alright... you knocked... I'll bang
here's the rest of the DD. I don't like the variety on this board, I don't find it particularly helpful or productive. But I do wish I had listened to my gut (and to his limited, and I mean limited credit JP and a few others) when the company got in bed with a Cayman Island fund. The sand... always leaves ya raw. I'm not a slave to the stock, so if you think there's something here, follow your nose and start digging around Chinese Pharma Filings. I was onto this awhile ago, and while I nibbled at 8, 2, 1, 75, and 50, the vast number of my core buys are in the recent .30s and I have not sold my core yet though I have successfully sold spikes and losses from time to time.
At the top, I want to say, it's not to say that this will happen, it's that it could and it ought to, bc there's a lot of synergy here. For those familiar with the legal filings between reginicin and Lonza, pg 36 (http://www.regenicin.com/news/complaint_2013_09_30.pdf) we're looking for the company that in 2011 could've been trying to close a deal on ESS/facility with Lonza for $750million. That's a short list. But other chinese suitors are interesting too, I'll give you some names, that's all.
In early August, likely as the Series G was failing, Dr. Ben Li, CEO of Lee's pharmaceuticals, a $750M-$1B USD MCap set up an investment fund with a partner in the Cayman Islands with an initial investment of $18.5M, but set to get much larger. As noted, all subsidiaries and the company itself are incorporated under various caribbean schemes. Easy to play hide and seek with the cash. Generally, the company is well off, lots of cash.
I will, for a second, ignore the possibility that they in cahoots with Discover were trying to buy us from the inside out this fall or some other scheme.
Our recent conference was a crossborder SME event in Heifei/Anhui. Dr. Ben Li is american educated and an expert at such processes having executed all sorts of these deals. Lee's primary manufacturer and subsidiary company/facilities is called Zhaoke Pharmaceuticals. They have a burn care product that sucks/basic compared to ESS called Veloderm they licensed for PRC use from Italy in 2006 and they sponsor research to get it to chinese market etc. They describe themselves as "your partner in China", a growing company looking to licenses in 5 areas, one of them being dermatology.
They were cutting deals with equity investments and upfront licensing cash even in the whakhadoo market of September and still is at a killer pace (see armetheon link). Why? Because this company has extreme strength, has been working on deals for a long time, and everyone can tell you China wants a broader more innovative economy from a state directed perspective.
http://www.leespharm.com/en/
http://www.leespharm.com/file/investor/LTN201508211185.pdf
http://mobile.journals.lww.com/burncareresearch/_layouts/oaks.journals.mobile/articleviewer.aspx?year=2013&issue=05000&article=00016
https://armetheon.com/armetheon-and-lees-pharma-enter-into-agreement-to-develop-and-commercialize-tecarfarin-in-greater-china-and-thailand/
http://www.kpmg.com/ES/es/Internacionalizacion-KPMG/Documents/China-Outlook-2015.pdf
I really like our chances in China. See KPMG outlook link above. Sounds like the process will have us meeting with some of these companies online before the conference even begins, and we show up and in person see what we can work out with a handful of them. We were vetted at PBoC in NY. As you'll see from reading the link, we're in the right sector at the right time. China wants higher technology assets, SME's are being a given a huge boost from the government to help deals happen, and Anhui is a biotech sector (theres a professor at the flagship medical university there doing MANF research already). I know next to nothing about China, this is just a dip of the toes, but google returns some interesting companies like Lee's Pharma (zhaoke), Anhui Huaxing Hengda Biotech, Anhui Wisdom-Win Investment Co., Ltd, Hefei Tianmai Biotechnology Development Co, Hefei Cosource Medicine Technology Co, Anhui Tiger Biotech Co, Sealong Biotech. But even outside the sector, China wants this type of tech. Its not crazy for a tin can maker to get state backing to transform into a Skin graft company, that shit happens all the time in a pseudo state/market economy like China.
How awesome would it be to offload some global licensure (transact) to get some much needed cash and still have US/europe markets. WE know Anhui
TL;DR
I began by looking for bio/pharm companies we might meet for the PBoC trip, which is in the Anhui province capital of Heifei and looked for synergies.
Geography. Is it in Anhui?- Yes. Lee's functions across all of China, but main manufacturing is in Heifei
Size. Are they an SME?- Yes. Market cap just under 1 billion.
Do they partner with American companies?- Yes, they have multiple times in past, CEO is American educated, they seek additional partnerships for growth.
Are they financially able and interested?- Yes. See previous post.
Is there asset synergy- Yes. Both product, expertise. They licensed, sponsor R&D, have existing european partnership and expertise on a burn care product. Veloderm+ESS would make them market leader for burn care in PRC.
Is there financial synergy?- Yes, for both parties.
GC has been hinting at China for over a year now, and obviously this fall, things have been publicly accelerating. We know they were working on ESS acquisition for 18 mo. How long have they been working on developing chinese relationships? I just think by now they may have developed good China ideas well in advance of this. This could be more of a late stage type meeting for partnerships, tours, etc. I am optimistic.
Also, trolls, bug right off, right the eff off.