Summary

Other Scenarios:

Buyer: DRAXIS Health Inc. (USA) (DRAX) Last Price: 6.04 Market Cap.: 253.83M
Target: DepoMed, Inc. (DEPO) Last Price: 4.94 Market Cap.: 234.50M

Lines of Business Summary:

Product Summary:

Overlap & Complementary Sectors

Sector Buyer Target # of Focused Companies
*Healthcare 908
Biopharmaceuticals 366
Medical Devices   247
Outsourced Services 65

- 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: 13)
  • Draxis Pharma Inc.
Target (Total: 8)
  • AcuForm Oral Drug Delivery Technology
Buyer
  • DRAXIMAGE I-131 Sodium Iodide Capsules
  • DRAXIMAGE Tc 99 Calcium Glucoheptonate Kit
  • DRAXIMAGE Tc-99m Sestamibi
  • DRAXIMAGE Tc 99 MacroAggregated Albumin Kit
Target
  • Furosemide GR
  • GERD Program
  • Glumetza (Metformin GR)
  • Gabapentin GR

Business Relationship Summary:

Top Key Suppliers

Top Key Customers
Buyer (Total: 4)
  • Genzyme Corporation (GENZ)
  • MDS Inc. (USA) (MDZ)
  • BTG plc (BTG:GB)
  • Chinoin Pharmaceutical Company
Target (Total: 1)
  • Biovail Corporation (USA) (BVF)
Buyer (Total: 8)
  • GlaxoSmithKline plc (ADR) (GSK)
  • Genzyme Corporation (GENZ)
  • Pfizer Inc. (PFE)
  • Johnson & Johnson (JNJ)
Target (Total: 5)
  • Esprit Pharma Holding Company, Inc.
  • King Pharmaceuticals, Inc. (KG)
  • Biovail Corporation (USA) (BVF)
  • LG Electronics (LGLD:GB)

Key Financial Summary:

Key Metrics

  Buyer Target
Number of Employees 404 105
Revenue Per Employee 210,356.3 153,580.8
Total Revenue 21.0 3.8
Total Expenses 18.5 15.1
Other Revenue 0.0 0.0
Cost of Revenue 12.2 0.3
SG&A Expense 4.2 6.2
Research & Development 0.9 8.6
Other Operating Expense 0.0 0.0
Operating Income 2.4 -11.3
Unusual Income 0.0 0.0
LT Debt to Capital 0 0
Fwd P/E 24.87 -5.64
Fwd P/Rev 2.74 8.56
Book Value 96.9 -49.5
Curr Portion of LTD/Cap Lease 0.0 0.0

Individual Company Summary

Focused

Buyer

Focused (): *Healthcare > Outsourced Services > Development/Manufacturing Services > Contract Manufacturing Organizations (CMO) > Pharmaceuticals > Final Dosage Forms

Target

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

Business Description

Buyer

DRAXIS Health Inc. (DRAXIS) is a specialty pharmaceutical company providing products in three categories: sterile products, non-sterile products and radiopharmaceuticals. Sterile products include liquid and freeze-dried (lyophilized) injectables and sterile ointments. Non-sterile products are produced as solid oral, liquid and semi-solid dosage forms. Radiopharmaceuticals are used for both therapeutic and diagnostic molecular imaging applications. As of January 1, 2005, all of the operations of the Company are carried out through its wholly owned subsidiary DRAXIS Specialty Pharmaceuticals Inc., which operates two divisions, DRAXIS Pharma (contract manufacturing) and DRAXIMAGE (radiopharmaceuticals). During the year ended December 31, 2006, 72.8% of its consolidated revenues were derived from DRAXIS Pharma (contract manufacturing) and 24.2% of its consolidated revenues were derived from DRAXIMAGE (radiopharmaceuticals).

Target

Depomed, Inc. (Depomed) is a specialty pharmaceutical company engaged in the development and commercialization of products that are based on its oral drug delivery technologies. Depomed has developed two commercial products: GLUMETZA (metformin hydrochloride extended release tablets), which is a once-daily treatment for adults with type 2 diabetes that it jointly commercializes in the United States with King Pharmaceuticals, Inc. and ProQuin XR (ciprofloxacin hydrochloride extended release tablets), which is a once-daily treatment for uncomplicated urinary tract infections that Esprit Pharma, Inc. markets in the United States. Depomed has also developed Gabapentin GR, an extended release form of gabapentin. In addition, the Company has other product candidates in earlier stages of development, including a treatment for gastroesophageal reflux disease.

