialty products.

Under the deal, Bristol-Myers will pay $26 a share through a two-step merger, beginning with a tender offer. That represents a huge 163 percent premium over Inhibitex’s closing price Friday.

“The acquisition of Inhibitex builds on Bristol-Myers Squibb’s long history of discovering, developing and delivering innovative new medicines in virology and enriches our portfolio of investigational medicines for hepatitis C,” Lamberto Andreotti, chief executive of Bristol-Myers, said in a statement.

Many big pharmaceutical companies have turned to mergers in recent years to plug holes in their drug pipelines, in large part to replace products that are set to face generic competition. Such companies are turning increasingly to smaller biopharmaceutical players developing specialized — and therefore hard to replicate — treatments.

In Inhibitex, Bristol-Myers will buy a company focused on antiviral products. Its main drug, INX-189, is an oral medicine being developed for hepatitis C that the company hopes will form the basis for simpler treatments of the disease.

Yet the deal is an expensive bet by Bristol-Myers, which says it expects the takeover to hurt its profitability for the next four years. Its earnings are expected to fall by 4 cents a share this year and 5 cents a share next year.

Inhibitex has not proved profitable lately, reporting annual losses from 2008 through 2010. For the quarter ended Sept. 30, the company, based in Alpharetta, Ga., reported a $5.3 million loss atop $1.3 million in revenue.

Bristol-Myers has said it plans to finance its bid by drawing upon its cash hoard. Shareholders owning about 17 percent of Inhibitex’s stock have already agreed to support the merger.

Bristol-Myers was advised by Citigroup and the law firm Kirkland Ellis. Inhibitex was advised by Credit Suisse and the law firm Dechert.

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Trial Shows Blockbuster Potential for Blood Clot Pill Eliquis

An experimental pill to prevent blood clots exceeded already high expectations as a better therapy for millions of people with atrial fibrillation, according to final results of a worldwide study released Sunday.

The study was featured at the European Society of Cardiology in Paris and simultaneously published on the Web site of The New England Journal of Medicine.

“It’s a remarkable achievement,” said Dr. Valentin Fuster, a past president of American and world heart associations, who was not involved with the trial. “This is one of the most significant advances in cardiovascular medicine in the last five years, no question,” Dr. Fuster, chairman of federal and medical panels on atrial fibrillation and director of the heart center at Mount Sinai Medical Center in New York, said in an interview.

The twice-daily pill, to be called Eliquis, prevented 21 percent more strokes than the blood thinner warfarin, a standard treatment for heart arrhythmia, and resulted in 31 percent fewer incidents of major bleeding over an average of 1.8 years in the study.

Eliquis also reduced total deaths by 11 percent, a mortality benefit its makers, Bristol-Myers Squibb and Pfizer, plan to trumpet in a marketing campaign, assuming the Food and Drug Administration approves the drug later this year. Barring any problems, sales are quickly expected to reach billions of dollars.

The new drugs are not without disadvantages. They cost much more than generic warfarin, roughly $8 a day instead of $1 or less. And Eliquis and Pradaxa require two pills a day, one in the morning and one in the evening, instead of the once-daily warfarin. The study included 18,201 people in 1,034 clinical sites in 39 countries and was consistent worldwide, the sponsors said. Although the study was financed by the drug makers, which raises the issue of bias, it met the gold standard for medical research as a randomized, double-blinded trial in which doctors and patients did not know who took which pill until the end. The drug acts on an enzyme that leads to blood clots.

Dr. Christopher B. Granger, the study’s lead author and a professor of medicine at Duke University, said, “I think this is a profound trial result that will have a major impact on the practice and management of patients with atrial fibrillation. It combines both greater efficacy in terms of prevention of stroke with a substantial reduction to bleeding risk, and that package is one that will be particularly compelling.”

Wall Street has high expectations, too. The companies’ stock soared after they released a brief statement about the stroke and bleeding benefits in June. Barclays Capital said the final results on Sunday were “perhaps the most anticipated R.D. event of the year.”

“If everything checks out,” Jami Rubin of Goldman Sachs said in an interview, “that will confirm in our minds that Eliquis has potential to take a majority share of the $10 billion anticoagulation market.”

More than 2.6 million people have atrial fibrillation in the United States, according to the Centers for Disease Control and Prevention. As many as 12 million people will have it by 2020 because of an aging population with longer life expectancy. The arrhythmia in the left upper chamber of the heart can cause slow blood flow and clots, raising the risk of stroke by four to six times on average, the government says.

