Whenever shareholders bemoan the fate of their investment in this or that drugmaker, invariably someone mentions that Fred Hassan should become CEO. Why? Fred has a brief, if controversial track record of running companies and then selling them to others. This happened when he ran Pharmacia, which was sold to Pfizer (PFE), and more recently with Schering-Plough (SGP), which is now part of Merck (MRK).
But Fred is not the only one who knows how to flip a drugmaker. Let us introduce you to - or remind you of the existence of - Adrian Adams. Earlier this week, he notched a deal to sell Inspire Pharmaceuticals (ISPH), where he is CEO, to Merck for $430 million, or $5 a share, a 26 percent premium at the time of the announcement.
However, the stock was about $6 when he was hired in February 2010. For months after his arrival, Inspire shares climbed and reached $8.74, but plunged to $3.43 in January when clinical trial results for a cystic fibrosis drug disappointed. And so selling the entire company to Merck was a quick way to restore some luster and, of course, cash out. Adams stands to leave with $9 million, according to the change of control provisions in this Securities and Exchange Commission filing (see page 54).
Where was Adams previously? He ran Sepracor (SEPR) from 2007 to 2009 before selling that drugmaker, which was best known for the Lunesta sleeping pill and its ubiquitous ads, to Dainippon Sumitomo Pharma (DNPUF.PK) for $2.6 billion or $23 a share. As Mass High Tech reported at the time, Adams walked away with about $11 million for his trouble (see this).
And from 2002 until late 2006, Adams was ceo of Kos Pharmaceuticals (KOSP), which marketed the Niaspan cholesterol pill. And you know what happened….he sold Kos to Abbott Laboratories (ABT) for $3.7 billion, or $78 a share, which amounted to a 56 premium prior to the announcement. At 3.7 times estimated 2007 revenues and 30 times estimated 2007 earnings per share, “the deal is not exactly cheap,” JPMorgan analyst Michael Weinstein wrote in an investor note, according to Bloomberg News.
Where will he land next? As you can see, Adams has shied away from the biggest names. Perhaps he will be tapped to revive Amylin Pharmaceuticals (AMLN), a struggling drugmaker where he is a director. Or just pick the name of a languishing stock and maybe Adams will show up. Unless Fred gets there first.