Biotech Values

[DewDiligence]

ENDP acquires PATH for $2.85/sh in cash plus contingent rights:

http://finance.yahoo.com/news/endo-acquire-specialty-pharmaceutical-company-120000858.html

Endo Health Solutions today announced it has entered into a definitive agreement under which Endo will acquire NuPathe Inc. for $2.85 per share in cash, or approximately $105 million. In addition to the upfront cash payment, NuPathe shareholders will receive rights to receive additional cash payments of up to $3.15 per share if specified net sales of NuPathe's migraine treatment ZECUITY are achieved over time... The contingent cash consideration payments can be summarized as follows:

• $2.15 per share if net sales of ZECUITY exceed $100 million during any four-quarter period prior to the ninth anniversary of the first commercial sale of ZECUITY; and

• An additional $1.00 per share if net sales of ZECUITY exceed $300 million during any four-quarter period prior to the ninth anniversary of the first commercial sale of ZECUITY.

The $2.85 buyout price (excluding contingent payments) is a 23% premium to Friday’s close; however, PATH is already trading at around $3.30, ascribing ~$0.45/sh of value to the contingent rights.