Summary

Other Scenarios:

Buyer: Penwest Pharmaceuticals (PPCO) Last Price: 11.10 Market Cap.: 259.69M
Target: Alexza Pharmaceuticals, Inc. (ALXA) Last Price: 7.88 Market Cap.: 243.26M

Lines of Business Summary:

Product Summary:

Overlap & Complementary Sectors

Sector Buyer Target # of Focused Companies
*Healthcare 930
Biopharmaceuticals 375
Cardiovascular System   19
Neurology 34
Pain Management 10
Outsourced Services 66
Drug Delivery Technology 15

- Focused. Denotes that the company is considered focused in this area. In general, Focused Companies draw the majority of their earnings in the sector/product area specified.

- Sector Pure-Plays. Denotes that the company is focused in the selected sector and generates nearly all earnings in the sector/product area specified.

- Sector Participation. Denotes that the company develops products in this line of business.

Sample Products in Similar Lines of Business

Sample Products in Complementary Lines of Business
Buyer (Total: 12)
  • SyncroDose
  • Geminex
  • TIMERx
  • Gastroretentive Drug Delivery System
Target (Total: 7)
  • Staccato System
Buyer
  • Nifedipine XL
  • PW2132 (Torsemide ER)
  • PW4110
  • PW4153
Target
  • AZ-002 (Staccato Alprazolam)
  • AZ-001 (Inhaled Staccato Prochlorperazine)
  • AZ-104 (Low-Dose Staccato Loxapine)
  • AZ-004 (Staccato Loxapine)

Business Relationship Summary:

Top Key Suppliers

Top Key Customers
Buyer (Total: 2)
  • Mylan Laboratories Inc. (MYL)
  • DRAXIS Health Inc. (USA) (DRAX)
Target (Total: 0)

n/a
Buyer (Total: 4)
  • Mylan Laboratories Inc. (MYL)
  • sanofi-aventis (ADR) (SNY)
  • Endo Pharmaceuticals (ENDP)
  • Merck KGaA
Target (Total: 0)

n/a

Key Financial Summary:

Key Metrics

  Buyer Target
Number of Employees 75 141
Revenue Per Employee 35,697.8 10,996.8
Total Revenue 0.7 0.0
Total Expenses 9.9 14.2
Other Revenue 0.0 0.0
Cost of Revenue 0.1 0.0
SG&A Expense 3.7 4.0
Research & Development 6.0 10.1
Other Operating Expense 0.0 0.0
Operating Income -9.1 -14.2
Unusual Income 0.0 0.0
LT Debt to Capital 25.18 6.31
Fwd P/E -6.67 -5.02
Fwd P/Rev 82.53 133.20
Book Value 32.1 96.9
Curr Portion of LTD/Cap Lease 1.2 3.7

Individual Company Summary

Focused

Buyer

Focused (): *Healthcare > Outsourced Services > Drug Delivery Technology > Oral Delivery

Target

Focused (): *Healthcare > Outsourced Services > Drug Delivery Technology > Pulmonary Delivery

Business Description

Buyer

Penwest Pharmaceuticals Co. (Penwest) develops pharmaceutical products based on drug delivery technologies with a focus on products that address disorders of the nervous system. In June 2006, the United States Food and Drug Administration (FDA), approved for marketing Opana ER, an extended release formulation of oxymorphone hydrochloride that the Company developed with Endo Pharmaceuticals Inc (Endo), using its TIMERx drug delivery technology. Penwest is also developing product candidates designed for the treatment of pain, epilepsy, Parkinson?s disease and spasticity, as well as a product candidate for the treatment of edema resulting from congestive heart failure. The Company conducts its business primarily in North America.

Target

Alexza Pharmaceuticals, Inc. (Alexza) is a pharmaceutical company focused on the development and commercialization of products for the treatment of acute and intermittent conditions. The Company has one product candidate that has completed a Phase IIb clinical trial, one product candidate that has completed a Phase IIa clinical trial, and two product candidates that have completed Phase I clinical trials. The Company?s technology, the Staccato system, vaporizes unformulated drug to form a condensation aerosol that allows rapid systemic drug delivery through deep lung inhalation. The Company's lead product candidates are AZ-001 (Staccato prochlorperazine), AZ-002 (Staccato alprazolam), AZ-004 (Staccato loxapine) and AZ-003 (Staccato fentanyl).

