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Daniel Lauchheimer
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Investor with no formal training. Enjoy reading about happenings in corporate America, and trying to predict where things will land in the future. Interested specifically (but not limited to) Healthcare, and Real Estate. Also interested in macro strategies, and derivatives-- both for investing... More
  • Pharma Friday 5/17-5/25 0 comments
    May 26, 2013 11:13 AM | about stocks: VRX, ACT, MDT, ELN, WCRX, XNPT

    A weekly roundup of news from the pharma industry.

    Earnings

    1. Medtronic (MDT) reported earnings this week with revenues of $4.46bn, and EPS of $1.10 a 7 cent beat. Gains led by defibrillator sales, which gained 1.5 percent to $755 million and pacemakers, which climbed 2.6 percent to $505 million. EPS guidance of $3.80-$3.85 bracketing the $3.84 a share average of 24 analysts.

    M&A

    1. Eye care company Bausch & Lomb Inc. is nearing a deal to sell itself to drug maker Valeant Pharmaceuticals International Inc. (VRX) for about $9 billion. This deal comes on the heels of VRX's failed attempt to buy rival Actavis. VRX known as an aggressive acquirer-announcing more than 20 deals since 2011-which helps explain how it pivoted in less than a month from discussing a deal with Actavis to nearing one with Bausch & Lomb. Among its biggest deals was a combination with Biovail Corp. in 2010 and the $2.6 billion takeover of Medicis Pharmaceutical Corp. in 2012. That acquisition bolstered its position in skin-care products, a focus for Valeant.
    2. Elan (ELN) continued its battle with Royalty Pharma (RP). RP raised its offer by 12% to $6.4bn for ELN, which the ELN board rejected. Part of the RP deal stipulated that ELN shareholders reject ELN's Theravance (THRX) transaction, where ELN will received royalties from THRX's lung treatments.
    3. ELN itself went on the offensive buying AOP Orphan Pharmaceuticals AG -- a rare disease manufacturer -- for 263.5 million euros, and taking a 48 percent stake in Dubai-based NewBridge Pharmaceuticals for $40 million. Finally, ELN plans to issue $800 million in debt to take advantage of attractive interest rates
    4. Actavis Inc. (ACT), the largest U.S. maker of generic drugs by market value, agreed to acquire Warner Chilcott (WCRX) for about $5 billion excluding net debt in a deal to expand in women's health and urology. Actavis is paying about 5.8x EBITDA that compares with the median of about 13 times EBITDA in a survey of almost 40 similar deals, the data show. WCRX investors will receive 0.16 shares of new Actavis stock for each Warner Chilcott share they own.
    5. Merck (MRK) reached a deal with Goldman Sachs (GS) to repurchase $5 billion of its shares from the investment bank. Merck will make an initial purchase of 99.5 million shares based on current market prices. Merck sold bonds last week to fund some of the share repurchases, which the company had said were to reach about $7.5 billion over 12 months.
    6. Shire (SHPG) is looking at ways of giving as much as £2bn back, already have a £500mm share buy back in place announced in Q4. The maker of Adderold has been consistently targeted by large pharma firms like Bristol Meyers (BMS).

    Regulatory

    1. XenoPort Inc. (XNPT), the maker of the drug Horizant for Restless Legs Syndrome, sank the most in almost three years after an experimental medicine failed to meet goals of a late-stage clinical trial. Brian Abrahams, an analyst with Wells Fargo (WFC), had estimated sales of $77 million by 2017 for the drug. This is disappointing, given promising phase 2 data
    2. MRK's Suvorexant -- an experimental sleep medication that blocks orexins to facilitate sleep while those for sale now work with the body's receptors that reduce neuron activity -- received word from the FDA this week that there might be issues with dosing. -- Merck says smallest doses would be 15mg, but the FDA contends that even that might not be safe. Suvorexant may generate sales of $526 million in 2017 if approved, based on the average of six analysts' estimates compiled by Bloomberg
    Stocks: VRX, ACT, MDT, ELN, WCRX, XNPT
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