Intellipharmaceutics International Inc. (IPCI)

[AngeloFoca]

Under the terms of the agreement, Allergan will acquire Tobira for an upfront payment of $28.35 per share in cash, and up to $49.84 per share in contingent value rights that may be payable based on the successful completion of certain development, regulatory and commercial milestones, for a total potential consideration of up to $1.695 billion.

http://finance.yahoo.com/news/tobira-therapeutics-skyrockets-allergan-acquisition-152502746.html

I'm not saying I think there's any discussions of a buy-out going on... but if there were... the Tobira buy out is an excellent example of what could be expected.

These are the figures I would expect to see in an IPCI buyout if it were to happen now.

As I've often expressed here... I think right now IPCI should be valued at $6.00, so a 100% premium would give us a $12.00 up front payment, or around $480 million cash up front ($12 x 38.5 fully diluted shares = $462 million + $18 million for exercise of 5 million warrants and options at ~ $3.60 each)... as I've also expressed, I believe long term... 3 to 5 years, I think IPCI will have a market cap of $2.5 billion so you set up contingency fees to arrive at that if and when designated milestones are achieved.

For instance... $8 to $12 million for each ANDA that achieves approval - 7 in all are pending, so figure on $70 million if/when fully achieved - FDA approval for Rexista would be a contingecy fee of perhaps $500 million (a contingency coupon worth $12 per share would be exercisable upon FDA approval)... while FDA approval on Regabatin could be valued at say $800 million - also FDA approval of each and every indication of a drug utilizing PODRAS technology could bring in perhaps A=$25 million B=$50 million C=$100 million whereas A,B,and C are designated as low medium and high value drugs based on the expectations of their sales potential... and the 20 or so outlined to date, combined could possibly bring in $1 billion.

Anyway... any thing can be specified in a contract... but I don't believe such a thing would happen with IPCI since clarity going forward is murky at best... and I think Odidi wants to stay on top of it all.

p.s. As you see in the Tobira agreement... the cash offer is $28+ and the stock is right now selling at $38+ which means that investors are right now paying $10 for the $50 contingency value that Allergan will pay... 20% is not bad... someone who follows Tobira who thinks their 2 primary products will gain FDA approval could make 500% on their investment within a few years... my guess is that the 20% will grow to 40% as the target date approaches.