Summary

Other Scenarios:

Buyer: Kendle International Inc. (KNDL) Last Price: 43.94 Market Cap.: 637.68M
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
Healthcare Services   153
Outsourced Services 69
Technology   1,039
Software   308

- 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: 5)
  • Phase II-IV Clinical Services
  • AAC Consulting Group, Inc.
  • Kendle Clinical Pharmacology Unit
  • Kendle Clinical Development Services
Target (Total: 12)
  • SyncroDose
  • Geminex
  • TIMERx
  • Gastroretentive Drug Delivery System
Buyer
  • AAC Consulting Group, Inc.
  • TrialWare
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: 3)
  • Pfizer Inc. (PFE)
  • CardioVascular BioTherapeutics, Inc. (CVBT)
  • Prana Biotechnology Limited (ADR) (PRAN)
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 3,050 75
Revenue Per Employee 183,040.5 35,697.8
Total Revenue 139.2 0.7
Total Expenses 128.3 9.9
Other Revenue 0.0 0.0
Cost of Revenue 92.9 0.1
SG&A Expense 31.7 3.7
Research & Development 0.0 6.0
Other Operating Expense 0.0 0.0
Operating Income 10.9 -9.1
Unusual Income 0.0 0.0
LT Debt to Capital 55.76 25.18
Fwd P/E 25.68 -5.18
Fwd P/Rev 1.59 64.18
Book Value 145.8 32.1
Curr Portion of LTD/Cap Lease 0.2 1.2

Individual Company Summary

Focused

Buyer

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

Target

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

Business Description

Buyer

Kendle International Inc. is a global clinical research organization (CRO) that provides a range of Phase I-IV global clinical development services to the biopharmaceutical industry. The Company operates in North America, Europe, Asia/Pacific, Latin America and Africa. It augments the research and development activities of biopharmaceutical companies by offering value-added clinical research services and the Company?s information technology. During the year ended December 31, 2006, the Company reorganized its business into two reportable segments: Early Stage and Late Stage. The Early Stage business focuses on the Company?s Phase I operations, while Late Stage comprises contract services related to Phase II through IV clinical development, regulatory affairs and biometrics offerings. In April 2006, it acquired Latin America CRO International Clinical Research Limited. In August 2006, it acquired Phase II-IV Clinical Services business of Charles River Laboratories International, Inc.

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 % 34.09 85.73
Operating Margin % 6.1 -1,171.13
Quick Ratio 1.18 6.99
Current Ratio 1.32 7.23
Coverage Ratio -0.47 -0.05
Total Assets 486.5 51.4
Return on Equity % 5.4 -104.45
Return on Assets % 1.62 -65.22
Cash+ ST Inv. Per Share 1.63 1.62
Total Debt 184.0 12.0
Total Debt to Equity % 126.2 37.41
Total Debt to Tangible Equity % n/a 41.44
Debt to Asset % 37.82 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.
  
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.
  
Technology  
Software  
Industry-Specific
Software that has functionality specific to a vertical industry.
  

- 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.

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.

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.

Target Products:

  • PW4142 (Nalbuphine ER)
  
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.

Buyer Products:

  • AAC Consulting Group, 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.

Buyer Products:

  • Phase II-IV Clinical Services
  • AAC Consulting Group, Inc.
  • Kendle Clinical Pharmacology Unit
  • Kendle Clinical Development 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
  
Technology  
Software  
Industry-Specific  
Healthcare/Pharma  
Drug Development  
Clinical Trials Management
Software designed to manage the information and processes relating to clinical trials.

Buyer Products:

