RE:RE:RE:RE:RE:RE:Eli Lilly buys Sigilon for US$126ps which traded at $0.33ps I looked over the Sigalon offer I'll give background, some important points & my thoughts as a comparable.
Bacground;Sigalon
1.Sigalon has only pre- clical studies. Not even any phase 1.
2. Before the deal they were trading @ just around $4ps.
3. The offer is $14.28ps + future considerations ( biobucks), totalling $112/ps.
4. Sigalon is trading around $21, above the cash offer.
5. There are already 2 legal firms launching class action, claiming the deal my be underpaying.
Background: onc
1. two phase 3 ready opportunities
2. existing partnership with A.N. ..biobucks $86 million.
3. CAR-T , Goblet, Irene ...plus a few more on- going trials.
4. Onc recently announced amazing PanCan invitation.
5. business details within 90 days " after discussing with our stakeholders"
important points
ONC is way further along.
huge % premiums can & do happen in the biotech world.
the Sigalon deal comes with huge risks. The milestones may never get met.
leaving shareholders with a paltry $14-$20ps....was around $4 last week.
Including the biobucks the Sigalon deal is worth about $385million.
My thoughts:
1. Onc still has risks. However considerably less than the Sigalon deal. Phase 3 vs preclinical.
2. Timelines , let alone risk. Phase 3 ready pancreatic with PanCan. Two years or less to approval.
3. Sigalon, many years to approval if ever?
3. Using FDA data & other sources; preclinical chance to final approval under 10%
4. Phase 3 chance for final approval 59%
( #3 & #4 statistical averages).
So, on statistical risk alone, Onc with two phase 3 opportunities, is worth 6x that of Sigalon. Times two!
5. 12 x $385 million = $4.6 billion.
about $61/ ps for onc.
Additional;
The analysts all use NPV discounts of potential future income. The closer to approval, the smaller the discount.
I do not know anything about Sigalon sales/ income potential.
Contrary to those who say " they will not pay a premium like that", have been proven wrong; AGAIN.
The takeover value is based on what the drug/compound/ virus can do for the aquiring compnay.
Existing trading value has ZERO to do with their calculations.
Lastky
Want to find a company ripe for a takeover?
Look for one trading well below recommended values.
One of three things has to eventually happen.
1. The SP comes into reality.
2. buyout with a premium, yet still a deal for the aquiring company
3. all of the science fails & recommenations Drop to match trading price.
My best guess?
Onc will be in a phase 3 partnership before the 90 days is up.
Great week all.
BTW, before anyone jumps all over me. As was pointed out Sigalon was near being delisted not too long ago.
I'll repeat myself, trading SP is meaningless.