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Retrophin Raises Offer to Acquire Transcept Pharmaceuticals to $4 Per Share

By  +Follow September 19, 2013 8:51AM
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Retrophin, Inc. (RTRX) is not giving up on its pursuit to acquire the shares of specialty drug maker Transcept Pharmaceuticals, Inc. (TSPT) that it does not already own.  Last week, Retrophin delivered a letter to the board of directors of Transcept offering to buy the remaining shares for $3.50 each in cash.  The offer was rejected. 

To defend itself from a hostile takeover, Transcept has adopted a shareholder rights plan, often called a “poison pill,” which keeps a shareholder from acquiring more than 4.99 percent of the company.

On Wednesday, Retrophin bumped the offer up to $4.00 per share, with Retrophin chief executive Martin Shkreli sending a letter to the board members of Transcept.

Transcept is focused on development of neuroscience drugs with its only FDA approval being the oral sleep aid Intermezzo (zolpidem tartrate).  Purdue Pharma holds commercialization and development right for Intermezzo in the U.S.  Royalty revenue for Transcept from Intermezzo in the first six months of 2013 was $1.0 million, up from $500,000 in the year prior period. 

Net loss for the six months ended June 30, 2013 was approximately $17.2 million, or $0.92 per share, versus a net loss of approximately $10.3 million, or $0.67 per share, for the six months of 2012.

Retrophin has four drugs in its pipeline with RE-021 the only one in the clinical stage, being researched in a mid-stage trial for Focal Segmental Glomerulosclerosis, a disease that can cause nephrotic syndrome in children and kidney failure in adults.  The company’s other compounds are targeting hard-to-treat diseases like Pantothenate Kinase-Associated Neurodegeneration (PKAN) and Duchenne Muscular Dystrophy.

In recent weeks, three major shareholders of Transcept have publicly stated their disapproval of Transcept’s current strategy.  Activist investor Peter Collery of SC Fundamental LLC, which owns a 6.7-percent stake in Transcept, sent a letter to Transcept chief executive, president and director Glenn Oclassen (read the SEC filing) saying that the company needs to use $60 million of its cash to conduct a share repurchase to build value, not pursue “simply wrongheaded,” (but unnamed) projects.

Collery didn’t hold back much in expressing his feelings toward Transept management.  Such as:

“I should note how troubled we are by your presumption that the company’s money is yours to do with as you see fit. You and your fellow directors have a fiduciary duty to company shareholders.”

And...

“I’d like, in closing, also to express my displeasure with the company’s recent grant of nearly 600,000 management stock options with a strike price of $2.93 per share. As described above, the company’s shares may have a current realizable value of $5 or so. Were Transcept to implement a buyback program, that value might rise to $6. Essentially no management skill would be required to realize these values. That the shares trade for less than $3 is a function of shareholders’ distrust of management. It is incredible that management should be granted undervalued stock options as a “reward” for having created that distrust and I would expect that an inquiry into the deliberations surrounding this recent option grant, and particularly, the suitability of the strike price would be quite interesting.”

Roumell Asset Management, LLC, the largest Transcept shareholder at 12.3 percent of the company, has also filed a 13D with the SEC criticizing the management and demanding a share buy-back plan, not an unidentified acquisition.

The new proposal by Retrophin offers to buy Transcept at a 20-percent premium to Tuesday’s closing price.  The price is still lower than the $6 mark that Collery believes can be attained by performing a share repurchase, but this is a little to-may-toes/to-ma-toes because a merged company could benefit similarly, so investors will have to see where the support falls with the new proposal.

“Our proposal represents an attractive premium to Transcept’s trading performance, and we believe that the proposal offers a compelling opportunity for Transcept’s stockholders, particularly in light of Transcept’s risky and controversial acquisition strategy,” stated Martin Shkreli, Chief Executive Officer of Retrophin. “We hope that Transcept’s Board of Directors will respect its stockholders’ wishes and quickly commence discussions with us regarding the proposed transaction.”

Retrophin wants a transaction to be entered into by the end of September.

