Oppenheimer: Raptor Pharma Sale A 'Good Idea'

Trading in shares of Raptor Pharmaceutical Corp. RPTP was halted owing to volatility following reports of the company evaluating a possible sale and looking to hire an investment bank for the same.

Oppenheimer’s Christopher Marai maintained a Perform rating for the company, saying the sale was a “good idea” and in the best interest of shareholders. He added, “We have previously stated Raptor could be worth $7-8/share to an acquirer, based on DCF analysis of future Procysbi revenue, and recommended management sell the company here and here and here.”

Possible Acquisition

Marai noted that although Raptor Pharma is currently not profitable, the acquirer company may achieve the same through synergies and halted R&D spend. CEO Julie Smith's experience is likely to fetch a favorable price for the company.

Procysbi is a $190 million opportunity in cystinosis, but the existence of a generic in the market, uncertainty around IP and pricing headline risk raises the risk associated with the acquisition, Marai commented.

“Based on a DCF analysis of revenues, we believe it would be reasonable for an acquirer to pay $7-8/share, which would be at a lower multiple than other rare disease companies have sold for,” the Oppenheimer report stated.