Amylin (AMLN) Wants a Buyout Price At Least in the Low-to-Mid $30s - Jefferies
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Price: $30.98 --0%
Rating Summary:
3 Buy, 8 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 25 | New: 24
Rating Summary:
3 Buy, 8 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 25 | New: 24
Trade AMLN Now!
In late-March, Amylin Pharmaceuticals (NASDAQ: AMLN) rejected a $22 per share takeover bid from Bristol-Myers Squibb (NYSE: BMY). Since that time, shares have surged to $28 as bidders swirl around the company
Today, analysts at Jefferies weighed in on the situation - saying they've learned three datapoints during management discussions to better understand acquisition speculation.
Based on feedback on the timing of contractual triggers in the Lilly agreement, they believe Amylin will feel pressure to make strategic decisions on its independence by September.
"One critical point: under the termination agreement, LLY has the right to provide AMLN 180 days notice of its intention to return the rights back for any country of its choosing as of Sept 30, 2012. We believe that AMLN is preparing to receive notice from LLY in September, and based on management feedback, the company would like to have resolution of its international marketing situation by year end 2012 at the latest and preferably before the end of September."
The firm also notes that perspective on peak GLP-1 sales and durability of Bydureon exclusivity leads them to impute the company's perspective on valuation is in the $30s.
Currently a $2 billion, management believes GLP-1 could grow to a market size in the 'high single digit" billions of sales at peak, even without positive data from ongoing cardiovascular outcomes trial, the firm notes. In addition, management sees strong value in the durability of the Bydureon annuity, with a very low likelihood of generic competition.
"We have taken this feedback and incorporated into a valuation analysis using the following assumptions: a range of $7-9b in peak WW GLP-1 sales, 38% peak market share for AMLN by 2020, a 75-25 split of U.S. vs. ROW sales, and inclusion of a terminal value function into a DCF model to reflect continued branded sales beyond patent expiration. This yields a DCF valuation of $27-40/share, or an average of $33.50/share, which would represent our interpretation of the management’s perspective on its own value on a standalone basis. This does not include the impact of a positive readout from the EXSCEL cardiovascular outcomes study expected by 2016. Thus, we would expect that theoretical acquisition offers would have to be at least in the low-to-mid $30s to meet the threshold of consideration by AMLN management for a sale of the company at this stage."
The firm maintained a Buy rating and $32 price target.
For an analyst ratings summary and ratings history on Amylin Pharmaceuticals click here. For more ratings news on Amylin Pharmaceuticals click here.
Shares of Amylin Pharmaceuticals closed at $27.64 yesterday, with a 52 week range of $8.03-$28.45.
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Today, analysts at Jefferies weighed in on the situation - saying they've learned three datapoints during management discussions to better understand acquisition speculation.
Based on feedback on the timing of contractual triggers in the Lilly agreement, they believe Amylin will feel pressure to make strategic decisions on its independence by September.
"One critical point: under the termination agreement, LLY has the right to provide AMLN 180 days notice of its intention to return the rights back for any country of its choosing as of Sept 30, 2012. We believe that AMLN is preparing to receive notice from LLY in September, and based on management feedback, the company would like to have resolution of its international marketing situation by year end 2012 at the latest and preferably before the end of September."
The firm also notes that perspective on peak GLP-1 sales and durability of Bydureon exclusivity leads them to impute the company's perspective on valuation is in the $30s.
Currently a $2 billion, management believes GLP-1 could grow to a market size in the 'high single digit" billions of sales at peak, even without positive data from ongoing cardiovascular outcomes trial, the firm notes. In addition, management sees strong value in the durability of the Bydureon annuity, with a very low likelihood of generic competition.
"We have taken this feedback and incorporated into a valuation analysis using the following assumptions: a range of $7-9b in peak WW GLP-1 sales, 38% peak market share for AMLN by 2020, a 75-25 split of U.S. vs. ROW sales, and inclusion of a terminal value function into a DCF model to reflect continued branded sales beyond patent expiration. This yields a DCF valuation of $27-40/share, or an average of $33.50/share, which would represent our interpretation of the management’s perspective on its own value on a standalone basis. This does not include the impact of a positive readout from the EXSCEL cardiovascular outcomes study expected by 2016. Thus, we would expect that theoretical acquisition offers would have to be at least in the low-to-mid $30s to meet the threshold of consideration by AMLN management for a sale of the company at this stage."
The firm maintained a Buy rating and $32 price target.
For an analyst ratings summary and ratings history on Amylin Pharmaceuticals click here. For more ratings news on Amylin Pharmaceuticals click here.
Shares of Amylin Pharmaceuticals closed at $27.64 yesterday, with a 52 week range of $8.03-$28.45.
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