Deal Summary

Key Ratios

  Buyer Target
Gross Margin % 85.73 100
Operating Margin % -1,171.13 -16,282.67
Quick Ratio 6.99 10.52
Current Ratio 7.23 10.75
Coverage Ratio -0.05 -0.08
Total Assets 51.4 155.7
Return on Equity % -104.45 -52.05
Return on Assets % -65.22 -32.4
Cash+ ST Inv. Per Share 1.62 4.71
Total Debt 12.0 10.2
Total Debt to Equity % 37.41 10.55
Total Debt to Tangible Equity % 41.44 10.55
Debt to Asset % 23.36 6.57

Product Summary

Sector Buyer Target
*Healthcare
Biopharmaceuticals
Cardiovascular System
The Cardiovascular System Subsector includes therapeutics that treat disorders affecting the heart and blood vessels.
  
Neurology
The Neurology Subsector includes therapeutics that treat disorders of the central nervous system, including the brain, spinal cord, and nerves.
Pain Management
The Pain Management Subsector includes therapeutics that treat and management pain.
Outsourced Services
Drug Delivery Technology
The Drug Delivery Technology Subsector includes companies that develop novel delivery methods for therapeutics.

- Focused. Denotes that the company is considered focused in this area. In general, Focused Companies draw the majority of their earnings in the sector/product area specified.

- Sector Pure-Plays. Denotes that the company is focused in the selected sector and generates nearly all earnings in the sector/product area specified.

- Sector Participation. Denotes that the company develops products in this line of business.

Product Details

Sector Buyer Target
*Healthcare
Biopharmaceuticals
Cardiovascular System  
Heart Disorders  
Angina  
Calcium Channel Blocking Agents
Therapeutics that treat chest pains by preventing the entry of calcium into heart muscle cells.

Buyer Products:

  • Nifedipine XL
  
Phase I/Phase II Clinical Stage Products
Therapeutics that are being investigated for the treatment of heart and circulatory system disorders in early stages of clinical research where human subject is involved.

Buyer Products:

  • PW2132 (Torsemide ER)
  
Vascular Disorders  
Hypertension  
Calcium Channel Blocking Agents
Therapeutics that treat high blood pressure by blocking the beta adrenergic receptors of the heart muscle and increasing the excretion of sodium ions, potassium ions, and water through urine.

Buyer Products:

  • Nifedipine XL
  
Neurology
Phase I/Phase II Clinical Stage Products
Therapeutics that are being investigated for the treatment of nervous system and mental disorders in early stages of clinical research where human subject is involved.

Buyer Products:

  • PW4110

Target Products:

  • AZ-002 (Staccato Alprazolam)
  • AZ-001 (Inhaled Staccato Prochlorperazine)
  • AZ-104 (Low-Dose Staccato Loxapine)
  • AZ-004 (Staccato Loxapine)
Research/Preclinical Stage Products
Therapeutics that are being investigated for the treatment of nervous system and mental disorders in very early stages of research where no human subject is involved.

Buyer Products:

  • PW4153
  • PW4159
  • PW4158

Target Products:

  • AZ-007 (Staccato Zaleplon)
Pain Management
Narcotics  
Opioids
Therapeutics that treat pain by binding to certain nervous system receptors which alter both the perception of pain as well as the emotional response to pain.

Buyer Products:

  • Opana ER (Oxymorphone Hydrochloride Extended Release)
  
Phase I/Phase II Clinical Stage Products
Therapeutics that are being investigated for the treatment of pain in early stages of clinical research where human subject is involved.

Buyer Products:

  • PW4142 (Nalbuphine ER)

Target Products:

  • AZ-003 (Staccato Fentanyl)
Outsourced Services
Drug Delivery Technology
Oral Delivery  
Hydrogel Based/Polymer Coated
Drug Delivery Technologies used to deliver drugs in a jelly like base which are enclosed using a polymer matrix.

Buyer Products:

  • SyncroDose
  • Geminex
  • TIMERx
  
Polymer Coated
Drug Delivery Technologies used to deliver drugs in a polymer based matrix to hold/enclose the drug.

Buyer Products:

  • Gastroretentive Drug Delivery System
  
Pulmonary Delivery  
Powder
Drug Delivery Technology used to deliver drugs in a powder of hollow, porous spheres containing drugs for deep lung delivery.

Target Products:

  • Staccato System
  

- Focused. Denotes that the company is considered focused in this area. In general, Focused Companies draw the majority of their earnings in the sector/product area specified.

- Sector Pure-Plays. Denotes that the company is focused in the selected sector and generates nearly all earnings in the sector/product area specified.

- Sector Participation. Denotes that the company develops products in this line of business.

