I know most of this has been stated before, but I wanted it distilled. Please bear with me. Just to clarify what took place:
1)Perrigo (P)offers to buy LCI for $x. 2)When P made the offer, LCI did not have a permanent contract to distribute Jerome's drugs (Jerome's drugs contribued significantly to LCI's bottom line). Only had a working relationship. 3) LCI obtains 10 year deal from Jerome in exchange for 4m shares to distribute all of Jerome's drugs 4) Jerome has a new potential block buster drug under FDA consideration 5) Perrigo states that they do not presently have any intention of exercising option (lapses 8/6/04) 6) LCI states that it must be due to additional cost of acquiring the 4m shares issued.
Question or observation:
Perrigo must have some clause in the agreement which allows them to continue to review LCI's operations otherwise they will never know if anything has changed.
Why would Perrigo make such an offer prior to a permanent contract? Perrigo would have no idea or control in how the contract would be structured. Either Perrigo thought that LCI was worth the money with or without the contract or made a blunder.
Perrigo should have paid more to be able to come in and look for a few months.
LCI must feel that either present Jerome drugs or new block buster drug is worth $60m+ in stock. If they are betting on the new drug, they must have something to go on, you would think.
When Jerome submits an application for its new formulation, does the FDA provide updates as to where it is at in the approval process? Maybe someone out there knows the process.