Replies to post #3134 on Biotech Values

[DewDiligence]

>> Agreement bars (pun) ceph from filing a legal challenge to a Barr generic filing. Without this ftc deal, ceph surely had some formulation and use patents up its sleeve. So no question to me, this puts a generic actiq on the market before (possibly by several years) it otherwise would have. <<

That was my original view, before I listened to CEPH’s CC. But CEPH’s CEO, Frank Baldino, said on the call that the supplemental IP beyond the basic Actiq patent set to expire in 2006 was minimal and pertained largely to packaging. Hence, CEPH might have been hard-pressed to justify contesting a generic challenge.

The larger issue is that, if you believe the statements emanating from CEPH, Cima’s Fentanyl drug has vastly greater sales potential than Actiq. The lollipop concept worked nicely for a small slice of the “breakthrough pain” market but it also limited Actiq’s appeal beyond that niche market.

[DewDiligence]

Cima Sues AaiPharma Over Merger Fees

[Apropos to our thread…]

http://biz.yahoo.com/ap/040811/cima_aai_1.html
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Wednesday August 11, 7:15 pm ET

Cima Labs Sues Former Merger Partner AaiPharma to Recoup $17 Million in Fees

EDEN PRARIE, Minn. (AP) -- Cima Labs Inc. on Wednesday said it filed a lawsuit to recover nearly $17 million in fees relating to the breakup of its acquisition by AaiPharma Inc., which is currently under investigation by regulators regarding its sales practices.

The lawsuit, filed in Minnesota's Hennepin County District Court, alleges fraud and breach of contract relating to the merger agreement the companies entered Aug. 5, 2003. Cima hopes to recover $11.5 million it paid AaiPharma as part of a contractual merger break-up fee, as well as $5 million in other costs.

Cima originally had agreed to be acquired by AaiPharma last August in a deal valued at $360 million. However, the agreement to merge kicked off a takeover battle for Cima with rival Cephalon Inc. and a mystery bidder.

After originally rejecting Cephalon's bid, Cima agreed to be bought by Cephalon in a deal valued at $515 million. The acquisition was approved by federal regulators earlier this week, and ended a year-long saga on Wall Street regarding about who Cima would agree to be taken over by.

Cima contends it never would have pursued a deal had it known AaiPharma launched an internal investigation into sales practices last March. [Sounds like a reasonable argument.]

"Had AaiPharma's financial results as restated been public, we would not have entered into a merger agreement with the company," said Cima chairman and interim chief executive Steven Ratoff in a statement. "Under the circumstances, we believe it is appropriate to seek recovery of the break-up fee and recoup the significant fees and expenses we incurred in connection with negotiating the transaction."

Shares of Cima closed up 1 cent, or 0.03 percent, at $33.98, AaiPharma closed down 49 cents, or nearly 16 percent, at $2.62 -- and continued its slide in the after-hours session, recently changing hands at $2.45 -- and Cephalon closed down 45 cents, or 1 percent, at $42.55. All trade on the Nasdaq.
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