  • TrialWare
  

- 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
  Covance Inc. n/a 5,023.149 32.00 29.70 3.36 3.26 5.84
Pharmaceutical Product Development, Inc. n/a 4,644.765 28.49 28.15 3.51 3.52 5.51
Charles River Laboratories n/a 3,876.106 41.54 22.48 3.42 3.19 8.57
ICON plc (ADR) n/a 1,585.508 33.70 30.07 2.98 2.61 6.14
PAREXEL International Corporation n/a 1,252.822 33.60 27.68 1.36 1.39 6.31
PRA International n/a 739.110 41.98 34.66 1.94 2.07 37.65
PharmaNet Development Group Inc. n/a 623.398 n/a 29.07 1.47 1.72 n/a
Encorium Group Inc. n/a 59.237 n/a n/a 1.98 n/a 18.22
Quintiles Transnational Corp. n/a n/a n/a n/a n/a 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
Buyer
  Pfizer Inc. 12.00% 174,978.777 10.02 12.06 3.61 3.71 7.23
CardioVascular BioTherapeutics, Inc. n/a 102.398 n/a n/a n/a n/a n/a
Prana Biotechnology Limited (ADR) n/a 46.061 n/a n/a 102.82 n/a 9.27
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
  CardioVascular BioTherapeutics, Inc. n/a 102.398 n/a n/a n/a n/a n/a
Prana Biotechnology Limited (ADR) n/a 46.061 n/a n/a 102.82 n/a 9.27
Miravant Medical Technologies n/a 0.095 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 486.6 3.0 489.6
Other Revenue 0.0 0.0 0.0
Total Revenue 486.6 3.0 489.6
Cost of Revenue 320.7 0.4 321.1
SG&A Expense 113.9 14.2 128.1
Depreciation & Amortization 14.0 0.0 14.0
Research & Development 0.0 23.7 23.7
Interest Expense 0.0 0.0 0.0
Other Operating Expense 0.0 0.0 0.0
Unusual Expense (Income) 8.2 0.0 8.2
Total Expenses 456.9 38.3 495.2
Operating Income 29.7 -35.3 -5.6
Non Operating Items
Interest Expense (Inc.), Net Non-Oprtng -13.8 1.8 -12.0
Other, Net -3.7 0.0 -3.7
Income Before Taxes 12.2 -33.5 -21.3
Income Taxes 4.3 0.0 4.3
Income After Taxes 7.9 -33.5 -25.6
Net Income - Excl. Xord. Items 7.9 -33.5 -25.6
Net Income - Incl. Xord. Items 7.9 -33.5 -25.6
Income Avail. to Common 7.9 -33.5 -25.6
Share Items
Basic Avg. Shares Outstanding 14.5 23.2 37.7
Basic EPS - Excl. Xord. Items 0.54 n/a -0.68
Basic EPS - Incl. Xord. Items 0.54 n/a -0.68
Full Dilution Adjustment 0.0 0.0 0.0
Fully Diluted Shares Outstanding 14.9 23.2 38.0
F.D. EPS - Excl. Xord. Items 0.53 n/a -0.67
F.D. EPS - Incl. Xord. Items 0.53 n/a -0.67
Balance Sheet
Assets
Cash and Equivalents 24.1 21.0 45.1
ST Investments 0.0 16.6 16.6
Accounts Receivable 148.2 0.6 148.9
Inventory 0.0 0.4 0.4
Prepayments and Advances 0.0 0.9 0.9
Other Current Assets 20.0 0.0 20.0
Current Assets 192.4 39.5 232.0
Accum D&A 0.0 0.0 0.0
PPE, Net 26.3 3.6 30.0
Goodwill & Intangibles 251.9 3.1 255.0
Other Assets 0.0 0.0 0.0
Other LT Assets 15.8 5.1 20.9
Total Assets 486.5 51.4 537.9
Liabilities
Accounts Payable 17.0 1.3 18.4
Payable/Accrued 0.0 0.0 0.0
Accrued Expenses 45.5 2.6 48.1
ST Debt 0.0 0.0 0.0
Curr Port of LTD & Cap Lease Oblg 0.2 1.2 1.4
Other (Current) Liabilities 83.1 0.3 83.4
Current Liab. 145.8 5.5 151.3
LT Debt 183.5 10.8 194.3
Capitalized Lease Obligations 0.3 0.0 0.3
Total LT Debt 183.8 10.8 194.6
Other LT Liab. 11.1 3.0 14.1
Total Liabilities 340.7 19.3 360.0
Shareholders Equity
Common Stock 0.1 0.0 0.1
Additional Paid in Capital 156.7 220.3 377.0
Retained Earnings -12.1 -188.3 -200.5
Treasure Stock -0.5 0.0 -0.5
Other Equity 1.7 0.1 1.8
Total Equity 145.8 32.1 177.9
Total Liab. & Equity 486.5 51.4 537.9
Shares Outstanding 14.5 23.4 37.9
Cash Flow
Operating Cash Flow
CF Net Income 0.0 -33.5 -33.5
CF Depreciation 0.0 0.0 0.0
CF Deferred Taxes 0.0 0.0 0.0
Other Non-Cash Items 0.0 0.0 0.0
Change in Working Capital 34.1 4.5 38.6
Total Cash From Operating Activities 34.1 -29.0 5.0
Investing Cash Flow (not calculated)
Capital Expenditures -12.0 -2.4 -14.3
Other Investing Cash Flows -224.7 3.4 -221.3
Total Cash From Investing Activities -236.7 1.1 -235.6
Financing Cash Flow (not calculated)
Dividends Paid 0.0 0.0 0.0
Purchase Or Sale of Stock 1.6 3.5 5.1
Purchase and Retirement of Debt 183.2 12.0 195.2
Other Financing Cash Flow -5.6 -0.1 -5.7
Total Cash From Financing Activities 179.2 15.4 194.6
Exchange Rate Effects 0.9 0.0 0.9
Net Change in Cash -22.5 -12.6 -35.1
Cash Taxes Paid 7.7 0.0 7.7
Cash Interest Paid 6.2 0.0 6.2