Genentech warns board could turn hostile

By Nick Taylor

- Last updated on GMT

Related tags U.s. securities and exchange commission Genentech Escherichia coli

As the battle for Genentech continues, the US biotech has warned its shareholders that Roche may “seek to influence our business in a manner that is contrary to our goals or strategies”.

The information was released in a filing with the US Securities and Exchange Commission (SEC), in which Genentech detailed the array of problems the drawn-out takeover is causing.

In particular Roche’s statement that it is determined to have a greater say in the running of Genentech has alerted the biotech to the possibility of its board becoming increasingly divided.

The companies’ affiliation agreement allows for Roche to have proportional representation on the Genentech board, an option that the Swiss company has said it will exercise if its takeover fails.

With a majority on the Genentech board Roche could make decisions that were not necessarily in the biotech’s best interests, although in many cases these would also be detrimental to the Swiss pharma firm.

Even without increasing its board members Roche can veto Genentech acquisitions or divestitures that represent more than 10 per cent of the biotechs assets, net income, or revenue.

In addition Genentech reiterated its fears that the takeover would hinder its ability to attract and retain staff and collaborators, as well as drain its time and resources.

Global manufacturing construction & approval

In its filing with the SEC Genentech also gave an update on the progress of its manufacturing facilities that are in construction or awaiting approval.

The qualification and licensure of the expanded site in Vacaville, California is expected to be complete by the end of the year. In addition the fill/finish site in Hillsboro, Oregon is predicted to be approved by the US Food and Drug Administration (FDA) in 2010.

Genentech is also spreading manufacturing operations beyond the US, with the Escherichia coli​ production facility in Singapore expected to be approved by the FDA in the first half of 2010.

Another Singapore facility may also be added to Genentech’s properties if it exercises its option to purchase the facility Lonza is currently building for production of Avastin (bevacizumab) bulk drug substance.

The complete filing can be found here​.

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