FWIW. My PFE deal prediction and structuring:
PFE wants to control Europe launch, and with days away from Launch in Germany, I expect an offer near-term.
In early 2020, Yasmeen Rashimi, the analyst now at Piper (was at Roth at the time) was the only sell side analyst that valued Europe in her modeling. Her target for AMRN was $31 with $16 coming from Europe.
Interestingly, the article that appeared this weekend and that has been board chatter, estimates $2.5B in peak European sales. A 3x multiple is roughly $16.
So PFE offers a 1:3 stock deal, which values AMRN at $15-$17 based on recent PFE pps.
KM will not think that is enough given that he stated on the last conference call that he believes RoW revenues could be $1B (3x = $6). He also believes that USA $600M run rate is understated due to limited marketing capabilities during COVID-19 lockdown.
So PFE adds a CVR for $10 per share in cash (maybe stock) payable if/when non European revenue hits an annual run rate of $1.5B.
Assuming PFE doesn’t expect to hit that run rate, they are basically getting residual USA sales, Canada and China royalties, and any new RoW revenues for free.
If something changes on the USA litigation front or new V indications are approved, the peak run rate should surpass the CVR threshold, and PFE wins.
We don’t know if PFE has been acquiring shares (obviously <5% of outstanding) at “cheap” current levels. If so, no need to payout stock or CVR for these shares. Similarly, any shares acquired in open market by PFE, pre closure, would not require the CVR. All lowering the final deal cost for PFE.
KM and insiders would approve since all their options would vest on deal closing (6 months or so?). The value of their stock would have nearly tripled from current levels, plus they have the CVR.
On announcement, AMRN stock would trade close to $15 (given arbitrage and potential optionallity of CVR). Most current shareholders would be happy with a near tripling from current price and can decide on whether to hold until closing to get the CVR.
Personally, I think the CVR would pay out within 2-3 years of deal closure as:
1) a superior PFE Salesforce could grow USA revenues from current levels;
2) as KM stated, an NDA could be approved in some countries within a 6 month timeframe. (Australia and some South American countries)
3) a small, yet growing royalty stream in China and Canada.
And of course the wild cards of changes from USA litigation and/or new indications for Vascepa.
Cheers!!
GLTA,
x BLK BK
