Biotech Values

[DewDiligence]

Omrix Mulls Hedge Fund Buyout

[Reposted from #msg-31526037.]

http://www.globes.co.il/serveen/globes/docview.asp?did=1000372963&fid=942

›The biotech company recently turned down an offer by a Johnson & Johnson unit.

By Shiri Habib
8-Aug-2008

Sources inform ''Globes'' that Omrix Biopharmaceuticals Ltd. (Nasdaq: OMRI ) has received a buyout offer from a US hedge fund for $25 per share, amounting to $430 million, in a deal that would take Omrix private. Omrix closed at $22.13 on Friday, giving a market cap of $378.8 million. The offer represents a 14% premium on the company's market cap.

The company had no comment on the report.

Omrix's share has risen 57% in recent months on reports that something interesting was going on there, as well as the company's quite strong financial report for the second quarter, published last week.

The sources added that, a few months ago, Omrix received an acquisition offer from Johnson & Johnson (NYSE: JNJ) unit Ethicon Inc., with which Omrix has a distribution agreement. Omrix turned the offer down because it felt that the offer was too low. Omrix president and CEO Robert Taub is now examining the offer from the US hedge fund, and he will reportedly send it to Ethicon to give it an opportunity to make a better offer of its own.

Omrix had claimed in the past that Ethicon was not making a strong enough effort in marketing the company's biosurgical sealants and other products. However, the company's appear to have settled their differences and their relationship is as good as ever.

Omrix will have to make a share buyback offer in order to sell the company to a private company and delist from Nasdaq. [I do not understand what this means.] Omrix's holdings are quite dispersed. Taub owns 9.4% of the company and, together with four other private parties, owns 17%. The public and institutional investors own the rest, including 7% by Adage Capital Partners GP LLC, 5.6% by Oberweis Asset Management Inc., and 4.4% by Orbimed Advisors LLC.

US and European sales of Omrix's flagship product, the Evicel fibrin sealant, are growing. The market is now waiting for the company's next two products, which could greatly boost sales if and when they are approved in the coming years: Adhexil for the prevention of post-surgical infections in tissue, especially gynecological procedures; and a fibrin pad for the prevention of bleeding during surgery. The results of the Phase II trial for the fibrin pad are due in late 2008 or early 2009, and it should reach market by late 2010. The results of the Phase I/II trial for Adhexil are due in late 2009, and could lead to a strategic or distribution agreement.‹