Human Genome Sciences Inc. (HGSI) adopted a shareholder rights plan with a 15% trigger in the wake of GlaxoSmithKline PLC's (GSK, GSK.LN) $2.6 billion hostile takeover bid for the biotech firm and continued to suggest that shareholders reject the offer.
Human Genome Sciences, based in Rockville, Md., last month rejected Glaxo's $13-a-share offer as too low and said it had hired two banks to advise it on "strategic alternatives," including a possible sale of the company.
The company said Thursday the rights plan will allow its board the opportunity to complete its strategic review process and protect the long-term interest of its shareholders.
A rights plan, also known as a poison pill, is often used to thwart potential hostile takeover offers by giving other shareholders the right to buy more shares at a discount if one shareholder buys a certain percentage of the company's stock. The plan is valid for one year.
Human Genome reiterated Thursday that it is confident in the potential for its lupus drug, Benlysta, and that Glaxo's offer undervalues the company.
Glaxo and Human Genome Sciences jointly sell the lupus drug that they developed together and share financial interest in drugs for diabetes and heart disease.
Glaxo began working with Human Genome Sciences nearly 20 years ago, paying $125 million in 1993 to establish a research partnership with the company. Human Genome Sciences was one of the first biotech companies to emerge from the early 1990s push to map all of the genes in the human body.
Shares were inactive premarket and closed at $14.25 on Wednesday. They are up 93% this year.
-By Lauren Pollock, Dow Jones Newswires; 212-416-2356; email@example.com