The Art Of The Deal
I believe a deal should reflect the negotiating leverage of the parties involved. Allergan appears desperate and its ability to launch new drugs in the near term could be suspect. I intimated as much after is Mohawk deal was made public:
Allergan has tried hard to position itself as a traditional biotech company. If that is the case then it should be able to generate new products from its R&D machine. Taking unconventional measures to protect Restasis could connote to the market that its product development capabilities are lacking. Sans new acquisitions and an efficient R&D shop it could be difficult for the company to justify its robust 15x EBITDA multiple.
An FDA decision on Esmya (uterine fibroids) might be delayed until the second half of 2018; outside of Esmya the company might not launch any drugs until 2019 or beyond. The “art of the deal” could suggest an auction process for Allergan’s pieces could render values far less than its current share price of $166.
Conclusion
Threats to Botox and pending LOE could cause buyers to shy away from buying Allergan’s assets. A disappointing sale process could sink the stock. If buyers decide to wait six to nine months for LOE to be fully priced in it could be even more disastrous. AGN remains a sell.
