CVTX gets buyout offer-

I have written many times about CVTX, a small biotech specializing in cardiac drugs. I have beleived that the stock was undervalued for some time. Now Astellas has shown they agree.

Today, Astellas made public thier attempts to purchase CVTX.  They apparently made an all cash offer in November for $16/share- back when the stock was trading at arround $8-9 and were rebuffed. Now that the stock is up in the $11s, they are trying to exert pressure on management to come to the table.

CVTX and Astellas have worked together for years, and a fumor of a acquision is one I first heard about three years ago.  CVTX's second drug, regadonosin was brought to market in cooperation with Astellas- who paid for 2/3 of the cost of the trials and is now selling the durg- giving CVTX a royalty.

They say in their open letter today, that during this interaction they have watched CVTX grow and have been very impressed with the potential for further growth- if they had more resources.  Apparently CVTX hasn't been willing to sit down with Astellas to discuss their offer further.

This morning CVT's stock is trading above the $16 offer price.  It seems clear that for Astellas to prevail, they will have to raise their offer price at least a few bucks.  The premium that was present in November is no longer there as great as result of  a 30% appreciation in the stock ( which was a result of increasing sales and revenues.) 

My guess and hope is that this deal does happen at arround $19.  Apparently Astellas has plenty of cash, and completing this acquision would save them some $20-30 million/year in royalties right off the bat.

I certainly hope that some of you have followed my suggestion of buying this stock when it traded in the single digits.

One more interesting issus: the spate of insider buying in December- Was it related to this offer? If so, would that make it illegal?  Something to look into after I realize my profits.

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  • pharmaking

    January 28, 2009

    One correction:
    My broker's website mentioned flagged multiple insider buys in December, but on closer review, it appears that these were just options exercised, and then the stock was sold. So really this was the equivalent of insider selling, not buying. Sort of strange, atleast no insider trading issues.

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