If you have read this before then you have read some of my previous posts. Perhaps it is time to discuss it again...particularly in light of the pending P-3 results and the M&A activity in pharma...and, yes, $4.83 is most reasonable. With the 725 million shares or less I expect outstanding at the time of an acquisition, that p/s places an acquisition price at about $3.5 Billion. Now, there are those who argue that Elite is not worth it. But to suggest that fails to understand whose logic is most important. I submit that it is the logic of the acquirer, who would complete their own valuation analysis; as I have said repeatedly. And when they do, they may arrive at the same conclusion Teva did about purchasing Auspex. In case you do not recall...
Teva bought Auspex for its late stage drug TECHNOLOGY that has the chance to be a new standard of care and for that it paid about $3.5 Billion. Let’s be clear, this tech has no revenues. The purchase was based on forecasted revenues (as determined by Teva’s business development valuation analysis – that may well be different than what Auspex thought they were worth). We might argue that Elite is in a very similar position at this time. Any firm seeking to buy Elite would be buying the potential of their ADF technology; and they also get some generic business thrown in (an attraction for Teva). So, as the Auspex purchase clearly shows, and is supported by other pharma acquisitions, the purchase price for firms with potential blockbuster drugs that have yet to garner revenue continues to be around 3.5 times projected first year revenues. Interesting, is it not?
And, this is only one form of analysis on an acquisition price. There are others...
