Cynapsus Therapeutics Inc. (CYNA)

[noretreat]

Here's why a drugmaker paid a 120% premium for biotech Cynapsus
MARKETWATCH 10:08 AM ET 9/1/2016
Symbol Last Price Change
CYNA 39.655up +21.295 (+115.99%)
SOMMF 4.3up 0 (0%)
QUOTES AS OF 12:27:43 PM ET 09/01/2016
Cynapsus' Parkinson's drug could reach $2.0 billion in sales

The all-cash, $624 million purchase of Cynapsus Therapeutics Inc.(CYNA) by Sunovion Pharmaceuticals, announced Wednesday after the close came at quite a premium of 120%.

Powering that figure is a potentially transformative Parkinson's disease treatment. Canada-based Cynapsus (CTH.T) is poised to release late-stage clinical trial results on that drug in the next one to two months.

APL-130277 is intended to help Parkinson's patients manage the disease's so-called "off" episodes, when the disease isn't under control and the patient is less mobile. The treatment uses a molecule commonly seen in this setting, apomorphine, but as a thin strip taken under the tongue rather than an injection.

In a mid-August note, BMO Capital Markets Corp. analyst Do Kim predicted the treatment "will redefine the acute therapy market for Parkinson's."

The drug could at peak garner sales of $2 billion worldwide, with about $1.5 billion of that occurring in the U.S. That's according to estimates based on its "ease of administration combined with its milder safety profile" compared with the Parkinson's treatment Apokyn.

Cynapsus said on Monday that the Food and Drug Administration had granted its treatment a "fast track" designation, which could allow it access to a faster approval process.

Related: This beaten-down biotech stock is a cure for your portfolio (http://www.marketwatch.com/story/this-beaten- down-biotech-stock-is-a-cure-for-your-portfolio-2016-08-09)

Kim, in his note earlier this month, maintained an outperform rating for the company and set a $25 price target, even though Cynapsus missed BMO's earnings estimates in the second quarter, reporting an 83 cents loss per share compared with a 80 cents loss expected by BMO.

He also recommended investors purchase before phase 3 trial results emerging in September or October.

See: FDA approves drug to treat highly disruptive symptom of Parkinson's disease (http://www.marketwatch.com/story/ fda-approves-drug-to-treat-highly-disruptive-symptom-of-parkinsons-disease-2016-05-02)

(http://www.marketwatch.com/story/fda-approves-drug-to-treat-highly-disruptive-symptom-of-parkinsons-disease-2016-05- 02)

(https://w.graphiq.com/w/7hTxwnRaHfT)

Cynapsus' purchase (http://www.marketwatch.com/story/sunovion-to-buy-cynapsus-therapeuticals-for-120-premium-2016-08- 31)will help Sunovion, a subsidiary of Japan'sSumitomo Chemical Co. Ltd.(SOMMF), "diversify its portfolio in key therapeutic areas," as well as expand, the company said. The deal, already approved by both companies' board of directors, is expected to close in the fourth quarter.

Cynapsus' shares shot up 116.0% in morning trade on Thursday, to $39.65 per share. The company's shares rose 179.4% over the last three months, compared with a 3.2% rise in the S&P 500

Read more: Don't buy into biotech's 'drug dream' recovery (http://www.marketwatch.com/story/dont-buy-into-biotechs- drug-dream-recovery-2016-04-07)

-Emma Court; 415-439-6400; [e-mail]


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