Jul. 20 at 1:16 PM
$SLS my read on where a buyout of
$SLS by big pharma stands
My own belief is that multiple big pharma companies are already reviewing
$SLS company documents under an NDA in an electronic dataroom.
I don’t know that for a fact, but it would make sense given:
1. Regal is about to end.
2. The impending patent cliff faced by big pharma - first among them
$MRK facing the loss of 55 percent of its revenue when the Keytruda patent expires in a few years.
3. GPS’s strong potential as a platform medication to treat many different forms of cancer, and
4. The 8K recently issued by
$SLS disclosing the change in control provisions to the employment agreement of the company’s three top executives, including granting them golden parachutes that include full equity vesting in the event they are terminated without or quit with cause following a transfer of control.
As for a buyout, I can’t imagine we will get the mega big buyout price unless and until Regal’s top line results come out and it is a big success or a purchase agreement will have CVR (contingent value rights) provisions linking the big buyout number to specific (successful) HR results in the trial. Basically the lower the HR the more $$$$.
To me, Regal’s success is the key that unlocks the floodgates to the mega buyout money. And we will not know that until the release of the topline data, which Dr. Stergiou stated would be “several weeks” (my read - 2-3 weeks) after the 80th event press release which is imminent.
Based on the extraordinary long survivorship of about 40 percent of the pooled Regal cohort - a minimum of 28 months since enrolling to over 4 years, I am very optimistic that Regal will meet and exceed its primary endpoint on overall survival.
On value, people are all over the place. People have given ranges here between
$10 to over
$49 billion. I am in the
$15-
$25 billion camp (a record for a development stage biotech) given historical buyout numbers BUT a very low HR number and a bidding war plus the patent cliff faced by some big pharma companies could lead to an even higher number exceeding
$30 billion in a run the table scenario) in my opinion.
The record buyout of a pre-revenue development stage biotech is
$14 billion (some have thrown around higher figures of closed acquisitions that were of fully commercialized pharmaceutical companies with FDA-approved drugs on the market generating billions in revenue, which I do not find remotely analogous to a development stage biotech with no approved drugs on the market that has no revenue, which is the
$SLS situation).
But
$MRK recently offered
$32 billion to buy development stage biotech
$RVMD to try to get Daraxonrasib. THAT is what a patent cliff premium for a platform therapy with a very low HR number looks like. That kind of number of better may be possible with a very low HR from Regal - to me, one below 0.50.
But due your own due diligence as this is not financial advice.
Good luck longs.
