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Mayne Pharma Group (ASX:MYX) has been taking a beating in the markets this week, with company value as much as -33% lower — today down to $4.34 a share after opening Week 21 at $6.48 — on second thoughts from Cosette.
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The biggest whack came on Wednesday, when Mayne suffered its worst ASX trading day in 16 years, down -30%. Today has been a little better; just -4% lost to 3pm.
The nosedive came after Cosette Pharmaceuticals this week opened a review into its long-proposed $672 million Mayne Pharma acquisition. The reason, the U.S.-based company said, was mainly “material adverse changes.”
These “changes” (read: huge market volatility) now set several wheels in motion.
For Mayne, only one really matters, though: A 10-day consultation period.
Mayne and Cosette are now sitting down to talk through the blockbuster deal and what the aforementioned “material adverse changes” — a term HotCopper understands is boiled into the acquisition paperwork — mean for both parties.
Notable pain points in the drawing room talks will be Mayne’s nine-month trading halt as well as a recent letter from the U.S. Food and Drug Administration.
Cosette specifically pointed to “circumstances associated” with the Oz-based pharma company’s April 22 earnings update. Also mentioned was previous litigation from TherapeuticsMD over a licensing deal.
Mayne has already rejected that all these issues are big enough for Cosette to back out.
While things may come up rosy again, investors have already balked; it’s been a bloodbath for MYX stock since Wednesday morning. Shares are at $4.34 right now.
That’s particularly notable because Cosette’s offered buy price was $7.40/sh.
Much of the heavy lifting (or rather, sharp diving) was done on Wednesday, May 21, which now stands as the single worst day the Australian pharmaceutical company has seen on the bourse since as far back as early March 2009.
Not helping matters price-wise for Mayne is the fact that the ASX has also now queried why the recent slap from U.S. regulator the FDA was not disclosed.
The letter accused Mayne of “misrepresenting” the safety of its Nextstellis contraceptive.
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Mayne shareholders had already had June circled on their calendars, with the vote on the scheme of agreement originally pencilled in for June 18.
With Cosette now more likely to wash their hands of the whole thing when discussions wrap up, June may instead mark a clear exit month for some Mayne holders.
Now, it all comes down to whether Cosette can find what it sees as a “satisfactory outcome” — though at this stage, this HotCopper writer suspects the North Carolina company sees its most “satisfactory outcome” being the deal being scrapped.
Keep your eyes peeled for a termination notice; if it comes, it will be before May 31.
Heading into close on Thursday afternoon, MYX has been at $4.34/sh.
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