Exceptional Value Theralase's product is significantly better than Merck's competing product, the acquisition price would reflect its superior value and market potential. Here's a breakdown:
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Exceptional Value of the Product: If Theralase's product outperforms Merck's by a wide margin, it could dominate the market, allowing Merck to:
- Capture a larger market share.
- Reduce R&D costs for its competing product.
- Secure a long-term competitive advantage.
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Current Valuation: Theralase’s market cap (e.g., CAD 50–100M) and financial position would set the baseline for negotiations. However, the superior product's potential would justify a substantial premium.
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Industry Acquisition Multiples:
- 5–10× revenues if the product is already commercialized.
- 2–5× peak annual sales projections for products still in trials.
If Theralase’s product has the potential to generate CAD 500M annually at its peak, Merck might reasonably pay CAD 1.5–3B, or even more, depending on competitive factors.
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Comparison to Similar Deals:
- Merck paid $10.8B for Prometheus Biosciences in 2023 for a promising product pipeline.
- Sanofi acquired Kadmon for $1.9B in 2021 for a product with strong future potential.
Estimated Price Range
Given the significant superiority of Theralase’s product, a reasonable acquisition price could be between CAD 1.5B and 3B