Shares of TSPT are down about 18 percent in 2013 thanks to a run-up from lows of $2.52 late in August with the acquisition chatter.  At lows, the stock was off about 40 percent.  Shares rose by 8 percent in Wednesday trading to close at $3.59.  In extended trading, shares rose to $3.98.  Retrophin shares edged up about 1 percent on the day to $6.88.  Shares have more than doubled in 2013.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for rtrx
Gotham City Capital
19 Aug 14 20:22:03
RT @dsobek: blame @adamfeuerstein @redacre & @given2tweet for @MartinShkreli block. Thanks. Now I'll not get the early scoop on $rtrx mate…
MarianoSays
19 Aug 14 18:47:27
RT @dsobek: blame @adamfeuerstein @redacre & @given2tweet for @MartinShkreli block. Thanks. Now I'll not get the early scoop on $rtrx mate…
MarianoSays
19 Aug 14 18:46:53
RT @dsobek: I think @MartinShkreli blocked me. Odd cause I never really talk about $rtrx. Maybe he did not like my #ALSIceBucketChallenge
Stock News Guru
19 Aug 14 18:44:33
$RTRX: Retrophin's Press Releases Have A Lot Of Sugarcoating http://t.co/WnRcYs8xW5 http://t.co/4uU026Aj5W
David Sobek
19 Aug 14 18:35:21
blame @adamfeuerstein @redacre & @given2tweet for @MartinShkreli block. Thanks. Now I'll not get the early scoop on $rtrx material info.
happycamper
19 Aug 14 18:33:43
@dsobek @MartinShkreli he blocked me also, and I am actually an admirer of his and investor in $RTRX. Its all good!
David Sobek
19 Aug 14 18:30:23
I think @MartinShkreli blocked me. Odd cause I never really talk about $rtrx. Maybe he did not like my #ALSIceBucketChallenge
BioInvestor
19 Aug 14 12:06:11
@AceOfSpades2007 Do you know why $RTRX filing 4 and few others don't show up in SEC website? http://t.co/flafep34FP
Andrew Colburn
19 Aug 14 11:41:42
$RTRX up 2% after director dumps $245K of stock. Umm...ok?
OTC Alerts
19 Aug 14 06:14:20
$RTRX received a new alert.See why at http://t.co/hTU4LTt2Nv $MSEZ #Penny #pennystocks #PinkSheet #OTC #OTCBB #stocks #stock 27
BioRunUp
19 Aug 14 06:11:46
RT @shaneblackmon: $RTRX Insider selling, director sells 20k shares http://t.co/Y6xwJstKSM
Sludge Reports Live
19 Aug 14 04:10:54
@SludgeReports you should all check the timestamp of the tweet, last thurs immediate price action, and form 4 sale price/date $RTRX
Stock Market News
18 Aug 14 16:44:27
$RTRX: RETROPHIN, INC. Files SEC form 8-K, Other Events http://t.co/Matwvk20xW http://t.co/zNvvi4afeN
iHangout
18 Aug 14 16:39:18
http://t.co/jYcEVui7Op chartguy89: Stock Charts: RTRX 11.99 Stock Charts $RTRX Retrophin Inc. http://t.co/o3JIlj9fTw
Sludge Reports Live
18 Aug 14 16:22:12
$RTRX Marty playing Twitter tricks to pump up the price for a director sale? You be the judge! Tweet right b4 sale http://t.co/23Z4YGPjBK
BioTraderST
18 Aug 14 15:51:41
RT @shaneblackmon: $RTRX Insider selling, director sells 20k shares http://t.co/Y6xwJstKSM
Andrew Colburn
18 Aug 14 15:50:05
RT @bradloncar: $RTRX 20,000 share sale by a director: http://t.co/PmI1mKFXcX
Forex Insight
18 Aug 14 15:47:00
RT @VanMacher: $RTRX: Retrophin CEO Under Fire for Twitter Faux Pas http://t.co/JKP2lclTnw http://t.co/7wzXMBgN0G
Michael Grattan
18 Aug 14 15:45:15
@adamfeuerstein: RT @bradloncar: $RTRX 20,000 share sale by a director: http://t.co/mEpFvKvhmh/s/Dlj_ http://t.co/UsRqijjGsg
Market Headlines
18 Aug 14 15:44:28
$RTRX: Retrophin CEO Under Fire for Twitter Faux Pas http://t.co/JKP2lclTnw http://t.co/7wzXMBgN0G
Sludge Reports Live
18 Aug 14 15:35:36
$RTRX not delisted yet? Maybe next week, after all insiders sell.
Sludge Reports Live
18 Aug 14 15:33:20
RT @bradloncar: $RTRX 20,000 share sale by a director: http://t.co/PmI1mKFXcX
Dr. Zoidberg
18 Aug 14 15:32:43
RT @bradloncar: $RTRX 20,000 share sale by a director: http://t.co/PmI1mKFXcX
Joe Hofland
18 Aug 14 15:25:12
RT @bradloncar: $RTRX 20,000 share sale by a director: http://t.co/PmI1mKFXcX
Pawcio
18 Aug 14 15:22:49
