Jul. 2 at 6:48 PM
$HRTX Been exploring some ideas. One thing that has bubbled up is Rubric's investment in
$COLL (Collegium). Collegium has a huge pain franchise, and, get this, has
$800M in revenue and
$450M in EBITDA, most of which is free cash flow.
The biggest challenge is that their market cap is only
$1.2B. Basically, there's no growth in their drugs, so the market is valuing it based on a pure DCF model to patent expiry.
The most plausible financial transaction would be a reverse stock for stock merger (to preserve Heron's NOL), and literally shield their EBITDA from taxes to the tune of 1.37B.
In this scenario, Rubric could win out big - since they have senior convertible notes, they would negotiate a very favorable conversion rate, effectively diluting the existing shareholders. Existing shareholders would end up with a small chunk of the combined company - since Heron MC is so much smaller than Collegium. It would likely be a nice premium from current levels, but nothing to write home about.
