Why Corium Shares Are Booming

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Corium International Inc. (NASDAQ: CORI) shares jumped on Friday after the company announced that it entered into a definitive merger agreement under which Gurnet Point Capital (GPC) will acquire Corium. Corium’s board of directors has unanimously approved the transaction.

Note that the transaction is structured as a tender offer followed immediately by a merger. Under the terms of the merger agreement, GPC will pay $12.50 per share in cash upon the closing. Compared to the 50-day and 200-day moving averages, the price offers 37.4% and 25.3% premiums, respectively.

The agreement also provides for a contingent value right of $0.50 per share that is payable based on the U.S. Food and Drug Administration’s approval of Corium’s lead product candidate, Corplex Donepezil, for the treatment of Alzheimer’s disease, prior to March 31, 2020. The $12.50 per share closing amount represents a 50% premium over the closing price on October 10, 2018.

Following the transaction, which is expected to close by the end of 2018, Corium also will offer to repurchase all of its $120 million in convertible notes.

Peter Staple, president and CEO of Corium, commented:

After an extensive evaluation of potential partnering opportunities, we concluded that the value and certainty provided in the proposed transaction is in the best interests of Corium’s shareholders, and provides Corium with the financial and other resources needed to bring Corplex Donepezil through regulatory approval and commercialization. Our management, R&D and product manufacturing teams look forward to working with GPC as we prepare to submit our regulatory application for Corplex Donepezil, and extend our leadership position in developing new transdermal products that address significant patient need.

Corium’s largest stockholder, Essex Woodlands, has entered into a support agreement to tender its shares in this transaction.

Shares of Corium were last seen up about 50% at $12.51 on Friday, with a consensus analyst price target of $12.67 and a 52-week trading range of $7.17 to $13.93.