RT @bradloncar: $RTRX 20,000 share sale by a director: http://t.co/PmI1mKFXcX
Adam Feuerstein
18 Aug 14 15:20:54
RT @bradloncar: $RTRX 20,000 share sale by a director: http://t.co/PmI1mKFXcX
Bobby Shea
18 Aug 14 15:06:29
RT @bradloncar: $RTRX 20,000 share sale by a director: http://t.co/PmI1mKFXcX
Brad Loncar
18 Aug 14 15:02:13
$RTRX 20,000 share sale by a director: http://t.co/PmI1mKFXcX
Shane Blackmon
18 Aug 14 14:56:21
$RTRX Insider selling, director sells 20k shares http://t.co/Y6xwJstKSM
Pzaa...Guy
18 Aug 14 14:55:27
$RTRX - Statement of Changes in Beneficial Ownership (4) http://t.co/kNRjllEReW
Edmund Sullivan
17 Aug 14 11:56:42
My nephew and godson @BabyIanMichael - the littlest $RTRX holder. http://t.co/RwmZoBxtqH
bishmeet kohli
16 Aug 14 14:51:14
RT @Zackfoot: If $RTRX had proper sell-side coverage that could explain the magnitude of #RE024 px. #2 data, stock would be $25. Not kiddin…
BioTraderST
16 Aug 14 09:10:30
RT @Emory_R: New BAKER BROS. ADVISORS 13F Sold: $ICPT $RTRX $AUXL $FURX New: $SLXP $CPRX $MGNX $ARWR $BCRX Increase: $VSAR $FMI http://t.co…
Stocks in News
15 Aug 14 18:44:24
$RTRX: Traders Are Watching - Celgene Corporation (NASDAQ:CELG) , General Electric ... http://t.co/dt6I1aJNln http://t.co/uNZA344hjd
BioInvestor
15 Aug 14 18:02:31
Updated $RTRX cash flow needs; corrected for Manchester payoff. 1 option is to do another M&A with debt/convertible http://t.co/qGuVvFNPWY
BioInvestor
15 Aug 14 15:49:05
Even based on $RTRX sales estimates, @MartinShkreli may need financing. Where am I wrong? http://t.co/LHpNFTXTRc
Emory Redd
15 Aug 14 12:05:16
Parents seek approval for new drug that could save their three boys http://t.co/MCG1ve21lz #PKAN $RTRX
OTPicks.com
15 Aug 14 09:45:04
http://t.co/rruxxSh4Kk $heff: New BAKER BROS. ADVISORS 13F Sold: $ICPT $RTRX: $heff http://t.co/xiaucQqoD0 http://t.co/rruxxSh4Kk
LHommeAncien
15 Aug 14 09:04:51
$rtrx with all this ice-bath stuff around, I expect Martin to announce they have a product already in P2 for "frozen-brain" syndrome $spy
il falso guaritore
15 Aug 14 02:30:31
RT @bradloncar: Here's what $RTRX's 10-Q now says about syntocinon nasal spray, originally said to be on the market Q2 this year. http://t.…
Bulls vs Bears
15 Aug 14 00:44:28
$RTRX: RETROPHIN, INC. Files SEC form 8-K/A, Financial Statements and Exhibits http://t.co/PVf0n4fiOq http://t.co/htF86AWaV4
Dr. Zoidberg
14 Aug 14 23:02:50
RT @redacre: Does CEO selectively blocking twitter folks signal "maturity" ? $RTRX I think the message from the BoD hasn't gotten through. …
Dr. Zoidberg
14 Aug 14 23:00:19
RT @bradloncar: $RTRX - RE-034 (infantile spasms) now "may be initiated as soon as first quarter 2015" and zero real details about syntocin…
HedgeBound
14 Aug 14 20:50:58
$RTRX looks promising over $12.50/sh @MartinShkreli
masterlongevity
14 Aug 14 16:53:02
RT @riverstonecap: $RTRX heading towards single digit midget territory, in other words the maturity level of its CEO
Michael Torres, PhD
14 Aug 14 15:02:20
RT @Emory_R: New BAKER BROS. ADVISORS 13F Sold: $ICPT $RTRX $AUXL $FURX New: $SLXP $CPRX $MGNX $ARWR $BCRX Increase: $VSAR $FMI http://t.co…
alan caldwell
14 Aug 14 14:33:34
RT @Emory_R: New BAKER BROS. ADVISORS 13F Sold: $ICPT $RTRX $AUXL $FURX New: $SLXP $CPRX $MGNX $ARWR $BCRX Increase: $VSAR $FMI http://t.co…
Must Trade Medtech
14 Aug 14 14:29:41
RT @Emory_R: New BAKER BROS. ADVISORS 13F Sold: $ICPT $RTRX $AUXL $FURX New: $SLXP $CPRX $MGNX $ARWR $BCRX Increase: $VSAR $FMI http://t.co…
C.Dub
14 Aug 14 14:15:44
RT @Emory_R: New BAKER BROS. ADVISORS 13F Sold: $ICPT $RTRX $AUXL $FURX New: $SLXP $CPRX $MGNX $ARWR $BCRX Increase: $VSAR $FMI http://t.co…
Kyle Dennis
14 Aug 14 14:14:19
RT @Emory_R: New BAKER BROS. ADVISORS 13F Sold: $ICPT $RTRX $AUXL $FURX New: $SLXP $CPRX $MGNX $ARWR $BCRX Increase: $VSAR $FMI http://t.co…
				
				
By  +Follow September 19, 2013 8:51AM
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