Spencer Pharmaceutical Inc.
(OTC: SPPH)
SPPH Buyout Could Reap Investors a 4x to 5x Return!
Back in early November we brought SPPH to our member's attention as a new trade idea when the stock was at $.28. After our trade alert SPPH zoomed to more than $.60, a potential gain of more than 100% for OTCPicks members. Since that time the company has announced that it received an unsolicited all-cash Buyout Offer from a company called Al-Dora Holdings, a Kuwaiti private investment company owned and managed by some of the Gulf's richest families.
For the last few weeks more information has been coming out about the buyout offer and it is estimated that the buyout offer is valued at $.97 a share. This is a huge premium considering that after shooting up to $.60 earlier in the month the share price has retreated to around $.125. Al-Dora has agreed to a $500,000 non-refundable deposit commitment as a good faith downpayment, and the company has announced its intention to cancel 36 million outstanding shares increasing the buyout offer value to $1.10 per share.
For all these reasons, we don't see why SPPH shares have retreated recently when there is so much positive news coming out. If this buyout goes through as currently structured investors buying SPPH shares at the current ballpark share price of $.23 could potentially reap at least a 4X+ return on their investment.
SPPH toward the end of December dropped significantly and bottomed out at around $.07 then bounced hard and strong. Since that time it has been in an overall bullish uptrend and MACD and Stochastics are looking positive.
We think SPPH shares still have a lot of upside. Yesterday, the company hosted Al-Dora representatives at a dinner in Montreal which went very well. It further solidified that this buyout is the real deal and if it goes throughare going to stay down at this level. Do your homework on SPPH today and put SPPH back on your watchlist right away!
The company's goal is to develop a portfolio of pro-drugs with the ability to outclass the current commercial drugs.
Technologies
Vectorization to the Central Nervous System
The Problem:
The delivery of drugs to central nervous system (CNS) is a challenge in the treatment of neurological disorders. Drugs may be administered directly into the CNS or administered systematically (e.g., by intravenous injection) for targeted action in the CNS. The major challenge to CNS drug delivery is the blood-brain barrier (BBB), which limits the access of drugs to the brain substance. Over the past decade, several treatments have been launched on the market for the treatment of Alzheimer”s disease (Donepezil for Aricept®, Rivastigmine for Exelon®, Galantamine for Razadyne®). However, the existing molecules have their effects depleted with time which leads to elevated doses. These elevated doses can cause serious adverse effects on peripheral organs due to the activity of these molecules which can lead to stopping the treatment.
The Solution:
INSA Rouen has been developing a platform for the treatment of Alzheimer’s disease. The scientific group has designed, synthesized and investigated by in vitro and in vivo experiments, new inhibitors free of adverse peripheral effects. Our strategy brings into play a ‘bio-oxidable prodrug”, which after having crossed the blood brain barrier protecting the brain, is converted to the parent drug in the CNS, via a redox-activation process.
The Strategy:
The past few years, the scientific team has been dedicated to prove the concept and has claimed the intellectual property through a registered patent. The therapeutic challenges being the same for all Central Nervous System (CNS) diseases, INSA has created a series of prodrugs able to cross efficiently the Blood Brain Barrier and outclass all the current commercial drugs for CNS diseases. (Alzheimer’s, depression, Schizophrenia, bipolar disorder and brain tumours).
We are now ready for Clinical trials.
The Scientific Team:
The research is currently performed at the National institute of Applied Sciences of Rouen (INSA) within the CNRS Laboratory UMR 6014 COBRA at the ECOFH (Research Team in Fine Organic and Heterocyclic Chemistry) managed by Pr. Francis Marsais, in partnership with the neuropsychoparmacology and pharmacy of the University of Rouen.
The Research team includes:
The Solution:
Université du Québec à Montréal (UQAM) has discovered and tested a system based on an «intelligent vehicle» that we believe is the best for oral delivery which can protect a small-molecule, a peptide or a protein during the passage of the gastro-intestinal tract and ensure the uptake of bioactive molecules from the gut into the bloodstream in an active form. In this case, UQUAM’s technology will make it easier and less painful and offer increased convenience, patient compliance, and reduced overall health costs.
The Technology:
The technology is based on patented natural polymers used as a vehicle to deliver active compounds at the absorption sites without compromising their stability and bio-availability . To be effective, it is necessary to prepare the polymer in order to confer specific deliver-abilities and protection of the active compound capabilies
When administered orally, this «intelligent vehicle» is able to recognize the harsh environments (i.e. gastric acid) or denaturing factors (i.e. proteolytic enzymes). Face these situations, the vehicle changes its configuration to adopt a structure more stable in order to protect the bioactive agents during gastro-intestinal transit and release them in the controlled way at absorption sites. Moreover, the vehicle can hang for a while on the intestinal walls and promote significantly the transport of the drug into the bloodstream.
We firmly believe that the simplicity and versatility of UQAM’s formulations make this novel natural matrix compatible with various drugs and highly competitive in the field of drug delivery systems.
