1 week Ago
Canadian drug developer Theratechnologies Inc. is in play. The Montreal-based company, known for its treatments for HIV patients, said late Friday that it’s in negotiations on a deal to sell itself to an unnamed buyer that has already done extensive due diligence.
It said if a definitive agreement is struck, it will contain a “go-shop” provision allowing the company to talk to other suitors. The disclosure came after one of those suitors, an American pharmaceutical packaging company called Future Pak LLC, revealed Friday morning that it wants to take over Theratechnologies and that it has made a cash offer worth up to US$255-million. It said in a statement that its approaches so far have been met with “minimal engagement” from the Canadian company, leading it to make public its interest as a buyer.
Theratechnologies responded hours later with a news release that provided context for recent events. The company said it received a first unsolicited, non-binding proposal from Future Pak last August worth US$100-million that it rejected as “not attractive.” It said it then received a second unsolicited, non-binding bid from Future Pak in January that it couldn’t consider because it was already in exclusive talks with another potential suitor.
Theratechnologies said its board has now formed a special committee made entirely of independent directors to review offers. Barclays Capital is acting as financial advisor to the committee while Fasken Martineau DuMoulin LLP is the external legal advisor. Future Pak is a privately-held manufacturer of blister packs, bottles and other packaging for the pharmaceutical industry.
The company said it is offering US$205-million in cash for Theratechnologies once the deal closes and up to US$50-million in contingent value right payments. The proposal faces no financing hurdles and has the backing of its partner, Colbeck Capital Management, according to its statement. Future did not respond to a request for an interview.
The offer is worth between US$3.51 and US$4.50 per share.
That’s a 164-per-cent to 238-per-cent premium to Theratechnologies’s closing stock price of US$1.33 April 10 on the NASDAQ Exchange, Future said. “We believe this proposal provides significant upside and a solid foundation for constructive dialogue, with the goal of achieving a mutually beneficial transaction,” Nirav Patel, chief growth officer at Future Pak, said in a statement.
Future Pak tried and failed to buy U.S. drug maker Vanda Pharmaceuticals last year, withdrawing its proposal after what it called “continued lack of engagement” from the company.
That it’s taking a run at another drug developer now suggests it wants to expand its business into marketing drugs directly. Theratechnologies is a specialty pharmaceutical company whose treatments address the unmet medical needs of HIV patients. Its two main products are EGRIFTA, which helps reduce excess abdominal fat, and Trogarzo.
The Montreal company’s dual-listed shares shot up 50 per cent to close at US$2.00 in NASDAQ trading Friday and jumped 46 per cent to close at $2.70 on the Toronto Stock Exchange.
That was still well below the US$3.51 minimum being offered by Future Pak, indicating investors did not believe a deal will get done. But that was before they had this latest information.
Future Pak’s unsolicited offer highlights that there is value in the EGRIFTA franchise, Jones Research analyst Justin Walsh said in a note to clients before Theratechnologies published its news release. He expressed skepticism that Future Pak would succeed with its offer. “It’s more likely to fall through than close,” he said.
The two largest shareholders in Theratechnologies are Investissement Québec (IQ), the Quebec government’s investment arm with a 19.8-per-cent stake, and Soleus Capital Master Fund, a U.S.
health care investment firm, which has a 10.4-per-cent position, according to data by S&P Capital IQ. Investissement Québec spokeswoman Isabelle Fontaine declined to comment.
A representative for Soleus did not respond to a request for comment..
