Biotech Values

[corpstrat]

Encysive: 4x peak revs, 2x peak revs? Whatever!
Anyone make any sense of this piece? Or is this deal not relevant for biotech valuation?

http://biz.yahoo.com/ap/080220/encysive_mover.html?.v=2&printer=1
AP
Encysive Soars on Pfizer Acquisition
Wednesday February 20, 6:43 pm ET
By Jennifer Sterling, AP Business Writer
Encysive Skyrockets After Pfizer Announces Acquisition; Analysts Cite Thelin US Prospects

NEW YORK (AP) -- Encysive Pharmaceuticals Inc.'s stock skyrocketed Wednesday after Pfizer Inc. said it will buy the biopharmaceutical company for about $195 million and analysts praised the deal.
New-York-based drug maker Pfizer, which markets the world's best-selling cholesterol drug Lipitor, will make a $2.35-per-share cash tender offer for Encysive.

Shares of Houston-based Encysive soared $1.19, or 110.2 percent, to $2.27. In the past year, the stock has ranged between 59 cents and $5.02.

The acquisition would give Pfizer the rights to Thelin, an oral drug approved in several European Union countries but struggling for approval with U.S. regulators. Pfizer would also add Encysive's other pipeline drug candidates to its portfolio.

Thelin treats pulmonary arterial hypertension, or high blood pressure in the pulmonary artery.

The deal, if approved, would strengthen Pfizer's position in treatments for the condition, for which it already markets a drug called Revatio, which contains the same active ingredient as Viagra.

Meanwhile, Pfizer plans a late-stage trial of Thelin in the U.S. to obtain approval for the drug by the Food and Drug Administration.

On Wednesday, investors appeared strongly in favor of the deal and expressed confidence Pfizer would achieve approval for Thelin.

Rodman & Renshaw LLC analyst Navdeep Jaikaria said the deal was surprising but would bode well for Encysive shareholders. He also cast aside worries over Thelin's approval prospects in the U.S.

Jaikaria said without the acquisition, it could have taken a year or two for Encysive's stock to build enough value to trade at its current range.

And despite Encysive's struggles with Thelin in the U.S., Jaikaria said Pfizer's know-how in the PAH market and vast resources should translate into an approval for Thelin.

"With Pfizer coming into the game, we believe Thelin can be a much bigger drug than it would've been otherwise because they have a knowledge of the (pulmonary arterial hypertension) space and already have an approved drug there," Jaikaria said.

He rates Encysive at "Market Perform."

Cowen and Co. analyst Philip Nadeau said the valuation of the deal was in line with prior acquisitions and means Pfizer is paying about four times Thelin's peak revenue. He values peak sales of Thelin in 2012 at about $100 million.

Nadeau also noted that Pfizer already has the infrastructure in place for Thelin, based on its sales and marketing team for Revatio. Nadeau rates Encysive at "Outperform."