UPDATE 5-Biogen offers to buy partner Facet in $355 mln deal

* Biogen Idec says offers 64 pct premium for Facet shares

* Biogen says $14.50/share below earlier $15/share offer

* Facet shares jump 74 pct to $15.38, above offer price (Adds Biogen/Elan court battle, closing shares)

By Ransdell Pierson

NEW YORK, Sept 4 (Reuters) - Biogen Idec Inc (BIIB.O) said on Friday it offered to acquire Facet Biotech Corp FACT.O, a partner in developing multiple sclerosis and cancer drugs, in a deal valued at about $355 million.

Biogen Idec, which sells two leading multiple sclerosis drugs, in a letter to Facet's board offered $14.50 per share, about a 64 percent premium over the closing price of Facet shares on Sept. 3, Biogen Idec said in a release.

But shares of Facet jumped 74 percent to close at $15.38 on Nasdaq, well above the offer price, amid analysts' speculation Biogen Idec would boost its bid.

JP Morgan analyst Geoff Meacham said Facet should have about $310 million in cash and investments after the third quarter, which would mean Biogen Idec "would seem to effectively be paying less than $50 million" for the smaller biotech.

Meacham speculated Biogen Idec might be willing to submit a more enticing bid, of perhaps $18 per share.

"Biogen Idec has asked to meet with the Facet board and its advisors and stated that it is prepared to commit all necessary resources to complete a transaction expeditiously," Biogen Idec said.

The Cambridge, Massachusetts-based company said its offer is not subject to any financing contingency.

Officials at Facet, which is based in Redwood City, California, could not immediately be reached for comment.

Biogen Idec said the offer was lower than an initial offer of $15 per share it made on Aug. 17 to Facet Chief Executive Officer Faheem Hasnain, followed by a letter from Biogen Idec to Hasnain and Facet's board on Aug. 21 offering that price.

But Biogen Idec said it reduced its offer to $14.50 per share in a letter sent to Facet on Sept. 4, about a week after Facet announced a collaboration with Trubion Pharmaceuticals Inc TRBN.O. [ID:nBNG494394]

Biogen said the Trubion deal reduced the value of Facet in its eyes and those of investors, saying Facet shares had fallen 22 percent since the Trubion collaboration was announced.

Biogen Idec and Facet -- formed in 2008 as a spin-off from PDL BioPharma Inc (PDLI.O) -- are jointly developing a drug for multiple sclerosis called daclizumab and a treatment for solid tumors, volociximab.

Tysabri, made by Biogen, is considered the most effective drug on the market for multiple sclerosis, a progressive neurological disease that can lead to paralysis. But the drug carries the risk of a potentially deadly brain disease.

Hasnain, in a Reuters interview last week, said Tysabri was plagued by safety concerns, giving Facet's experimental daclizumab treatment "potential to enjoy a very sizable market opportunity."

During the interview, Hasnain said Facet has enough cash to last it through the end of 2010. [ID:nN28335420] But Facet said on Friday it has enough cash to extend through 2012.

"We think this deal makes strategic sense at a low price," JP Morgan's Meacham said. But he cautioned that daclizumab was a "risky asset" because Biogen Idec will be taking on costs of perhaps more than $200 million to complete late-stage studies of the drug.

Biogen Idec was also preoccupied on Friday with a high-stakes battle with another partner, Irish drugmaker Elan PLC (ELN.I) (ELN.N), involving their shared blockbuster Tysabri treatment for multiple sclerosis.

A Manhattan federal judge late on Thursday ruled that Elan had breached a collaboration agreement with Biogen Idec by making a deal with Johnson & Johnson (JNJ.N) that gives J&J an option to acquire Elan's half share in Tysabri.

J&J agreed recently to pay $1 billion for an 18.4 percent stake in Elan and $500 million for a majority stake in Elan's pipeline of experimental Alzheimer's disease drugs. It acquired the option on Tysabri in the transaction.

Biogen rose $1.10, or 2.2 percent, to $51.01, on Nasdaq.

(Reporting by Ransdell Pierson; Editing by Phil Berlowitz, Andre Grenon and Richard Chang)