Summary

Other Scenarios:

Buyer: Penwest Pharmaceuticals (PPCO) Last Price: 18.35 Market Cap.: 422.85M
Target: PharmaNet Development Group Inc. (PDGI) Last Price: 22.69 Market Cap.: 417.91M

Lines of Business Summary:

Product Summary:

Overlap & Complementary Sectors

Sector Buyer Target # of Focused Companies
*Healthcare 870
Biopharmaceuticals   329
Healthcare Services   157
Outsourced Services 66

- 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: 14)
  • Geminex
  • SyncroDose
  • TIMERx
  • Gastroretentive Drug Delivery System
Target (Total: 12)
  • SFBC International Inc.
  • PharmaNet Inc.
  • KeyStone Laboratories
  • Pharmaceutical Development Associates, Inc.
Buyer
  • Procardia XL (Nifedipine)
  • PW2132 (Torsemide ER)
  • PW2101
  • PW4102
Target
  • PharmaNet Inc.

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: 5)
  • Mylan Laboratories Inc. (MYL)
  • sanofi-aventis (ADR) (SNY)
  • Schering AG (ADR) (SHR)
  • Endo Pharmaceuticals (ENDP)
Target (Total: 0)

n/a

Key Financial Summary:

Key Metrics

  Buyer Target
Number of Employees 72 2,283
Revenue Per Employee 41,255.9 181,645.0
Total Revenue 0.7 103.3
Total Expenses 10.1 97.3
Other Revenue 0.0 0.0
Cost of Revenue 0.0 73.0
SG&A Expense 3.2 24.3
Research & Development 6.8 0.0
Other Operating Expense 0.0 0.0
Operating Income -9.4 5.9
Unusual Income 0.0 0.0
LT Debt to Capital 0 37.95
Fwd P/E -13.24 40.89
Fwd P/Rev 110.91 1.42
Book Value 51.7 266.7
Curr Portion of LTD/Cap Lease 0.0 3.1

Individual Company Summary

Focused

Buyer

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

Target

Focused (): *Healthcare > Outsourced Services > Development/Manufacturing Services > Contract Research Organizations (CRO) > Limited Service

Business Description

Buyer

Penwest Pharmaceuticals Co. (Penwest) develops pharmaceutical products based on drug delivery technologies. The Company is focusing its development efforts principally on products that address disorders of the nervous system. The advanced product in Penwest's drug development pipeline is oxymorphone ER, an extended release formulation of oxymorphone that it is developing with Endo Pharmaceuticals Inc. (Endo). Penwest is also developing several additional product candidates designed for the treatment of depression, pain, epilepsy and Parkinson's disease, as well as a product candidate designed for the treatment of edema resulting from congestive heart failure. The Company conducts its business primarily in North America.

Target

PharmaNet Development Group Inc., formerly SFBC International, Inc., is a global drug development services company, providing a range of both early and late-stage clinical drug development services to branded pharmaceutical, biotechnology and generic drug and medical device companies around the world. The Company conducts its operations in two segments: early stage and late stage clinical development. Early stage consists primarily of its Phase I clinical trial facilities, bioanalytical laboratories and clinical laboratories. Late stage consists of its subsidiary, PharmaNet, Inc., which primarily provides late Phase II through Phase IV services.

Deal Summary

Key Ratios

  Buyer Target
Gross Margin % 96.94 29.12
Operating Margin % -814.87 -2.39
Quick Ratio 11.31 1.31
Current Ratio 11.79 1.45
Coverage Ratio -0.08 0.98
Total Assets 58.8 565.0
Return on Equity % -53.67 -4.98
Return on Assets % -47.21 -2.35
Cash+ ST Inv. Per Share 2.02 2.91
Total Debt 0.0 166.2
Total Debt to Equity % 0 62.32
Total Debt to Tangible Equity % 0 n/a
Debt to Asset % 0.00 29.42

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.
  
Respiratory System
The Respiratory System Subsector includes therapeutics that treat disorders affecting both the upper and lower respiratory tract, including the nose, throat, larynx, trachea, bronchi, and lungs.
  
Healthcare Services  
Support Services
The Support Services Subsector is comprised of companies that provide non-medical services for managing, enhancing, facilitating, and enabling the healthcare delivery process.
  
Outsourced Services
Development/Manufacturing Services
The Development/Manufacturing Services Subsector includes companies that provide research, development, manufacturing, sales and marketing to biopharmaceutical and medical device companies.
  
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:

  • Procardia XL (Nifedipine)
  
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  
Beta Adrenergic Receptor Blocking Agents (Beta Blockers)
Therapeutics that treat high blood pressure by blocking the beta adrenergic receptors of the heart muscle.

