The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Another day and another drop in SP. There seems to have been significant selling pressure on AMYT even before the recent news. However, the MMs were controlling the price tightly up till last week - large sells were getting matched to similar large buys with minor overall price movements. All very difficult to understand!
In order to get major shareholder approval, I suspect the relative valuations of the two companies were based on the share price of the recent fund-raisings.....$4 for Chiasma and $12.50 for Amryt. With Chiasma trading at $3 before the announcement, the share price went up. Amryt was trading around $13.5 and went down. The deal was probably done when Amryt did its December fund-raising. Just a guess.
WIth the significantly increased valuation post-merger, I wonder will Amryt move off the AIM market onto the main market. This would bring in institutional investors that don't normally buy on AIM with a possible re-rating of the price and better liquidity.
I really like the TPE Technology Platform. I wonder what is its potential in developing re-formulations of existing drugs.
I fell into this share by accident because of Fastnet, but have grown to like it. Hopefully good times ahead.
Thanks Diamondstar
When Amryt raised $40m last December, I thought they were in the market to buy another drug to add to their portfolio. This was one of their key objectives to better leverage their sales infrastructure. I had expected they might buy a cast-off drug from one of the big players with just a few years left in the patent life-cycle because of the limited cash they had raised.
I was really pleased to see that they used shares to buy a drug that has just been launched in the market and fits in to their own offering with real potential and synergies. Chiasma has a US sales team in place but with Amryt, MYCAPSSA can be launched through the Amryt worldwide network as well.
Chiasma raised $70m at $4 per share last July. They had $115m in cash at end March, most of which will be used to clear debt. Amryt has $118m.......so between them they are well positioned to see MYCAPSSA through a successful rollout.
Chiasma shares were $7 last June before the fund-raise and then fell to $3 earlier this year. After the announcement they recovered to $4. The drop in the Amryt price is probably due to traders taking advantage of the arbitrage opportunity.
The merger allows MYCAPSSA to be launched worldwide, leverages Amryt's existing sales network at minimal cost and provides funding for the further development of Chiasma's TPE technology platform and the IND.
I think its a fantastic deal for both companies and expect the share price of the combined company will start rising.
You could be right Diamondstar..
Problem is execution..
By the time the deal closes how much of Chiasma's $115 million will be left?
They're burning thru $30+ million a quarter..
Then there's the legacy issue with HCR.. If they get acquired there's a lump sum payment of $126.4 to HCR.
So how much will it cost Amryt in cash? (is that the reason they raised $40 million recently,knowing its for the lump sum payment?)
So for me I'll sit on the sidelines for awhile. There isn't that much liquidity in Amryt's shares so the arbitrage guys will probably sell Amryt and buy Chaisma until they get closer to the finish line.
Bronxville - let me try to explain why Amryt paid 300 million for 1.8 million in revenue. Firstly, MYCAPSSA was only launched recently in USA, about 6 months ago. Hence, the USD 1.8 million revenue likely represents 100 acromegaly patients already on the drug.
By the end of this year, I would expect 300 patients on the drug, which would represent an annual revenue of up to USD 18 million. At the moment, it looks like they may be getting 10% market penetration, as 3000 new acromegaly patients are diagnosed in USA/year. In addition, there are 25,000 existing acromegaly patients in USA at present, who may switch from injectable octreotide/Lanreotide to MYCAPSSA.
Within 2-3 years, I believe that a target of 1000 patients on MYCAPSSA in USA could easily be achieved. With EU approval, the number could be easily doubled to 2000 patients (which would represent USD 120 million annual revenue). Within 3-5 years, I believe annual sales of USD 200-300 million is achievable.
Further uplift in this figure could be achieved if 1) The market penetration in the newly diagnosed acromegaly population is higher eg 20% 2) More patients decide to convert from injectable to oral somatostatin therapy 3) Amryt achieves approval in GEP-NET indication (whereby revenues could easily be doubled).
Ray S would have saved a bundle if he had waited to buy after the announcement.
Amryt paid almost $300 million for a company that had $1.8 million in Revenues
Reason is probably there's no reason to buy Amryt shares right now. Assuming the deal closes, you can buy Amryt right now for 140p by simply buying Chiasma shares. That's a big discount.
Amryt said the deal, which would grant it access to Mycapssa, Chiasma’s hormonal disorder drug, would create a global leader in treatments for rare diseases.
It has been approved and recommended by the boards of both companies. Amryt said yesterday that the plan would deliver annual cost synergies of approximately $50 million.
Reason for London fall in SP?
A London-listed biotechnology company specialising in rare diseases has agreed to buy an American rival.News of Amryt Pharma’s $296.7 million all-stock deal for the US-based developer Chiasma propelled shares in its target up by 38.7 per cent to $3.94.