Entering text into the input field will update the search result below

PDL BioPharma And Neos Therapeutics - The Deal That Could Have Been

Adam Stich profile picture
Adam Stich


  • After Kaleo deal, PDLI has close to $500 in cash.
  • For the past year, PDLI mgmt. has stated they plan on making an equity pharma offer.
  • Neos was that offer.
  • Regrettably - for PDLI shareholders - the deal was not accepted.
  • The deal should provide reassurance for PDLI shareholders that mgmt. is committed to pharma acquisition strategy that is cash accretive.

I began following PDL Biopharma (NASDAQ:PDLI) in March of 2017, when I wrote my first SA piece on the company: 2017 Could be a Gamechanger. You are welcome to read that article if you want to learn more about the company and why their stock dropped from $7 to $2 over the past few years. My second article on PDLI - Now is the Time to Buy - outlines my bull thesis for the company, including potential near term (1-6 month) catalysts for the stock. Essentially, I argue that PDLI is a conservative investment with a $500 million balance sheet, about $5.5 book value, nearly $3.5 per share of cash on balance after the Ariad and Kaleo deals, and a growing potential for earnings with Tekturna - a third line hypertension drug for patients intolerant to ACEs and ARBs (generic hypertension medication). Additionally, I write that one key catalyst for 2017 is the potential of an acquisition. Generally, I understand that many acquisitions are risky business, and often may not produce the synergies that the acquiring company hypes. However, PDLI is, in essence, like a public company that operates like a private equity shop, with a history of accretive debt and royalty deals in the pharmaceutical space. Recently, PDLI has entered the pharma equity space, namely with their purchase of Noden pharma and the Tekturna/Rasilez products.

Mid-way through Q3 2017, PDLI management followed through on projections they have made all year and made an unsolicited deal for Neos Therapeutics (NASDAQ:NEOS). Below is a synopsis of Neos' business model from their recent Q2 17 10Q:

They have "… a pipeline of extended­ release pharmaceuticals, which include two approved products and one proprietary product candidate in late stage development for the treatment of attention deficit hyperactivity disorder ("ADHD"). Adzenys XR­ODT was approved by the FDA on January

This article was written by

Adam Stich profile picture
Value oriented (and special situations) individual investor.  I look for good balance sheets, hidden assets, or - on the short side- the inverse of that.  Focus on fundamentals and an accounting analysis.  Finance is not my day job; I am a self taught investor.

Analyst’s Disclosure: I am/we are long PDLI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.