Deal Summary

Key Ratios

  Buyer Target
Gross Margin % 46.7 84.77
Operating Margin % 17.06 -369.97
Quick Ratio 4.31 1.44
Current Ratio 5.56 1.84
Coverage Ratio 0.03 0
Total Assets 108.3 37.0
Return on Equity % 12.24 n/a
Return on Assets % 10.96 -115.66
Cash+ ST Inv. Per Share 0.61 0.61
Total Debt 0.0 0.0
Total Debt to Equity % 0 0
Total Debt to Tangible Equity % 0 n/a
Debt to Asset % 0.00 0.00

Product Summary

Sector Buyer Target
*Healthcare
Biopharmaceuticals
Cardiovascular System
The Cardiovascular System Subsector includes therapeutics that treat disorders affecting the heart and blood vessels.
  
Digestive System
The Digestive System Subsector includes therapeutics that treat disorders affecting the digestive system.
  
Endocrinology/Metabolism
The Endocrinology/Metabolism Subsector includes therapeutics that treat metabolic disorders and conditions resulting from the dysfunction of hormone secreting glands.
  
Infectious Diseases
The Infectious Diseases Subsector includes therapeutics that treat diseases caused by the invasion and reproduction of microorganisms in the body.
  
Neurology
The Neurology Subsector includes therapeutics that treat disorders of the central nervous system, including the brain, spinal cord, and nerves.
Oncology
The Oncology Subsector includes therapeutics that treat and manage various types of cancer and related complications.
  
Pain Management
The Pain Management Subsector includes therapeutics that treat and management pain.
  
Medical Devices  
Radiology
The Radiology Subsector includes medical devices that generate images of internal physiology.
  
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  
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:

  • Furosemide GR
  
Digestive System  
Phase I/Phase II Clinical Stage Products
Therapeutics that are being investigated for the treatment of digestive disorders in early stages of clinical research where human subject is involved.

Target Products:

  • GERD Program
  
Endocrinology/Metabolism  
Diabetes  
Non-Insulin Dependent Diabetes Mellitus (NIDDM)/Type 2 Diabetes  
Biguanides
Therapeutics that treat abnormally high blood glucose levels by decreasing the production of glucose in the liver, decreasing intestinal absorption of glucose and increasing peripheral uptake and utilization of glucose.

Target Products:

  • Glumetza (Metformin GR)
  
Phase I/Phase II Clinical Stage Products
Therapeutics that are being investigated for the treatment of endocrinology disorders in early stages of clinical research where human subject is involved.

Target Products:

  • Gabapentin GR
  
Research/Preclinical Stage Products
Therapeutics that are being investigated for the treatment of endocrinology disorders in very early stages of research where no human subject is involved.

Target Products:

  • Metformin/Sulfonylurea GR
  
Infectious Diseases  
Bacterial  
Antibacterial Agents  
Narrow Spectrum  
Urology  
Urinary Tract Infections (UTI)  
Antibacterial Agents (Antibiotics)  
Quinolones/Fluoroquinolones
Therapeutics that treat bacterial infections of the urethra, urinary bladder, ureters, and kidneys by promoting breakage of bacterial DNA strands.

Target Products:

  • Proquin XR (Ciprofloxacin Extended-Release)
  
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:

  • DRAXIMAGE I-131 Sodium Iodide Capsules

Target Products:

  • Gabapentin GR
Oncology  
Research/Preclinical Stage Products
Therapeutics that are being investigated for the treatment and management of cancer and are currently in an early research or preclinical stage of development.

Target Products:

  • NeuGene Antisense Compound
  
Pain Management  
Non-Narcotics  
Gamma-Aminobutyric Acid (GABA) Reuptake Inhibitors
Therapeutics that treat pain by inhibiting the reuptake of GABA, which increases the levels of GABA in the synapses.

Target Products:

  • Gabapentin GR
  
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.