Relationship Details

Key Competitors

  Name Dir Percent Market Cap. P/E Ratio (TTM) Fwd P/E P/R Ratio (TTM) Fwd P/Rev Price To Tang. Book Value
Overlap
  BioDelivery Sciences International, Inc. n/a 75.733 n/a -2.48 27.37 n/a n/a
Buyer
  Johnson & Johnson n/a 182,933.045 17.29 15.54 3.20 3.02 13.11
Elan Corporation, plc (ADR) n/a 8,957.453 n/a -30.48 13.69 11.84 n/a
King Pharmaceuticals, Inc. n/a 3,002.084 9.75 6.45 1.45 1.35 2.21
Biovail Corporation (USA) n/a 2,803.422 12.77 9.82 2.70 3.32 4.61
K-V Pharmaceutical Company n/a 1,367.025 28.76 n/a 3.59 n/a 5.51
Alpharma Inc. n/a 928.506 16.06 20.99 1.36 1.30 1.93
Eurand N.V. n/a 638.125 n/a -69.05 5.57 5.51 8.35
Ligand Pharmaceuticals Inc. n/a 607.840 1.52 2.17 8.39 n/a 13.05
SkyePharma PLC (ADR) n/a 256.721 n/a -4.63 2.48 3.36 n/a
SCOLR Pharma Inc. n/a 96.138 n/a n/a 27.89 n/a 6.93
BioDelivery Sciences International, Inc. n/a 75.733 n/a -2.48 27.37 n/a n/a
Elite Pharmaceuticals, Inc. n/a 45.259 n/a -4.23 32.80 6.02 3.21
Purdue Pharma L.P. n/a n/a n/a n/a n/a n/a n/a
Target
  Nektar Therapeutics n/a 778.216 n/a -7.22 2.78 3.09 7.27
YM BioSciences Inc. (USA) n/a 88.773 n/a -2.91 13.60 22.65 1.45
BioDelivery Sciences International, Inc. n/a 75.733 n/a -2.48 27.37 n/a n/a
Aradigm Corporation n/a 72.900 n/a -3.29 27.52 30.29 1.67

- Defined by the Company - Defined by Others

Dependent Suppliers

  Name Dir Percent Market Cap. P/E Ratio (TTM) Fwd P/E P/R Ratio (TTM) Fwd P/Rev Price To Tang. Book Value
Buyer
  Mylan Laboratories Inc. n/a 3,804.178 17.18 9.95 2.11 1.76 4.93
DRAXIS Health Inc. (USA) n/a 218.700 22.15 25.85 2.54 2.51 2.08

- Defined by the Company - Defined by Others

Key Customers

  Name Dir Percent Market Cap. P/E Ratio (TTM) Fwd P/E P/R Ratio (TTM) Fwd P/Rev Price To Tang. Book Value
Buyer
  Mylan Laboratories Inc. 89.10% 3,804.178 17.18 9.95 2.11 1.76 4.93
sanofi-aventis (ADR) n/a 116,041.327 21.97 11.99 2.87 3.01 n/a
Endo Pharmaceuticals n/a 4,266.283 24.05 18.26 4.32 4.03 4.67
Merck KGaA n/a n/a n/a n/a n/a n/a n/a

- Defined by the Company - Defined by Others

Key Partners

  Name Dir Percent Market Cap. P/E Ratio (TTM) Fwd P/E P/R Ratio (TTM) Fwd P/Rev Price To Tang. Book Value
Buyer
  sanofi-aventis (ADR) n/a 116,041.327 21.97 11.99 2.87 3.01 n/a
Endo Pharmaceuticals n/a 4,266.283 24.05 18.26 4.32 4.03 4.67
Mylan Laboratories Inc. n/a 3,804.178 17.18 9.95 2.11 1.76 4.93
DRAXIS Health Inc. (USA) n/a 218.700 22.15 25.85 2.54 2.51 2.08
Pharmaceutics International, Inc. n/a n/a n/a n/a n/a n/a n/a
Edison Pharmaceuticals, Inc. n/a n/a n/a n/a n/a n/a n/a
Merck KGaA n/a n/a n/a n/a n/a n/a n/a
Otsuka Pharmaceutical Co., Ltd. n/a n/a n/a n/a n/a n/a n/a
Target
  Autoliv Inc. n/a 4,567.617 12.84 14.88 0.71 0.69 6.49
Symphony Holdings Limited n/a n/a n/a n/a n/a n/a n/a

