Replies to post #106208 on Biotech Values

[DewDiligence]

Reuters chimes in on the PFE-KG deal. PFE today reiterated its 2012
non-GAAP EPS guidance of $2.25-2.35, which gives the current share
price a P/E based on 2012 EPS of 7.6x and ought to make the stock
a no-brainer if you believe PFE can do what it says. (2012 is the year
of consequence for valuation purposes because it’s the first full year
following expiration of the Lipitor patent.)

http://www.reuters.com/article/idCNN1216434820101012

›Pfizer to Buy King Pharma for $3.6B in Cash

Tue Oct 12, 2010 11:04am EDT
By Bill Berkrot

NEW YORK, Oct 12 (Reuters) - Pfizer Inc (PF), the world's largest drugmaker, has agreed to buy King Pharmaceuticals Inc (KG) for $3.6 billion in a move to shore up earnings ahead of the looming evaporation of revenue from Lipitor, its biggest product.

Pfizer, which is still digesting last year's $67 billion acquisition of Wyeth, said on Tuesday it will pay $14.25 a share for King -- representing a 40 percent premium over King's closing share price on Monday.

Pfizer said it expects the transaction to add to its adjusted earnings per share by about 2 cents for both 2011 and 2012 and by 3 cents to 4 cents annually from 2013 to 2015. And it reaffirmed its earnings forecast for 2012. [PFE’s 2012 non-GAAP EPS guidance is $2.25-2.35.]

The company said it expects to generate initial cost-savings of more than $200 million, of which 50 percent will be realized in the first year, 75 percent in the second, and 100 percent in the third year.

…The deal will significantly expand Pfizer's presence in the market for pain drugs by adding King's pain portfolio to its own pain products, such as Lyrica and Celebrex. King will bring Avinza, the Flector Patch and the recently launched Embeda, the first approved opioid pain product intended to discourage abuse. King has other abuse-resistant pain products in development as well.

…The market for pain relief and management is large and increasing. Physicians in the United States wrote about 320 million prescriptions to treat pain in 2009, Pfizer said.

"King's leadership in new formulations of pain treatments designed to discourage common methods of misuse and abuse will provide Pfizer with multiple new drug delivery platforms, while providing potential long-term upside," the company said.

Frank D'Amelio, Pfizer's chief financial officer, told analysts on a conference call that its acquisition strategy will likely involve "bolt-on" acquisitions in areas such as emerging markets and generic drugs.

Bristol, Tennessee-based King also makes animal health products and specialty pharmaceuticals, including the Meridian auto-injector for emergency drug delivery, and an animal health business that offers feed additive products.

"King's three businesses are not only complementary to Pfizer's businesses, but are also strategically aligned with Pfizer's Primary Care, Established Products, and Animal Health business units, enabling a seamless combination that will maximize King's assets with Pfizer's global organization's scale and resources," the companies said.‹

[DewDiligence]

PFE/PTIE/DRRX/ACUR—one of the rare articles from Seeking Alpha that’s worth reading, IMO:

http://seekingalpha.com/article/255543-pharmaceutical-companies-reformulate-pain-products-how-investors-can-benefit

[DewDiligence]

FDA approves PFE’s Troxyca (oxycodone/naltrexone)—the only oxycodone product that carries an FDA label with a description of its abuse-resistant features:

http://finance.yahoo.com/news/fda-approves-troxyca-er-oxycodone-222100823.html

PFE acquired Troxyca in the 2010 buyout of King Pharmaceuticals (#msg-55425514).

The King deal also gave PFE Embeda, a morphine/naltrexone combination that was FDA-approved in 2009.