pharmawire article - javelin trying to shop itself?
From Pharmaclown, posted today on biotech values
18-Sep-08 15:55 Javelin Pharma in the process of trying to sell itself; UBS retained as investment bank, sources say
Story Javelin Pharmaceuticals (JAV), the listed Cambridge, Massachusetts-based specialty pharmaceutical company, is in the process of trying to sell itself, sources said, despite company assertions of “robust” partnership strategy.
Late last month CEO Martin Driscoll told this news service that it hopes to have a partner in place for its injectable pain drug, Dyloject (diclofenac sodium) in the near future. Talks are currently ongoing Driscoll had said at the time, and it is unclear whether a single partner will emerge with worldwide rights or whether the company will choose to work with a different company in each region.
A first source familiar with the situation said that Javelin had retained UBS as its investment bank to run an auction process, which entails a sale. First round bids were due the final week of August, and at the time around seven bidders, of different types, including private equity, private companies, and smaller specialty pharma, were interested, the source added.
UBS declined to comment. In an email response, Javelin’s Driscoll said the company’s product partnership discussions are robust. Regarding M&A activity, he said it is Javelin’s policy not to comment.
A second source said it was to his understanding that the company has had a number of discussions to either partner their product or sell the business.
The company has three Phase III products – Dyloject for post operative pain, Rylomine (intranasal morphine) indicated for acute moderate-to-severe pain, and Ereska (intranasal ketamine), indicated for acute moderate-to-severe pain – of which firms have looked at over the past couple of years, the second source said. There has historically been some skepticism regarding these products, he noted, as the company has not been able to partner them or sell “them for a while.”
Still, the second source emphasized the company needs to consider either strategy as it is burning through a great deal of cash and would not have enough money to get the products on the market. Javelin's six month cash burn as of August 2008, was approximately USD 19m. The company has USD 41m in cash and cash equivalents.
The second source was more conservative on a private equity bid. He said private equity firms will look at a lot of things, and are "desperate" to make investments, but cautioned that taking Javelin private is risky due to high costs. He noted that he has communicated with Javelin in recent weeks, and the company has made it known it is still trying to partner some of their products.
UCB, the Belgian pharma group, which specializes in key therapeutic areas such as inflammation, oncology and the central nervous system, would be a logical suitor, the second source said. Yet due to UCB's current restructuring initiative, and plans to re-establish itself as specialty drug firm, the source said he remained unsure about its current viability as a bidder for Javelin.
The Belgian-based company plans to cut 17% of its worldwide staff, an approximate reduction of 2000 employees, as part of its restructuring plans, due to key drugs going off-patent.
Cephalon is another M&A suitor possibility, the second source added.
Endo Pharmaceuticals has also been flagged by an analyst as a potential partner for Javelin in a previous report published by this news service. The first source said he did not believe these would be the types of companies that would be potential partners.
Javelin has a USD 148m market cap.
by Sasha Damouni