- Defined by the Company - Defined by Others

Financials

  Buyer Target Combined Entity
Income Statement
Operating Items
Revenue 3.0 0.3 3.3
Other Revenue 0.0 0.0 0.0
Total Revenue 3.0 0.3 3.3
Cost of Revenue 0.4 0.0 0.4
SG&A Expense 14.2 13.6 27.8
Depreciation & Amortization 0.0 0.0 0.0
Research & Development 23.7 40.3 64.0
Interest Expense 0.0 0.0 0.0
Other Operating Expense 0.0 0.0 0.0
Total Expenses 38.3 53.9 92.2
Operating Income -35.3 -53.6 -88.9
Non Operating Items
Interest Expense (Inc.), Net Non-Oprtng 1.8 4.0 5.8
Other, Net 0.0 0.0 0.0
Income Before Taxes -33.5 -50.4 -83.9
Income Taxes 0.0 0.0 0.0
Income After Taxes -33.5 -50.4 -83.9
Minority Interest (IS) 0.0 6.4 6.4
Net Income - Excl. Xord. Items -33.5 -44.0 -77.5
Net Income - Incl. Xord. Items -33.5 -44.0 -77.5
Income Avail. to Common -33.5 -44.0 -77.5
Share Items
Basic Avg. Shares Outstanding 23.2 28.5 51.7
Basic EPS - Excl. Xord. Items n/a n/a -1.50
Basic EPS - Incl. Xord. Items n/a n/a -1.50
Full Dilution Adjustment 0.0 0.0 0.0
Fully Diluted Shares Outstanding 23.2 28.5 51.7
F.D. EPS - Excl. Xord. Items n/a n/a -1.50
F.D. EPS - Incl. Xord. Items n/a n/a -1.50
Balance Sheet
Assets
Cash and Equivalents 21.0 83.5 104.5
ST Investments 16.6 50.7 67.3
Accounts Receivable 0.6 0.0 0.6
Inventory 0.4 0.0 0.4
Prepayments and Advances 0.9 2.9 3.9
Other Current Assets 0.0 0.0 0.0
Current Assets 39.5 137.1 176.6
Accum D&A 0.0 0.0 0.0
PPE, Net 3.6 17.9 21.5
Goodwill & Intangibles 3.1 0.0 3.1
Other Assets 0.0 0.0 0.0
Other LT Assets 5.1 0.7 5.8
Total Assets 51.4 155.7 207.0
Liabilities
Accounts Payable 1.3 4.8 6.1
Payable/Accrued 0.0 0.0 0.0
Accrued Expenses 2.6 4.3 6.9
ST Debt 0.0 0.0 0.0
Curr Port of LTD & Cap Lease Oblg 1.2 3.7 4.9
Other (Current) Liabilities 0.3 0.0 0.3
Current Liab. 5.5 12.8 18.2
LT Debt 10.8 0.0 10.8
Capitalized Lease Obligations 0.0 6.5 6.5
Total LT Debt 10.8 6.5 17.3
Minority Interest (BS) 0.0 30.0 30.0
Other LT Liab. 3.0 9.5 12.5
Total Liabilities 19.3 58.8 78.0
Shareholders Equity
Common Stock 0.0 0.0 0.0
Additional Paid in Capital 220.3 238.2 458.5
Retained Earnings -188.3 -140.2 -328.5
Other Equity 0.1 -1.2 -1.1
Total Equity 32.1 96.9 129.0
Total Liab. & Equity 51.4 155.7 207.0
Shares Outstanding 23.4 30.9 54.3
Cash Flow
Operating Cash Flow
CF Net Income -33.5 -44.0 -77.5
CF Depreciation 0.0 3.9 3.9
CF Deferred Taxes 0.0 0.0 0.0
Other Non-Cash Items 0.0 -4.5 -4.5
Change in Working Capital 4.5 11.2 15.7
Total Cash From Operating Activities -29.0 -33.4 -62.4
Investing Cash Flow (not calculated)
Capital Expenditures -2.4 -13.7 -16.1
Other Investing Cash Flows 3.4 -10.0 -6.6
Total Cash From Investing Activities 1.1 -23.7 -22.7
Financing Cash Flow (not calculated)
Dividends Paid 0.0 0.0 0.0
Purchase Or Sale of Stock 3.5 67.8 71.3
Purchase and Retirement of Debt 12.0 1.7 13.7
Other Financing Cash Flow -0.1 47.2 47.1
Total Cash From Financing Activities 15.4 116.7 132.1
Exchange Rate Effects 0.0 0.0 0.0
Net Change in Cash -12.6 59.6 47.0
Cash Interest Paid 0.0 0.7 0.7