Collegium to Acquire BioDelivery Sciences for $604M; Shares Up 16%

Collegium Pharmaceutical, Inc. (NASDAQ: COLL) has inked a deal to acquire BioDelivery Sciences International, Inc. (NASDAQ: BDSI) in an all-cash transaction for $5.60 per share of BDSI equating to a total value of $604 million.

Following the news, shares of Collegium Pharmaceutical, a leading diversified specialty pharmaceutical company, jumped 13% to close at $19.90 on February 14, and gained another 3% during the after-hours trading session.

Similarly, BDSI shares gained a whopping 53% to close near the deal price at $5.56 per share.

Synergies of the Deal

BioDelivery Sciences International (BDSI) is a rapidly growing specialty pharmaceutical company with a portfolio of pain and neurology products and therapies for serious and debilitating chronic conditions.

The deal is in-line with Collegium’s mission to build a leading, diversified specialty pharmaceutical company benefitting patients suffering from serious medical conditions.

The addition of BDSI’s commercial growth driver, BELBUCA will complement Collegium’s portfolio of pain products. Further, it will add a second growth driver, thereby creating diversified revenue growth.

Meanwhile, BDSI’s ELYXYB, a neurology product in its early launch phase, will create a strong foothold in neurology for Collegium .

The acquisition will also enhance Collegium’s financial position through boosted revenues, accretive earnings, and accelerated cash flow generation.

The deal is expected to be accretive to earnings in 2022 and 2023 with identified annual synergies of at least $75 million within twelve months upon completion.

Other Transaction Details

Per the terms of the deal, Collegium will pay a price of $5.60 per BDSI share. This implies a 54% premium based on BDSI’s closing share price of $3.64 on February 11.

Collegium will finance the deal using a combination of available cash as well as a $650 million secured financing. The acquisition is expected to close in the first quarter of 2022, subject to certain regulatory approvals.

CEO Comments

Collegium CEO, Joe Ciaffoni, commented, “The BDSI portfolio expands and enhances Collegium’s differentiated pain offerings and establishes a foothold in neurology, a strategic market adjacency.”

He further added, “Importantly, we expect this acquisition will be immediately and highly accretive by expanding our revenue scale and generating significant synergies.”

Wall Street’s Take

Following the accretive acquisition news, Cantor Fitzgerald analyst Brandon Folkes upgraded Collegium Pharmaceutical to Buy from Hold and also increased the price target to $26 (29.5% upside potential) from $18.

The rest of the Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 2 Buys. At the time of writing, the average Collegium Pharmaceutical stock forecast was $27, which implies 35.7% upside potential to current levels.

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