TST is best place to be for next 6-9 monthsThe headline of today's Financial Times is "Knige-edge bidding war for $21bn biotech group fuels pharma frenzy". I won't give you the whole article. For that, you need to pay your C$3.00 + HST at your favourite newsstand. But I did learn the following:
- AbbVie paid $21B for Pharmacyclics
- J&J already had a partnership agreement with Pharmacyclics since 2011 and were also bidding. J&J was expected to win, but they lost.
- An un-named third bidder also lost (private equity firm?)
- All three bids were rumoured to be close.
- PEAK revenue from Pharmacyclics' SOLE cancer drug is expected to be $7B/year.
- That means the deal went down at 3x peak revenue
If TST gets the same deal, that is worth: US$ 400m x 3 / 200m shares/options/warrents = US$6.00/share FOR THE US MARKET ONLY. This translates at current exchange rates to C$7.59/share. I'll give the buyer the rest of the world for free.
Meanwhile, the S&P500 is off about 1.5% today because talk is that Janet Yellen and the Fed are likely to start raising interest rates soon, based on today's US jobs report. If you don't like parking your spare cash in hot Biotech while the S&P500 bull-market goes into reverse, I recommend shorting the S&P500 with something like SDS on the NYSE.