Ed,
Thanks for the kind offer. Please ask, if you can, why they don't have a poison pill or some other defenses against a hostile takeover. My biggest worry about this low-risk, high-potential reward stock is that someone takes it over and pays a lot less than SEPR is likely to be worth in 4 or 5 years.
My fears were kindled on this issue when Tim Barberich, in the Propulsid conference call, sounded pretty wimpy about this, answering a question about selling the company with a bland reply, to the effect that if the shareholders could get a good premium in an offer they'd have to consider it.
I would have been happier to hear a little more fire in the belly from Chairman Barberich. The right answer should have been that "we'd fight like hell to beat off a takeover too low a price" -- and that we've proposed or put in some defenses to discourage a takeover (or at least to give leverage for a greater price if someone came looking).
This is a serious issue, I think, because the market (with its blindness to anything much more than next quarter's earnings) seriously underestimates the long term value of SEPR, while a big pharmaceutical company, with a clearer perception of that value and the patience to invest now and wait for it to be realized, might be tempted to seize the company.
A related issue: is there anything in the licensing or co-promotion agreements that SEPR has signed with J&J, Schering or HMR preventing those companies from going after all of SEPR? J&J for example has been expensively and well educated in the value of SEPR's pipeline of ICE's, as it has signed two rich deals (for norastemizole and "Propulsid II"), is discussing another (for the ICE for J&J's $500 million antifungal Sporanox) and faces another (for the ICE for Risperidone). J&J might be tempted to save some royalty expenses and shared profits, if nothing prevents it from making an offer (hostile or otherwise) for all of SEPR.
Is anyone else worried about this issue?
Thanks again, Ed.
RCM |