Target Products:

  • Gabapentin GR
  
Medical Devices  
Radiology  
Nuclear  
Gamma Camera  
Contrast Agents  
Radionuclides  
Injectable
A liquid form of radionuclide contrast agent that is introduced into the body by way of a needle.

Buyer Products:

  • DRAXIMAGE Tc 99 Calcium Glucoheptonate Kit
  • DRAXIMAGE Tc-99m Sestamibi
  • DRAXIMAGE Tc 99 MacroAggregated Albumin Kit
  • DRAXIMAGE Tc 99 Methylene Diphosphonic Acid Kit
  • MDP
  • DRAXIMAGE Somatoscan/Somatostatin Therapy
  • DRAXIMAGE Infecton (Technetium-Labeled Ciprofloxacin)
  • DRAXIMAGE Fibrimage
  • DRAXIMAGE Tc 99 Diethylene-triamine Pentacetic Acid Kit
  • DTPA
  
Oral
A pill form of radioactive contrast agent that is swallowed orally.

Buyer Products:

  • DRAXIMAGE Sodium Iodide I-131 Preparation Kit
  • DRAXIMAGE I-131 Sodium Iodide Capsules
  
Outsourced Services
Development/Manufacturing Services  
Contract Manufacturing Organizations (CMO)  
Pharmaceuticals  
Final Dosage Forms
Contract Manufacturing Organizations (CMO) that produce large quantities of drug products in final dosage forms ready to be sold to end users.

Buyer Products:

  • Draxis Pharma Inc.
  
Drug Delivery Technology  
Oral Delivery  
Polymer Coated
Drug Delivery Technologies used to deliver drugs in a polymer based matrix to hold/enclose the drug.

Target Products:

  • AcuForm Oral Drug Delivery Technology
  

- 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
  Johnson & Johnson n/a 179,963.150 17.44 15.42 3.25 2.98 15.39
Bristol Myers Squibb Co. n/a 62,092.452 39.78 22.63 3.51 3.22 16.99
Buyer
  General Electric Company n/a 395,888.394 18.94 17.44 2.39 2.28 15.95
Johnson & Johnson n/a 179,963.150 17.44 15.42 3.25 2.98 15.39
Target
  Pfizer Inc. n/a 181,913.371 9.77 12.05 3.71 3.81 6.48
Johnson & Johnson n/a 179,963.150 17.44 15.42 3.25 2.98 15.39
GlaxoSmithKline plc (ADR) n/a 147,509.658 13.61 13.29 3.20 3.23 13.91
Merck & Co., Inc. n/a 107,193.319 23.21 17.00 4.66 4.63 6.63
Abbott Laboratories n/a 83,179.438 53.69 19.30 3.68 3.72 n/a
Wyeth n/a 76,902.793 17.76 16.39 3.68 3.55 7.16
Bristol Myers Squibb Co. n/a 62,092.452 39.78 22.63 3.51 3.22 16.99
Bayer AG (ADR) n/a 58,900.185 11.37 17.48 1.45 1.33 n/a
Schering-Plough Corporation n/a 45,471.048 36.41 24.26 4.13 3.88 5.89
Teva Pharmaceutical Industries Ltd (ADR) n/a 32,986.239 17.39 18.51 3.74 3.60 24.33
Barr Pharmaceuticals, Inc. n/a 5,667.418 n/a 16.50 3.03 2.25 n/a
Mylan Laboratories Inc. n/a 4,489.333 20.66 10.63 2.79 2.10 6.57
Biovail Corporation (USA) n/a 4,076.580 17.20 13.66 3.73 4.73 7.30
Alpharma Inc. n/a 1,164.954 19.07 20.53 1.76 1.66 2.52
XenoPort, Inc. n/a 1,127.551 n/a -42.04 43.61 17.48 13.67
Sciele Pharma Inc. n/a 859.335 17.50 14.76 2.78 2.30 8.17
Flamel Technologies S.A. (ADR) n/a 566.178 n/a 201.36 20.55 4.87 8.32
SkyePharma PLC (ADR) n/a 415.644 n/a -15.63 4.09 3.22 n/a
Isolagen, Inc. n/a 125.156 n/a n/a 27.16 n/a n/a
MiddleBrook Pharmaceuticals, Inc. n/a 114.999 n/a -2.25 20.09 7.90 n/a
Access Pharmaceuticals, Inc. n/a 18.207 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
  Genzyme Corporation n/a 16,067.290 397.50 24.03 4.81 4.63 5.04
MDS Inc. (USA) n/a 2,506.904 21.12 44.59 2.12 2.21 5.97
BTG plc n/a n/a n/a n/a n/a n/a n/a
Chinoin Pharmaceutical Company n/a n/a n/a n/a n/a n/a n/a
Target
  Biovail Corporation (USA) n/a 4,076.580 17.20 13.66 3.73 4.73 7.30

