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Feb 20, 2008

Possible $195M Encysive Buyout by Pfizer Will Save Firm from NASDAQ Delisting

  • Pfizer is offering to acquire Encysive Pharmaceuticals for approximately $195 million in cash. The takeover will pull Encysive out of the potential NASDAQ-delisting doldrums, and Pfizer stands to add another treatment for pulmonary arterial hypertension (PAH).

    Under the terms of the agreement, Pfizer will pay $2.35 per Encysive share. The price represents a 117% premium over Encysive’s value at the close of yesterday.

    Encysive hit the $1 mark on NASDAQ at around mid-day yesterday after being trading below this price since the beginning of November 2007. On December 19, the company received a delisting warning from NASDAQ and was given until June 16 to regain compliance.

    With the announcement of a potential buyout by Pfizer, Encyzive opened trading today at $2.16. Following completion of the tender offer, a subsidiary of Pfizer will merge with Encysive. Pfizer will acquire the rights to Thelin®, an oral, once-daily endothelin A receptor antagonist, as well as Encysive's other pipeline candidates.

    Thelin is approved in the EU and is currently available in nine European countries. Encysive reported $3.6 million in revenues for this drug for the third quarter of 2007. The company expects 2007 sales of $10.5 million to $11.5 million and 2008  sales in the range of approximately $40 million to $50 million.

    In the U.S., however, Thelin hasn’t yet received the FDA go-ahead. The company has received three approvable letters, with the last one stating that Encysive's development program for Thelin did not demonstrate evidence of effectiveness needed for approval. The agency encouraged the company to conduct an additional study to demonstrate the drug's effectiveness in exercise capacity. Pfizer says that it plans to conduct a pivotal Phase III trial to support registration in the U.S.

    Pfizer already has a PAH therapy in its portfolio. Revatio was approved in 2005 to improve exercise ability in PAH patients.



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