The Scienfitic Team
Controlled release systems have been developed through a partnership from a very experienced team at UQAM with the intention of reducing or eliminating the side effects of many drugs, potentiate their biological activity as well as providing the possibility for once-a-day administration
Comparative Study:
Glucophage® XR (trade name for metformin extensed release) was chosen in this study because it is a largely used commercialized drug (the most prescribed worldwide for diabetes)
Market Analysis
CNS Diseases
The Central Nervous System disease market is one of the largest and fastest growing markets in the pharmaceutical industry. The global market for drugs treating Central Nervous System disorders has grown rapidly in recent years to reach US$ 66.1 billion in 2006. The global CNS market is forecast to expand to
US $104 billion in 2015.
The Alzheimer’s Disease (AD)
In 2006, global sales of the AD drugs were worth some US$ 1.6 billion. The Alzheimer’s drugs are relatively expensive medicines (costing around $1,700 to $2,300 per year for the patient). They can cause side effects however and these outweigh the sometimes limited benefits and lead to the end of the treatment. Thus, a new drug or strategy such as the one that INSA has developed with no side effects and good benefits would be a real advantage to the patient.
INSA’s strategy could be applied for AD but also for so many other diseases having an important part in the pharmaceutical market. (See table below)
Diabetes
More than 17 millions people in the United States have diabetes mellitus; most common is type 2 diabetes (90%). Type 2 diabetes is a condition characterized by high blood glucose levels caused by a lack of insulin or the body's inability to use insulin effectively. During the last decade, the prevalence of type 2 diabetes has significantly increased.
The most popular anti-diabetic drug for glycemia control in patients with type 2 diabetes is Metformin. In the United States, about 35 million prescriptions of genereic Metformin were issued in 2006. In 2008, metformin is one of only two oral anti-diabetics in the World Health Organization Model List of Essential Medicines.
To our knowledge, monolithic tablet formatting for Metformin is a growing demand in the pharmaceutical world.
Company Chart
Near the beginning of November Spencer Pharmaceuticals announced the buyout offer by Al-Dora and their stock zoomed from around $.20 to around $.60 in a matter of days. Since that time the share price has backed off and dropped to as low as around $.07 before rebounding hard of that price level. Since the beginning of December SPPH has been in an overall uptrend with higher lows being made along with higher highs. And in the past few days both the MACD and Stochastics indicators have turned decidedly bullish. We like what we see from the technicals of SPPH.
Recent SPPH News:
December 10 -
Spencer Pharmaceutical Formalizes Buyout Offer With Al-Dorra
Spencer Pharmaceutical Inc. (PINKSHEETS: SPPH) announced today that is has formalized the buyout offer with the Al-Dorra Group as a successful results of meetings held in Montreal, Canada over the past week.
According to the terms of the formal buyout offer, Al-Dorra will acquire Spencer Pharmaceutical for $245 million USD on an all cash transaction to close on or before March 17, 2011. As per the terms of the formal offer, Al-Dorra reserves the right to acquire shares in the open market and Al-Dorra will deposit $500,000 in the company's account to be used to pay legal fees, and expenses associated with the ongoing business operations of Spencer Pharmaceutical.
"We are very satisfied with the terms of the buyout offer as it is very beneficial to our shareholders," said Dr. Max Arella, President of Spencer Pharmaceutical Inc. "I would personally like to thank His Excellency Hussein Al-Awaid for his time and travel commitment in formalizing the agreement with our board on behalf of our shareholders," further added Dr. Arella.
About Spencer Pharmaceutical Inc.
Spencer Pharmaceutical Inc. is a US-based Pharmaceutical Research and Development Corporation, which is developing innovative drug release and absorption systems for the treatment of metabolic diseases such as diabetes and metabolic syndrome.
November 24 -
Spencer Pharmaceutical to Cancel 36 Million Shares, Increasing the Buyout Offer to $1.10 per Share
Spencer Pharmaceutical Inc. (Pinksheets:SPPH - News) announced today that it is in the process of cancelling 36,000,000 shares, which had been previously issued, and the said shares will be returned to treasury.
According to the Buyout offer of $245 million, the per share price is now based on 222,431,359 shares outstanding and therefore the reflected amount will be at $1.10 per share. The company expects to sign a definitive agreement with Al-Dorra upon their official visit to Canada schedule for November 30, 2010, where the company will host a dinner in their honor. It was previously noted that the company has the legal requirement to review any third party offer, even if Al-Dorra has irrevocably committed to a $500,000 deposit.
"The reduction in outstanding shares is another way to get a better price for our shareholders," said Dr. Max Arella, President of Spencer Pharmaceutical Inc. "Even if we believe the offer to reflect the value of our enterprise, we will continue to negotiate and look for ways to increase the value to our shareholders," further added Dr. Arella.
About Spencer Pharmaceutical Inc.
Spencer Pharmaceutical Inc. is a US-based Pharmaceutical Research and Development Corporation, which is developing innovative drug release and absorption systems for the treatment of metabolic diseases such as diabetes and metabolic syndrome.