Buyer Products:

  • PW2101
  
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:

  • Procardia XL (Nifedipine)
  
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:

  • PW4102
  • PW4112
  • PW4123
  • PW4110
  
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)
  
Respiratory System  
Lower Respiratory Tract Disorders (Lung Disorders)  
Asthma  
Acute Treatments  
Bronchodilators  
Beta Adrenergic Receptor Agonists
Therapeutics that cause dilation of the lung passages by supporting the actions of the adrenergic transmitters like epinephrine and norepinephrine.

Buyer Products:

  • PW3101 (Albuterol)
  
Healthcare Services  
Support Services  
Consulting
Services providing advice, assistance, and information to a wide range of healthcare companies, including pharmaceutical, medical devices, and health services companies.

Target Products:

  • PharmaNet Inc.
  
Outsourced Services
Development/Manufacturing Services  
Contract Research Organizations (CRO)  
Limited Service  
Clinical
Limited Service Contract Research Organizations that design, manage, and monitor human studies of new therapeutics. Other services include project management, patient recruitment, data management, biostatistical analysis, medical and regulatory affairs, and quality assurance.

Target Products:

  • SFBC International Inc.
  • PharmaNet Inc.
  • KeyStone Laboratories
  • Pharmaceutical Development Associates, Inc.
  • New Drug Services, Inc.
  • Clinical Pharmacology Associates
  • Synfine Research Inc.
  • Danapharm Clinical Research
  • Taylor Technology
  • Anapharm Inc.
  • Lee Coast Research Inc.
  • SFBC New Drug Services Canada, Inc.
  
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:

  • Geminex
  • SyncroDose
  • 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
  

- 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
Buyer
  Johnson & Johnson n/a 190,922.506 17.25 17.85 3.65 3.63 7.01
Wyeth n/a 64,708.887 15.89 15.26 3.26 3.22 6.16
Elan Corporation, plc (ADR) n/a 6,402.804 n/a -19.09 11.98 11.94 n/a
Biovail Corporation (USA) n/a 2,757.746 13.24 6.68 2.63 2.61 6.01
Watson Pharmaceuticals, Inc. n/a 2,568.873 40.88 21.64 1.45 1.37 2.28
Alpharma Inc. n/a 1,214.203 7.89 16.75 1.90 1.85 1.69
K-V Pharmaceutical Company n/a 1,198.128 25.20 n/a 3.15 n/a 4.83
Ligand Pharmaceuticals Inc. n/a 884.995 n/a 2.48 5.68 4.66 n/a
SkyePharma PLC (ADR) n/a 330.149 n/a n/a 3.48 n/a n/a
SCOLR Pharma Inc. n/a 197.379 n/a n/a 121.34 n/a 10.41
Elite Pharmaceuticals, Inc. n/a 40.336 n/a n/a 68.52 n/a 5.09
BioDelivery Sciences International, Inc. n/a 34.009 n/a -2.26 104.66 12.42 95.53
Purdue Pharma L.P. n/a n/a n/a n/a n/a n/a n/a
Target
  Covance Inc. n/a 3,835.936 28.07 27.38 2.76 2.81 4.87
Pharmaceutical Product Development, Inc. n/a 3,747.562 25.17 24.20 3.13 3.23 5.52
MDS Inc. (USA) n/a 2,667.679 67.96 30.20 1.99 2.14 4.78
ICON plc (ADR) n/a 1,040.281 37.20 28.98 2.35 2.38 5.03
PAREXEL International Corporation n/a 824.584 30.31 25.19 1.04 1.15 4.07
PRA International n/a 720.625 25.18 25.59 2.24 2.36 n/a
Quintiles Transnational Corp. n/a n/a n/a n/a n/a n/a n/a

- 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 4,311.889 16.65 14.66 3.17 2.99 5.69
DRAXIS Health Inc. (USA) n/a 208.156 23.32 21.22 2.50 2.33 2.24

