Astellas Pharma's $3.5 billion hostile takeover bid for OSI Pharmaceuticals grew a little more bitter March 2, as Astellas sued OSI to keep it from using a poison pill to fend off its advances. The suit seeks an injunction against any action that would block Astellas’ tender offer for Melville, New York-based OSI's shares “in a manner inconsistent with the directors’ fiduciary duties.” The prize Astellas is after: OSI's treatment for advanced non-small cell lung cancer and advanced pancreatic cancer, Tarceva, which could be just the edge the Japanese pharma needs to compensate for Japan's increasing shift toward cheaper generics.

The acquisition could also potentially help Astellas compensate for flagging sales of its biggest drug, Prograf, for treating organ rejection.

 

“The transaction would provide Astellas with a top-tier oncology business in the U.S. and an expanded product portfolio and pipeline,” the company says.

 

Astellas' $52 per share tender offer stands until midnight EST, March 31. But OSI clearly would like to see a better offer. It rejected a verbal offer for $52 per share in February saying that the terms “very significantly undervalues the company” and offered to confidentially share its reasoning with Astellas. Astellas claims OSI rejected as too low an offer for $55 to $57 per share as recently as mid-2009.

 

For its part, OSI is taking its time considering the deal, saying it “intends to advise stockholders of its formal position regarding the offer in due course.”

 

Astellas’ bid for OSI is just the most recent tango for Astellas, which tried to pick up Palo Alto, California's CV Therapeutics in 2009. That bid ended in failure when Gilead won over CV with a better offer. Roche, OSI's partner on Tarceva, has yet to take a stand on the offer or to make a counter-offer of its own, as some analysts expect it may.

 

Astellas, which has the benefit of a large stockpile of cash and a strong Japanese yen on its side has engaged Citigroup as its financial advisor and Morrison & Foerster to help it seal the deal with OSI.