- 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
  GlaxoSmithKline plc (ADR) 23.00% 147,509.658 13.61 13.29 3.20 3.23 13.91
Genzyme Corporation 23.00% 16,067.290 397.50 24.03 4.81 4.63 5.04
Pfizer Inc. 13.00% 181,913.371 9.77 12.05 3.71 3.81 6.48
Johnson & Johnson 10.00% 179,963.150 17.44 15.42 3.25 2.98 15.39
General Electric Company n/a 395,888.394 18.94 17.44 2.39 2.28 15.95
Penwest Pharmaceuticals n/a 290.642 n/a -8.58 86.08 82.91 8.06
DUSA Pharmaceuticals, Inc. n/a 57.466 n/a -4.95 2.09 1.91 3.34
Bracco S.p.A. n/a n/a n/a n/a n/a n/a n/a
Target
  Esprit Pharma Holding Company, Inc. 48.20% n/a n/a n/a n/a n/a n/a
King Pharmaceuticals, Inc. n/a 5,080.382 14.34 11.70 2.51 2.46 4.33
Biovail Corporation (USA) n/a 4,076.580 17.20 13.66 3.73 4.73 7.30
LG Electronics n/a n/a n/a n/a n/a n/a n/a
Madaus AG 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
  General Electric Company n/a 395,888.394 18.94 17.44 2.39 2.28 15.95
Johnson & Johnson n/a 179,963.150 17.44 15.42 3.25 2.98 15.39
GlaxoSmithKline plc (ADR) n/a 147,509.658 13.61 13.29 3.20 3.23 13.91
Bristol Myers Squibb Co. n/a 62,092.452 39.78 22.63 3.51 3.22 16.99
Cardinal Health, Inc. n/a 26,879.236 19.91 20.51 0.31 0.31 7.76
Covidien Ltd. n/a 20,946.233 14.62 n/a 2.11 n/a 15.92
Genzyme Corporation n/a 16,067.290 397.50 24.03 4.81 4.63 5.04
MDS Inc. (USA) n/a 2,506.904 21.12 44.59 2.12 2.21 5.97
Penwest Pharmaceuticals n/a 290.642 n/a -8.58 86.08 82.91 8.06
DUSA Pharmaceuticals, Inc. n/a 57.466 n/a -4.95 2.09 1.91 3.34
BTG plc n/a n/a n/a n/a n/a n/a n/a
Isogenic Science, Ltd. n/a n/a n/a n/a n/a n/a n/a
Bracco S.p.A. n/a n/a n/a n/a n/a n/a n/a
Chinoin Pharmaceutical Company n/a n/a n/a n/a n/a n/a n/a
United Pharmacy Partners Inc. n/a n/a n/a n/a n/a n/a n/a
Target
  Shire plc (ADR) n/a 13,990.911 42.42 37.53 7.31 6.28 7.20
King Pharmaceuticals, Inc. n/a 5,080.382 14.34 11.70 2.51 2.46 4.33
Biovail Corporation (USA) n/a 4,076.580 17.20 13.66 3.73 4.73 7.30
Patheon, Inc. n/a 373.694 n/a n/a 0.52 n/a 1.77
AVI BioPharma, Inc. n/a 153.376 n/a -6.53 261.88 8.86 5.41
Boehringer Ingelheim GmbH n/a n/a n/a n/a n/a n/a n/a
LG Electronics n/a n/a n/a n/a n/a n/a n/a
Madaus AG 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 90.9 12.0 102.9
Other Revenue 0.0 0.0 0.0
Total Revenue 90.9 12.0 102.9
Cost of Revenue 48.4 1.8 50.3
SG&A Expense 19.2 25.0 44.2
Depreciation & Amortization 5.2 0.0 5.2
Research & Development 2.5 29.8 32.3
Interest Expense 0.0 0.0 0.0
Other Operating Expense 0.0 0.0 0.0
