Viceroy Research (Viceroy) today released a detailed analysis of Mitsubishi Tanabe’s (TYO: 4508) potential acquisition of Neuroderm (NASDAQ: NDRM). Viceroy has meticulously researched the details of Neuroderm and Mitsubishi Tanabe, consulted a number of specialists in Parkinson’s Disease in relation to its thesis, and is of the firm belief that an acquisition of Neuroderm by Mitsubishi Tanabe will result in a complete write off of Neuroderm’s enterprise value of ~$970m.

Viceroy believes Mitsubishi Tanabe is a strong business, however an acquisition of Neuroderm will be value destructive and terrible news for shareholders, and the board will have a lot to answer for if the transaction is completed, including potential regulatory and legal claims.

Viceroy values Neuroderm at its most recent book value of ~$4.87 per share, representing an EV of $0.

Click here for Viceroy’s full report on the proposed Neuroderm acquisition

Viceroy believes:

• Neuroderm has misrepresented the size of the market, the relevance of its clinical study, and the effectiveness of its ND0612 pump-delivered drug.
• AbbVie’s Duopa/Duodopa pump is already established in the market, has a substantially lower adverse effect rate, conducted its trials on an appropriate subject pool, and did not rely on supplementary oral levodopa or entacapone, to boost its clinical trial results, unlike Neuroderm.
• Neuroderm claims the size of ND0612’s target market across the USA and EU is ~350,000 patients. AbbVie’s superior pump has targeted the same market, only capturing ~3,500 patients.
• The ND0612 drug is marketed towards advanced stage Parkinson’s sufferers, however the efficacy study for the drug was conducted on early stage Parkinson’s sufferers, which require substantially lower doses of the active drug component in order to be effective. We believe the FDA will closely review the stage 3 trials to ensure ND0612 is tested on an appropriate and relevant subject pool.
• Neuroderm’s ND0612 delivery pump is made up of generic components and presents zero R&D proprietary value.
• ND0612 is now only being tested for bioequivalence, not efficacy. While this may lead to a speedier FDA approved drug, Mitsubishi Tanabe is meant to be buying Neuroderm for its technology. We see this concession as further evidence of Neuroderm’s weak R&D value, which Mitsubishi Tanabe thought it was buying with this acquisition.

About Viceroy Research

Viceroy Research is an investigative financial research group. As global markets become more opaque and complex, and traditional gatekeepers and safeguards often compromised, investors and shareholders are at greater risk than ever of being misled or uninformed by public companies and their promoters and sponsors. Our mission is to sift fact from fiction and encourage greater management accountability through transparency in reporting and disclosure by public companies and overall improve the quality of global capital markets. Viceroy’s analysts utilize experience from diverse backgrounds including finance, engineering, forensic accounting, and law. Our research is further developed and vetted through an extensive consultant network of industry specialists. For more information, visit: viceroyresearch.org .

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