TLCR Talecris Biotherapeutics Holdings Corp. (MM)

Baxter International (BAX) recently announced that it has inked a definitive pact to purchase privately-held Prism Pharmaceuticals, a specialty pharma company located in King of Prussia, Pennsylvania.

Per the agreement terms, Baxter will pay up to $338 million, comprising an initial cash outflow of $170 million and as much as $168 million in forthcoming revenue-based milestone installments. Subject to regulatory approvals, the deal is expected to conclude in the second quarter of 2011. The transaction is not forecast to materially impact Baxter’s fiscal 2011 results.  

Prism Pharmaceuticals developed and then obtained U.S. Food and Drug Administration (“FDA”) certification for numerous presentations of NEXTERONE (amiodarone HCl), which is an antiarrhythmic substance. The NEXTERONE product line does not contain benzyl alcohol and polysorbate 80. It contains the sole ready-to-be used premixed intravenous (IV) bag formulations, vials as well as pre-filled syringe.

The NEXTERONE IV formulations, in a premixed condition, were recently authorized by the FDA in a couple of readily usable dosages: 150 mg in a 100 ml package for quick 10-minute loading infusion and 360 mg in a 200 ml package for future loading and upkeep infusion.

These formulations do not need mixing, thereby obviating possible medication mistakes related to compounding. Furthermore, NEXTERONE can be kept at normal temperature for 2 years. The product fits in automated dispensing furniture, placing it within patient care arenas ready for usage during critical situations.

Before its decision to acquire Prism Pharmaceuticals, Baxter was its contract manufacturer, on the basis of selection by Prism, to produce the premixed IV bags utilizing Baxter’s own GALAXY container know how as well as pre-filled syringes.

Amiodarone can be categorized as an antiarrhythmic medicine used for ventricular tachyarrhythmias or rapid types of irregular heartbeat. NEXTERONE Premixed Injection is used for starting treatment and prophylaxis of common ventricular fibrillation and hemodynamically unstable ventricular tachycardia. NEXTERONE has several significant contraindications as provided by the company.

The news regarding Baxter remains mixed. On the positive side, Baxter’s focus on life-sustaining products, which are not commoditized, partly insulates it from an economic downturn. The company is able to generate recurring revenues, and consistent cash flow, due to its focus on chronic diseases.

On the flip side, despite recent improvement in Plasma Proteins and Antibody Therapy sub-segments, we are concerned about stagnation in sales, a slightly somber outlook for some hospital spending and tightening of reimbursement.

The lingering neutrality surrounding the stock can be lifted by consistent execution. Baxter is a good bet for value investors willing to wait as fundamentals improve. Among others, it competes with Becton, Dickinson and Company (BDX) and Talecris Biotherapeutics Holdings Corp. (TLCR) in certain niches. We currently have a long-term Neutral rating on Baxter.

 
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