Italian drug company to buy Cary's Cornerstone Therapeutics

jmurawski@newsobserver.comSeptember 16, 2013 

Cornerstone Therapeutics announced Monday that it is being bought by an Italian pharmaceutical company, ending the Cary drug marketing firm’s five-year run as a publicly traded company.

The acquisition values Cornerstone at nearly $300 million, double what the company was valued at 10 months ago.

Chiesi Farmaceutici, which already owns 58 percent of Cornerstone’s stock, will pay $9.50 a share, or about $115 million total, for the remaining Cornerstone shares. The deal, which still requires approval from Cornerstone’s shareholders, is expected to be finalized in the first quarter of 2014.

The acquisition is the culmination of Cornerstone’s 2-year-old business strategy of getting specialty drugs to patients by selling directly to hospitals rather than working through doctors.

Chiesi said it bought Cornerstone to capitalize on the U.S. company’s “sales channel” for its own portfolio of products. “Through this transaction, Chiesi will become a bigger player in special care in the U.S., the world’s largest market for this type of care,” the Italian company said in a statement.

New York analyst Matthew Kaplan said the acquisition was a natural extension of Chiesi’s long-term relationship with Cornerstone. The wild card was the purchase price, he said.

“The price was the moving metric,” said Kaplan, an analyst with Ladenburg Thalmann & Co.

Cornerstone officials were not available for comment Monday. Company CEO Craig Collard said in a statement that the deal would benefit employees and customers.

Cornerstone shares closed at $9.47 Monday, down 27 cents, after closing at $9.74 Friday. The share value is now indexed to Chiesi’s purchase price of $9.50 a share.

Cornerstone shares began their ascent in mid-February, when Chiesi made its initial written proposal to acquire the Cary company for $6.40 to $6.70 a share, valuing Cornerstone at less than $200 million. But Cornerstone balked, creating a special committee to review the offer.

Meanwhile, investors propelled the stock, pegging the deal between $8 and $10 a share in recent months. However, Kaplan has valued the potential of Cornerstone stock at $12 to $14 a share in the next six to 12 months.

Monday’s announcement – and higher valuation – is the result of the special committee rejecting the terms of Chiesi’s original offer. The special committee’s conclusions will have to be approved by Cornerstone shareholders who are not affiliated with Chiesi and who are not Cornerstone officers.

Also on Monday, a New York securities litigation law firm, Tripp Levy, began trolling for a potential legal clients by announcing that it has begun investigating whether Chiesi, Collard and Cornerstone’s board of directors undersold Cornerstone shareholders.

Collard, who owns 6 percent of Cornerstone shares, supports the company’s takeover at $9.50 a share, according to Monday’s acquisition announcement.

The companies have not announced whether Cornerstone will retain its name as a Chiesi subsidiary or if it will be renamed by its new owner.

Chiesi is a privately held business founded in 1935 in Parma, Italy, with plants or facilities in France, Brazil, England and Rockville, Md. The company employs 3,800 people.

Cornerstone employed 116 in 2012, down from 147 a year earlier. The company did not provide an updated workforce total Monday.

Cornerstone was created as a publicly traded company in 2008 when Cary’s Cornerstone BioPharma acquired a Boston biotechnology company, Critical Therapeutics.

Narrowing focus

In 2012, Cornerstone narrowed its strategic focus to marketing respiratory drugs and specialty medications to hospitals and niche markets. Cornerstone typically does not develop or manufacture medications.

Cornerstone’s relationship with Chiesi goes back to 2009, shortly after Cornerstone went public and Chiesi became the American firm’s majority owner.

One of Cornerstone’s four products on the market is Chiesi’s Curosurf, which Cornerstone markets in the United States as part of a strategic agreement that gave Cornerstone the U.S. rights to sell the drug and Chiesi a 58 percent stake in Cornerstone.

Curosurf treats respiratory distress syndrome, or RDS, in premature infants. The drug had sales of $11.3 million in the second quarter, the highest ever for that product.

Last year, Chiesi further extended its commitment, agreeing to lend Cornerstone up to $90 million to acquire EKR Therapeutics. The EKR acquisition gave Cornerstone the rights to oral hypertension drug Cardene, Cornerstone’s best-selling product today.

Murawski: 919-829-8932

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