As many as half of people with the condition, however, are untreated, by varying estimates. Warfarin, a cheap 60-year-old drug sold generically under the brand name Coumidin, requires frequent blood tests to monitor its active level and interacts with some other drugs and foods, including leafy greens. There is great appeal and demand for new drugs that do not vary so much and deliver the same stroke-preventing benefits.

The first new drug, Pradaxa, from the German drug maker Boehringer Ingelheim, was introduced in the United States last fall. In the first seven months on market, about four in five cardiologists and two in five primary care doctors had prescribed it to more than 250,000 people, Wa’el Hashad, Boehringer’s vice president for cardiovascular marketing, said in an interview last week.

Pradaxa inhibits thrombin, an enzyme in clot formation. Other emerging drugs block a related enzyme known as Factor Xa.

Xarelto, from Bayer and Johnson Johnson, approved by the F.D.A. in July to prevent clots in hip and knee replacement surgeries, goes to an F.D.A. review panel for atrial fibrillation on Sept. 8.

Eliquis is scheduled to be submitted for F.D.A. review later this year. Its New York-based makers are marketing powerhouses with the top two best-selling drugs in the world, Lipitor from Pfizer and Plavix from Bristol-Myers Squibb. Patents on those drugs expire in the next year, making Eliquis even more important to their businesses.

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Publicis to Acquire Rosetta for $575 Million

PARIS — Publicis Groupe of France bolstered its already substantial investment in Internet advertising on Tuesday, saying it had agreed to buy Rosetta Marketing Group, one of the biggest independent digital marketing agencies in the United States, for at least $575 million.

Publicis, which owns ad agencies like Leo Burnett and Saatchi Saatchi, has moved more aggressively than many of its rivals in expanding its digital capabilities, betting that spending on Internet marketing will continue to gain market share from more traditional forms of advertising. The planned deal for Rosetta is its third major digital acquisition, after the purchase of Digitas for $1.3 billion in 2006 and Razorfish for $530 million in 2009.

“The transformation of the advertising market will be colossal,” Maurice Lévy, the chief executive of Publicis, said in a conference call.

Rosetta, based in Hamilton, New Jersey, specializes in areas like search engine advertising and direct marketing, and also has a strong position in the health care business, already an area of focus for Publicis. Rosetta’s clients include Bristol Myers Squibb; Hewlett-Packard; Johnson Johnson; Research In Motion, the developer of the BlackBerry; and the T-Mobile division of Deutsche Telekom.

Until recently, Chris Kuenne, who founded Rosetta in 1998 and serves as its chief executive, had appeared eager to stay on the sidelines of a merger-and-acquisition race in which big advertising companies like Publicis and WPP Group, based in London, snapped up many of the leading Internet marketing specialists.

“Everybody comes knocking and calling and we’re not really interested,” he told Advertising Age, a trade publication, last year. “There’s a race on in the agency world to assemble three key things: the right assets, the right people and the right culture. MA takes care of part one but has the potential to screw up the other two.”

On Tuesday, Mr. Kuenne changed his tune. “We recognize that in order to achieve our long-term business and geographic growth potential, we need the reach and resources of a global group,” he said in a statement.

Assuming the deal is completed, the portion of revenue that Publicis derives from digital activities would rise to more than 30 percent, from 28 percent last year, the company said. Publicis wants that total to rise to 35 percent within three years.

As with other digital acquisitions by Publicis, the price raised some concerns among investors. Rosetta is expected to generate less than €250 million in revenue this year.

But analysts said they were reassured by Mr. Lévy’s track record in bringing Razorfish and Digitas under the Publicis umbrella. They said the deal also reduced the likelihood that Publicis, the third-largest advertising company worldwide after WPP and Omnicom Group, might mount a much larger bid for the No. 4 player, Interpublic Group, which Mr. Lévy has previously run his slide rule over.

“This is just the kind of acquisition that the market wants to see them do, rather than a big merger like Interpublic, where the main benefit is cost-cutting,” said Conor O’Shea, an analyst at Kepler Capital Markets in Paris. He questioned, however, whether Publicis might be concentrating too much of its digital expansion in the United States, where Digital, Razorfish and Rosetta are strongest, rather than moving more aggressively into faster-growing Asian markets.

Under the terms of the agreement, Mr. Kuenne and other shareholders of the privately held Rosetta could receive a deferred payment, in addition to the initial $575 million, if the agency meets financial performance targets.

Rosetta has tried to position itself as a different kind of agency, providing consulting services rather than merely churning out advertising, which is seen as something of a commodity in the digital era. Unlike many agency founders, Mr. Kuenne came to the business from an advertising client, Johnson Johnson, rather than breaking away from an existing agency.

“We start with the underlying business problem — what is this brand trying to accomplish?” he said in the conference call.

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