- 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. 63.00% 4,311.889 16.65 14.66 3.17 2.99 5.69
sanofi-aventis (ADR) n/a 116,539.433 30.70 13.50 3.12 3.28 n/a
Schering AG (ADR) n/a 22,955.147 30.48 n/a 3.27 n/a 6.62
Endo Pharmaceuticals n/a 3,730.219 19.04 18.43 4.19 4.21 5.08
E Merck 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 116,539.433 30.70 13.50 3.12 3.28 n/a
Schering AG (ADR) n/a 22,955.147 30.48 n/a 3.27 n/a 6.62
Mylan Laboratories Inc. n/a 4,311.889 16.65 14.66 3.17 2.99 5.69
Endo Pharmaceuticals n/a 3,730.219 19.04 18.43 4.19 4.21 5.08
DRAXIS Health Inc. (USA) n/a 208.156 23.32 21.22 2.50 2.33 2.24
E Merck n/a n/a n/a n/a n/a n/a n/a
Prism Pharmaceuticals, Inc. 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 3.7 420.3 423.9
Other Revenue 0.0 0.0 0.0
Total Revenue 3.7 420.3 423.9
Cost of Revenue 0.1 297.9 298.0
SG&A Expense 13.4 104.2 117.6
Depreciation & Amortization 0.0 0.0 0.0
Research & Development 20.2 0.0 20.2
Interest Expense 0.0 0.0 0.0
Other Operating Expense 0.0 0.0 0.0
Unusual Expense (Income) 0.0 28.2 28.2
Total Expenses 33.8 430.3 464.1
Operating Income -30.1 -10.0 -40.1
Non Operating Items
Interest Expense (Inc.), Net Non-Oprtng 2.3 -9.9 -7.5
Other, Net 0.0 0.0 0.0
Income Before Taxes -27.7 -19.9 -47.6
Income Taxes 0.0 -6.6 -6.6
Income After Taxes -27.7 -13.3 -41.0
Minority Interest (IS) 0.0 -0.7 -0.7
Net Income - Excl. Xord. Items -27.7 -14.0 -41.7
Discontinued Operations 0.0 -26.7 -26.7
Net Income - Incl. Xord. Items -27.7 -40.6 -68.4
Income Avail. to Common -27.7 -40.6 -68.4
Share Items
Basic Avg. Shares Outstanding 22.9 18.3 41.3
Basic EPS - Excl. Xord. Items n/a n/a -1.01
Basic EPS - Incl. Xord. Items n/a n/a -1.66
Full Dilution Adjustment 0.0 0.0 0.0
Fully Diluted Shares Outstanding 22.9 18.5 41.4
F.D. EPS - Excl. Xord. Items n/a n/a -1.01
F.D. EPS - Incl. Xord. Items n/a n/a -1.65
Balance Sheet
Assets
Cash and Equivalents 23.2 52.3 75.6
ST Investments 23.1 1.5 24.6
Accounts Receivable 0.8 117.2 118.0
Inventory 0.2 0.0 0.2
Prepayments and Advances 1.8 8.4 10.2
Other Current Assets 0.0 10.5 10.5
Current Assets 49.1 189.9 239.0
Accum D&A 0.0 0.0 0.0
PPE, Net 3.8 61.8 65.6
Goodwill & Intangibles 3.2 296.9 300.1
Other Assets 0.0 0.0 0.0
Other LT Assets 2.7 16.3 19.0
Total Assets 58.8 565.0 623.7
Liabilities
Accounts Payable 1.4 10.6 12.0
Payable/Accrued 0.0 0.0 0.0
Accrued Expenses 2.5 30.3 32.8
ST Debt 0.0 0.0 0.0
Curr Port of LTD & Cap Lease Oblg 0.0 3.1 3.1
Other (Current) Liabilities 0.3 86.7 87.0
Current Liab. 4.2 130.7 134.9
LT Debt 0.0 160.2 160.2
Capitalized Lease Obligations 0.0 2.9 2.9
Total LT Debt 0.0 163.1 163.1
Minority Interest (BS) 0.0 1.3 1.3
Other LT Liab. 2.9 3.2 6.1
Total Liabilities 7.1 298.3 305.3
Shareholders Equity
Common Stock 0.0 0.0 0.0
Additional Paid in Capital 215.3 237.5 452.7
Retained Earnings -163.6 24.5 -139.0
Other Equity -0.0 4.7 4.6
Total Equity 51.7 266.7 318.4
Total Liab. & Equity 58.8 565.0 623.7
Shares Outstanding 23.0 18.4 41.4
Cash Flow
Operating Cash Flow
CF Net Income -27.7 -36.5 -64.2
CF Depreciation 0.0 12.4 12.4
CF Deferred Taxes 0.0 -3.9 -3.9
Other Non-Cash Items 1.2 65.7 67.0
Change in Working Capital 2.8 7.2 10.0
Total Cash From Operating Activities -23.7 45.0 21.4
Investing Cash Flow (not calculated)
Capital Expenditures -2.3 -25.2 -27.5
Other Investing Cash Flows 13.7 8.4 22.1
Total Cash From Investing Activities 11.4 -16.9 -5.4
Financing Cash Flow (not calculated)
Dividends Paid 0.0 -0.1 -0.1
Purchase Or Sale of Stock 10.3 -10.2 0.0
Purchase and Retirement of Debt 0.0 -1.5 -1.5
Other Financing Cash Flow 0.0 -0.2 -0.2
Total Cash From Financing Activities 10.3 -12.1 -1.8
Exchange Rate Effects 0.0 -3.3 -3.3
Net Change in Cash -2.0 12.7 10.8
Cash Taxes Paid 0.0 2.0 2.0
Cash Interest Paid 0.0 3.2 3.2