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Tag Archives: M&A

Valuation and Other Biotech Mysteries – Part 11: Changes in Pharmaceutical Industry Product Portfolios and Strategies

[Ed. This is the eleventh part in Wayne’s series. You can access the whole thing by clicking here. Please leave comments or questions on the blog and Wayne will address them in future posts in this series.]

As described in the prior post, the modern pharmaceutical industry has evolved from the patent medicine companies selling herb and alcohol combinations into an industry developing complex and personalized medicines such as gene and cell therapy. The first blockbuster drug, Tagamet (cimetidine), developed by Smith, Kline & French (SK&F) is a great base for a case study of various industry strategies. Read more of this post

Bristol-Myers Squibb Strikes $2.1 billion Deal for Medarex

light at the end of the tunnel smallGreat news for Medarex shareholders from BMS’ $16/share offer yesterday, which clocks in at a 90% premium over Wednesday’s close.  Reports cite the value of ipilimumab, a late-stage cancer therapy being advanced as a new treatment for metastatic melanoma, as well as the value of Medarex’s transgenic mouse platform to make human antibodies.

However, the deal is better for BMS than the headline price per share indicates. 

First, discount $300 million of the $2.4 billion that pays for Medarex’s cash and liquid securities.

Second, look at BMS’ cost savings here, since they were already partnered with Medarex on ipilimumab.  According to reports at the time the partnership was struck:

“Medarex has an option to co-promote ipilimumab in the U.S., where the company would receive 45 percent of profits. Bristol-Myers Squibb would get the rest and pay an undisclosed royalty back to Medarex on overseas sales. The company received an initial $50 million payment and could earn up to $480 million in regulatory and sales milestones.”

Figure the NPV of the $480 million is a lot higher now than it was in 2005, add in 45% of the U.S. market, and the 90% premium shrinks considerably.  I also wonder if the value of Medarex’s deal with Lonza is (a) transferable (more change-of-control clause fun) and (b) higher to BMS than it is to Medarex.

Other good news: This continues the “biotech is a good investment” meme shaping up this week.  Forbes asks “who’s next” in what DailyFinance calls “[t]he heated-up biotech sector,” and Cell Therapeutics thinks this is a great time to be in the market and is looking to sell $40 million or so of equity.

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Monday Deal Review: July 12, 2009

B&W_BigNickelThe highlights of this week were definitely the Bioniche-Endo deal and Allostera’s $17 million raise, but that was just the tip of the iceberg as Canadian deal activity heated up along with the weather.  A novel deal with an income trust swapping cash for a biotech’s public shell starts things off after the jump…

There’s No Bailout Like a Good Exit

A Bloomberg article this morning takes a look at the recent boom in Israel’s biotech and device stocks, and credits the government cash infusion (which we noted at the time) for some of the buoyancy; but also attributes much of the gain to speculation that the J&J-Omrix deal is the beginning, not the end, of acquisitions in the well-priced sector.  According to Bloomberg data, bargains still abound in Israel:

Most of the stocks still trade below their initial public offering prices and are valued at less than half of their global competitors relative to cash, according to data compiled by Bloomberg.

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Canadian M&A: Akela Pharma and Nventa to Merge, Akela Shareholders to Own 70%

Akela Pharma Inc. (TSX: AKL) and Nventa Biopharmaceuticals (TSX: NVN) will merge by exchanging 0.0355 Akela shares for each Nventa share, resulting in an approximate 70/30 ownership split between Akela and Nventa shareholders, respectively, in the combined entity. The public company will retain Akela’s name, management, and ticker symbol (AKL).  The arrangement arrangement was unanimously approved by both Boards.  Conditions: approvals from Nventa shareholders, the British Columbia Supreme Court and the Toronto Stock Exchange, and a minimum amount of $1.5M of net cash in Nventa.  Current (post-announcement)  Akela market cap: $3.46 million.

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Roche Tenderly Completes Genentech Deal

The results are in: 84.7% of Genentech’s publicly held shares were tendered and will be taken up by Roche Investments USA Inc. for $95 per share, bringing Roche’s stake up to 93.2% (96.2% with the guaranteed deliveries).  Just a short form merger away from done.

Next challenge: integration without assimilation.

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Wednesday Brain Dump: Around the World Edition

Patheon Special Committee Bites its Thumb at JLL’s Bid. Clubs, Bills and Partisans to Follow!

Following JLL’s commencement of its bid for Patheon yesterday, Patheon’s Special Committee released its response this morning advising shareholders that JLL’s offer is “substantially undervalued, opportunistic
and structurally coercive.”

Patheon shares closed up slightly at $2.55 (up 0.79% from $2.53 yesterday), approximately matching the gains made by the Canadian dollar (up 0.55% today).  JLL’s bid is in US dollars ($2 per share), so this fluctuation with the exchange rate is to be expected.

Bonus points if you don’t need to click this to get the reference in the title of the post .

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Canadian M&A Update: JLL Commences Patheon Bid at USD$2.00 per share

JLL Partners’ bid for Patheon Inc. (TSX: PTI), which has been brewing since December at the same USD$2.00 price, turned into a takeover bid today, with JLL announcing the lockup of shareholders holding 12,581,766 (about 13.8% by my calculation) of the subject shares. 

As we noted in the Monday Deal Review February 23, Patheon has cited a BMO valuation of US$4.20 to US$5.00 per share.

However, with today’s exchange rate putting the JLL offer around CAD$2.57, the current trading price of $2.53 looks like a fairly strong expectation that the bid will succeed.

Update: This is probably an opportune time to mention the Bloomberg article I saw on anti-takeover measures being implemented by public biotechs (hat tip to BIO SmartBrief, who picked it up yesterday).

Suzanne Dingwall actually made a similar point about vulnerable venture-backed public companies a couple of weeks ago.

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Merck and Schering-Plough in Canada

Following this morning’s announcement of Merck’s offer for Schering-Plough (0.5767 share of Merck and $10.50 in cash for each Schering-Plough share = $23.61 a share, a 34% premium, with Merck shareholders owning 68% of the combined company), we thought we’d take a look at the respective Canadian operations.  See what we turned up after the jump…

Monday Deal Review: February 16, 2009

An interesting collection of goings-on in this week’s special President’s Day / Family Day edition of the Monday Deal Review after the jump…

M&A Update

Following our last update, there have been a considerable number of bio/pharma M&A developments, so to bring you up to speed here is the latest deal info we’ve found…

It’s Raining M&A

Pfizer-Wyeth in Canada

Following today’s developments, some Canadian stats from the Pfizer Canada and Wyeth Canada web sites:

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