Biotech Values

[RockRat]

There are now at least two law firms investigating the offer. Both cite analyst targets as if they are fair value, which sounds to me as though they are either a) copying each other, or b) being fed this party line by management and regurgitating it (I think it is b). Ignoring what the market thinks about valuation. Meanwhile the BOD says nada. I assume the lawyers are being proactive, so they can file suit immediately if the BOD should accept the offer. As you know, I've been involved with some acquisitions that involved lawsuits. This tactic of staying mute and letting lawyers do the talking from day one is a new one to me, though. Guess I'm still wet behind the ears, but this seems like a particularly childish way of going about it. The BOD is too spineless to just say "no" all by itself. And frankly, the whole legal angle could backfire, because as Ramius points out, this BOD has some odd power concentrations. I'm not surprised, really: Cypress is a Rosenwald company.

McBio, do you know approximately when the next P2b data (the six month version) will be out? I'm thinking about a year from initiation, as these trials are fairly easy to enroll; is it even started yet? The reason I ask is because in the context of the company being in play, it's likely a non-event. The takeout drama will be over before we see the next dataset. So more important to the valuation for the takeout players is the Savella sales. Back of napkin seems to be a run rate of 20% q/q. Royalty rate appears to be in low teens at the current level of sales. I've seen peak sales estimates for Savella at ~$800 million, but not sure what year is being talked about. I've seen ~$325 million for 2015, so the peak must be about 10 years out. Not sure what goes on with co-promotion set up; currently revenue from that is almost double royalty revenue.

As I posted on the SI thread,

http://siliconinvestor.advfn.com/readmsg.aspx?msgid=26694531

I agree with Biomaven that 1020 is interesting. The main risk seems to be its global agonism of GABA. Research over the last few years points to specific receptor subtypes as being desirable to hit, and others not desirable to hit in schizophrenia. So far, so good, but the enrollment in the extension trail was (surprisingly) small, so we have no read on it. rkrw's concern of lukewarm data is a valid one. I am cautiously optimistic.

No position as yet; looking for clarity/info, and a better entry. Perhaps some wrinkle in the takeout battle will give me the latter. If not, it'll be fun to watch.

Edit: Wow, speaking of Rosenwald, check out this fawning, self-serving blog:

http://www.lindsayrosenwald.net/

Regards, RockRat