BW Online | December 24, 2001 | Impax: A Teva Target?

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DECEMBER 24, 2001

INSIDE WALL STREET

Impax: A Teva Target?

Gene Marcial

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Takeovers are rampant in the medical and biotech world: This year has seen 200 deals worth more than $7 billion--capped by Millennium Pharmaceuticals' recent move to buy Cor Therapeutics for $2 billion. This column spotted Cor as buyout bait (BW--Oct. 29). Who's next?

One target may be Impax Laboratories (IPXL ), which makes specialty prescription drugs using advanced formulation and drug-delivery technologies. The likely buyer: Israel's Teva Pharmaceutical Industries, one of the world's top makers of generics. In June, Impax and Teva signed a strategic partnership giving Teva 10-year rights to market 12 Impax products, including 5 of Impax' 13 accelerated new drug applications awaiting Food & Drug Administration approval. In exchange, Teva agreed to buy $15 million worth of Impax stock, now trading at 11: $3.75 million per quarter from September, 2001, through June, 2002. Teva paid 15.73 a share for the first batch. The stock deal comes on top of $22 million in milestone payments to Impax--plus sharing of development and marketing costs.

"Impax is a perfect fit for Teva, which lacks the technologies [Impax has]," says analyst Adam Greene of Dresdner Kleinwort Wasserstein, who rates Impax a strong buy. His price target is 18, but in a buyout, he thinks it is worth much more. Impax CEO Barry Edwards says Teva hasn't brought up the subject. Impax' full pipeline is one big reason behind Teva's pact. Impax develops products by reengineering drugs already on the market--including a generic version of Prilosec, expected to be launched in late 2002. It also uses its drug-delivery technologies to improve existing medicines. Greene sees Impax making money by 2003, earning 67 cents a share--after the launch of 10 generic drugs. Teva did not return calls.

By Gene G. Marcial

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