Summary

Other Scenarios:

Buyer: Alexza Pharmaceuticals, Inc. (ALXA) Last Price: 9.24 Market Cap.: 285.25M
Target: Penwest Pharmaceuticals (PPCO) Last Price: 8.55 Market Cap.: 200.03M

Lines of Business Summary:

Product Summary:

Overlap & Complementary Sectors

Sector Buyer Target # of Focused Companies
Healthcare 931
Biopharmaceuticals 377
Cardiovascular System   19
Neurology 34
Pain Management 10
Outsourced Services 69
Drug Delivery Technology 17

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

Business Relationship Summary:

Top Key Suppliers

Top Key Customers
Buyer (Total: 0)

n/a
Target (Total: 2)
  • Mylan Inc. (MYL)
  • DRAXIS Health Inc. (USA) (DRAX)
Buyer (Total: 0)

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

Key Financial Summary:

Key Metrics

  Buyer Target
Number of Employees 141 75
Revenue Per Employee 10,996.8 35,697.8
Total Revenue 0.0 0.7
Total Expenses 14.2 9.9
Other Revenue 0.0 0.0
Cost of Revenue 0.0 0.1
SG&A Expense 4.0 3.7
Research & Development 10.1 6.0
Other Operating Expense 0.0 0.0
Operating Income -14.2 -9.1
Unusual Income 0.0 0.0
LT Debt to Capital 6.31 25.18
Fwd P/E -5.62 -5.18
Fwd P/Rev 149.00 64.18
Book Value 96.9 32.1
Curr Portion of LTD/Cap Lease 3.7 1.2

Individual Company Summary

Focused

Buyer

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

Target

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

Business Description

Buyer

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).

Target

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.

Deal Summary

Key Ratios

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

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.

Target 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.

Target 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.

Target 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:

  • AZ-002 (Staccato Alprazolam)
  • AZ-001 (Inhaled Staccato Prochlorperazine)
  • AZ-104 (Low-Dose Staccato Loxapine)
  • AZ-004 (Staccato Loxapine)

Target Products:

  • PW4110
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:

  • AZ-007 (Staccato Zaleplon)

Target Products:

  • PW4153
  • PW4159
  • PW4158
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.

Target 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:

  • AZ-003 (Staccato Fentanyl)

Target Products:

  • PW4142 (Nalbuphine ER)
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.

Target Products:

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

Target 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.

Buyer 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 66.577 n/a -2.23 24.06 n/a n/a
Buyer
  Nektar Therapeutics n/a 760.739 n/a -7.22 2.72 3.06 7.10
YM BioSciences Inc. (USA) n/a 76.913 n/a -2.74 9.91 18.49 1.31
Aradigm Corporation n/a 76.140 n/a -3.43 28.75 31.61 1.75
BioDelivery Sciences International, Inc. n/a 66.577 n/a -2.23 24.06 n/a n/a
Target
  Johnson & Johnson n/a 190,863.999 18.04 16.24 3.34 3.16 13.68
Elan Corporation, plc (ADR) n/a 10,448.804 n/a -34.81 15.97 14.04 n/a
Biovail Corporation (USA) n/a 2,858.171 13.02 10.20 2.75 3.44 4.70
King Pharmaceuticals, Inc. n/a 2,574.611 8.36 5.85 1.25 1.23 1.90
K-V Pharmaceutical Company n/a 1,505.213 31.66 n/a 3.96 n/a 6.07
Alpharma Inc. n/a 929.815 16.08 22.14 1.36 1.29 1.93
Eurand N.V. n/a 731.542 n/a -79.52 6.39 6.35 9.57
Ligand Pharmaceuticals Inc. n/a 603.788 1.51 2.18 8.33 n/a 12.96
SkyePharma PLC (ADR) n/a 256.721 n/a -4.63 2.48 3.36 n/a
SCOLR Pharma Inc. n/a 128.925 n/a n/a 37.40 n/a 9.30
BioDelivery Sciences International, Inc. n/a 66.577 n/a -2.23 24.06 n/a n/a
Elite Pharmaceuticals, Inc. n/a 49.101 n/a -4.42 35.58 6.30 3.48
Purdue Pharma L.P. 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
Target
  Mylan Inc. n/a 3,903.698 17.63 12.21 2.17 1.39 5.06
DRAXIS Health Inc. (USA) n/a 226.270 22.92 26.80 2.63 2.60 2.15

- 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
Target
  Mylan Inc. 89.10% 3,903.698 17.63 12.21 2.17 1.39 5.06
sanofi-aventis (ADR) n/a 120,772.157 22.87 12.33 2.99 3.11 n/a
Endo Pharmaceuticals n/a 3,759.637 21.20 16.09 3.80 3.55 4.11
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
  Autoliv Inc. n/a 5,034.054 14.16 16.06 0.78 0.74 7.16
Symphony Holdings Limited n/a n/a n/a n/a n/a n/a n/a
Target
  sanofi-aventis (ADR) n/a 120,772.157 22.87 12.33 2.99 3.11 n/a
Mylan Inc. n/a 3,903.698 17.63 12.21 2.17 1.39 5.06
Endo Pharmaceuticals n/a 3,759.637 21.20 16.09 3.80 3.55 4.11
DRAXIS Health Inc. (USA) n/a 226.270 22.92 26.80 2.63 2.60 2.15
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

- Defined by the Company - Defined by Others

Financials

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