While Savella sales have ramped at a slower trajectory than forecast, they have ramped higher. FRX still projects $100 million in sales in 2010. CYPB is trading at less than a dollar above its cash level and the stock is currently valuing its stake in Savella at less than $25 million.
Will FRX simply buyout CYPB to grab the cash and save the royalty?
Would be interesting to see what you are thinking now that a hedge fund has put a $4 offer on CYPB. When you posted this CYPB was trading much higher. I think FRX can take CYPB out for next to nothing, control all Savella rights, sell off CYPB that are not desired, pocket the cash on the balance sheet which is significant and basically make out like bandits. I don't think FRX is a greedy company but CYPB allowed themselves to become too vulnerable and now hedge funds are trying to take over. Would Forest want to be partnered with hedge funds? If I were Forest I'd just take them out at a bargain price and shut it down.
How much do you think CYPB is worth to FRX? The royalty stream that CYPB gets is ~15%, and FRX also has to re-imburse CYPB's Savella sales costs. There are some additional milestone payments as well...