Monday, August 22, 2005

Fuzzy Outlook for OSI-Eyetech Merger []

Interesting deal between OSI and Eyetech. The combinatin could theoretically be the world leader in therapies involving (v)EGF signaling, which I think would be lucrative. However, the polluting of the Genentech relationship might be a mistake......unless OSI thinks they can always sell the combination to Genentech or a larger pharma.

The other element that makes this deal interesting is the Eyetech valuation. The deal is at a 43% premium to Eyetech's recent close, AND a 58% DISCOUNT to what Eyetech was trading at the beginning of the year. I haven't run the numbers (yet) but suppose that the market overreacted to the good news of Genentech's Lucentis which now looks supperior to Eyetech's product. (However, Lucentis won't be on the market before 2007.)

The other possible interpretation: Eyetech was scared by Lucentis (the news came out in late May), and rapidly sought a suitor, with OSI being naive enough to strike a deal.

Either way, my OSIP stock has taken a 20% haircut today. I'm not sure what to do now.

Fuzzy Outlook for OSI-Eyetech Merger [ Motley Fool Take] August 22, 2005

1 comment:

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