Retain OW on Sun Pharma, target Rs 1,010: Morgan Stanley

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Updated: September 23, 2015 6:59:04 AM

Sun Pharma has announced the acquisition of Insite Vision US for $48 million in equity value (net debt of US$3.5 million in Dec ember 2014).

Sun PharmaSun Pharma has announced the acquisition of Insite Vision US for million in equity value (net debt of US.5 million in Dec ember 2014). (PTI)

Sun Pharma has announced the acquisition of Insite Vision US for $48 million in equity value (net debt of US$3.5 million in Dec ember 2014).

The transaction is valued around 6.3x FY14 sales. Sun will commence a tender offer at a price of $0.35/ share, a 30% premium to the implied share price of the terminated acquisition between Insite and a competitor bidder’s price.

Insite’s lifetime high and low share prices are $0.93 in April 2011 and $0.25 in September 2010. Its last closing price was $0.34, and it has a market cap of $46.8 mn. Insite Vision generated sales of $8.2/30.8/21.6 mn in FY14/13/12 respectively, with R&D of $ 9.1/11.5/15.4  mn.

Insite Vision focuses on the development of specialty ophthalmic products. The company operates in two major ophthalmic segments – anti-infective ($2bn market size) and ocular inflammation and pain (~$1.7bn market size).

It identifies new product candidates from proven drugs that can be improved using its proprietary drug delivery systems Durasite and Durasite 2. It does not have manufacturing facilities for commercial production and relies on third party for phase 3 clinical trials.

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