Reading some of the reports coming from Dublin brokerages over the past few months, you’d have thought that the return of Tysabri to the market was as good as a done deal.
The multiple sclerosis drug was withdrawn from the market at the end of last February due to safety concerns. But, following a review of clinical data, it has been given priority status by America’s Food and Drug Administration (FDA) for further review.
Lehman believes the market may have lost the run of itself in fully pricing in a return by Tysabri to the market. It gives the treatment a 75% chance of getting the nod from the FDA. Even if it does, the broker believes some of the peak sales forecasts for the drug are just pie in the sky. While some Dublin analysts are pencilling in peak sales in the region of $1.8 billion (€1.5 billion), Lehman believes they would barely hit $500m.
The broker downgraded its rating for the stock to “underweight” and highlighted its $5 price target. That’s still a lot of downside for a stock that lost 15% of its value last week, to close on Friday at $13.66 in New York. Still, it’s not as low as the $1 objective that Martin’s former employer, Merrill Lynch, has on the issue.
Advertisement
Synergy crisis
THE mergers and acquisitions frenzy shows no sign of slowing — which perhaps helps to explain why the FTSE 100 index has soared since the start of the year despite worries about the price of oil. But a report to be published this week by KPMG Transaction Services will make sober reading for chief executives close to completing the big deals that are making their bankers and advisers so rich. Entitled The Morning After, the report warns that companies are paying higher premiums and increasingly relying on synergy benefits to make deals stack up.
Advertisement
In fact, 43% of the 101 companies interviewed by KPMG admitted that they were reliant on synergy benefits. Yet two-thirds of acquirers admitted they had failed to realise their full synergy targets — not surprising when you consider that 11% of chief executives conceded that after two years they still had not got control of the companies they had acquired.
Cold shoulder
MALCOLM WALKER, chief executive of Iceland, generated some cheap publicity last week when he attacked his predecessor, Bill Grimsey, claiming that his strategy was “nonsense” and that he had “run (Iceland) into the ground”.
Advertisement
Walker founded Iceland, but resigned in January 2001 after a profit warning and a row about his sale of £13.5m (€20m) of shares. He returned to the helm last year when the company was taken private.
Things had started to go wrong long before Walker left. During his last three months in charge, like-for-like sales fell 5.3% and the share price plunged as the company tried to refinance £550m of debt. Given the problems he inherited, Grimsey did the best he could for shareholders. Walker, having regained control of Iceland, should be more magnanimous.