Total Expenses 75.4 56.6 131.9
Operating Income 15.5 -44.5 -29.0
Non Operating Items
Interest Expense (Inc.), Net Non-Oprtng 0.5 0.0 0.5
Other, Net 0.0 1.8 1.8
Income Before Taxes 16.2 -42.7 -26.5
Income Taxes 4.3 0.1 4.4
Income After Taxes 11.9 -42.8 -30.9
Net Income - Excl. Xord. Items 11.9 -42.8 -30.9
Net Income - Incl. Xord. Items 11.9 -42.8 -30.9
Preferred Dividends 0.0 -0.7 -0.7
Income Avail. to Common 11.9 -43.4 -31.6
Share Items
Basic Avg. Shares Outstanding 41.7 42.1 83.8
Basic EPS - Excl. Xord. Items 0.28 n/a -0.37
Basic EPS - Incl. Xord. Items 0.28 n/a -0.37
Full Dilution Adjustment 0.0 0.0 0.0
Fully Diluted Shares Outstanding 41.9 42.1 84.0
F.D. EPS - Excl. Xord. Items 0.28 n/a -0.37
F.D. EPS - Incl. Xord. Items 0.28 n/a -0.37
Balance Sheet
Assets
Cash and Equivalents 25.5 5.2 30.7
ST Investments 0.0 20.6 20.6
Accounts Receivable 17.2 1.1 18.3
Inventory 7.2 4.4 11.6
Prepayments and Advances 1.2 3.3 4.5
Other Current Assets 3.9 0.0 3.9
Current Assets 55.0 34.5 89.5
Accum D&A 0.0 0.0 0.0
PPE, Net 48.3 2.3 50.6
Goodwill & Intangibles 1.0 0.0 1.0
Other Assets 0.0 0.0 0.0
Other LT Assets 4.0 0.2 4.2
Total Assets 108.3 37.0 145.3
Liabilities
Accounts Payable 9.2 4.6 13.8
Payable/Accrued 0.0 0.0 0.0
Accrued Expenses 0.0 5.6 5.6
ST Debt 0.0 0.0 0.0
Other (Current) Liabilities 0.7 8.5 9.2
Current Liab. 9.9 18.7 28.6
LT Debt 0.0 0.0 0.0
Total LT Debt 0.0 0.0 0.0
Other LT Liab. 1.4 55.8 57.2
Total Liabilities 11.3 74.5 85.8
Shareholders Equity
Preferred Stock 0.0 12.0 12.0
Common Stock 79.2 145.5 224.7
Additional Paid in Capital 15.8 0.0 15.8
Retained Earnings -6.2 -195.0 -201.2
Other Equity 8.2 -0.0 8.2
Total Equity 96.9 -37.5 59.5
Total Liab. & Equity 108.3 37.0 145.3
Shares Outstanding 42.0 42.1 84.1
Cash Flow
Operating Cash Flow
CF Net Income 11.9 -42.8 -30.9
CF Depreciation 5.2 1.2 6.4
CF Deferred Taxes 3.5 0.0 3.5
Other Non-Cash Items -1.4 2.5 1.1
Change in Working Capital -0.2 9.2 9.0
Total Cash From Operating Activities 18.9 -29.8 -10.9
Investing Cash Flow (not calculated)
Capital Expenditures -7.8 -0.6 -8.4
Other Investing Cash Flows -0.4 26.0 25.6
Total Cash From Investing Activities -8.2 25.4 17.2
Financing Cash Flow (not calculated)
Dividends Paid 0.0 0.0 0.0
Purchase Or Sale of Stock 3.9 1.4 5.4
Purchase and Retirement of Debt 0.0 0.0 0.0
Other Financing Cash Flow -3.4 0.0 -3.4
Total Cash From Financing Activities 0.6 1.4 2.0
Exchange Rate Effects 0.1 0.0 0.1
Net Change in Cash 11.4 -3.0 8.4
Cash Taxes Paid 0.7 0.1 0.7