Endo's (ENDP) $2.2B Bid Undervalues Auxilium (AUXL) - Aegis Capital

Aegis Capital comments on Auxilium Pharma (Nasdaq: AUXL) following a $28.10 per share bid placed by Endo Pharma (Nasdaq: ENDP) on Tuesday night.

Analyst Raghuram Selvaraju commented, In our view, Endo is being opportunistic in the context of Auxilium's recent operational struggles, which began with the attrition seen in the testosterone replacement therapy (TRT) market that led to a substantial shortfall in the firm's announced sales of Testim, its testosterone gel product, and which have culminated in the job cuts Auxilium announced earlier this month. Nevertheless, we would point out that Auxilium represents a diversified company and an attractive strategic target for Endo, which in our view still needs to reduce its exposure to various patent expirations and associated revenue erosion, and we also believe that Endo's initial offer was a lowball one. In particular, we believe that Endo recognizes the value inherent to Auxilium's most valuable marketed product, Xiaflex™, given the drug's potential in multiple additional indications beyond those in which it is already approved, and we consider the initial offer to be just the opening salvo in what could be a protracted affair.

Xiaflex remains positioned as a future growth driver. We believe that Stendra could become a best-in-class erectile dysfunction drug. Given the multiple value drivers going forward, we believe that Endo will likely have to raise its offer in order to seal this deal.

For an analyst ratings summary and ratings history on Auxilium Pharmaceuticals click here. For more ratings news on Auxilium Pharmaceuticals click here.

Auxilium Pharmaceuticals closed at $21.52 yesterday.

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