peptech to aquire psivida

Could Peptech be running the ruler over Psivida whilst Psivida's share price is climbing off 4 year lows?

A brief synopsis of the case:

Peptech share price at 2 year highs and cashed up to the tune of $186 million with many more dollars due to pour into the money box. Psivida bouncing off 4 year lows. Result: Attractive situation for a full script or mixed cash/script offer. But why?

What desires has Peptech signaled and announced?

Peptech has signalled an aggressive acquisition policy on the strength of its balance sheet to enrich its pipeline of drugs including building its Cancer franchise. Psivida offers its highly novel Brachysil anti-cancer technology. Brachysil for primary liver cancer is in Phase Two B trials and Brachysil for Pancreatic cancer is in Phase Two A trials.

Peptech purchased Biosceptre, a cancer diagnostic company still in the development phase but with near term products to market.
Psivida offers its fully owned US based subsidiary Aion Diagnostics (due to be spun out by IPO in US/AUS during 2007). Aion is developing novel nano-technology diagnostic tools for 15 targets including cancer. Expect a linking of platforms, technologies, expertise and products.

Peptech is disillusioned with lack of recognition from the Australian investment community and looking off shore to build its profile and potential base.
Psivida offers substantial and growing institutional support in the US by way of its NASDAQ listing and is in the final stages of moving all its HQ and operations to the US. Psivida's presence and critical mass in the US was significantly strengthened by the purchase of Control Delivery Systems in Boston, US in 2005 for $139 million (Bioshares rated it the Merger and Acquisition deal of the year) and Psivida will soon be primarily a US entity. Of note the market cap of the combined Psivida and CDS business at the time was $280m versus a current market cap of only approx $100m.

Of note the CDS business is based around long acting and controlled release micro-implantible devices. As is the Peptech animal health technology.

Peptech is moving into the eye disease market(which is one of the fastest growing markets world wide) through the acquistion of Promics. Through Promics, PTD are conducting pre-clinical work to target Age Related macular Degeneration (AMD).
Psivida offers to fill the eye disease product pipeline with marketed and pending therapeutic products acquired through the acquisition of Control Delivery Systems. Psivida has two commercialised revenue producing products in the eye disease market for CMV retinitis and also uveitis (licensed to Bausch and Lomb and co-marketed by Novartis). Well advanced Phase 3 trials are being conducted in the US, Europe, Canada and India for Psivida's Medidur technology to treat Diabetic macular Edema (DME) which is the leading cause of loss of vision for people under 65 world wide. There again is scope to cross-pollinate PTD and PSD technology to create a strong eye disease franchise.

All the above might sound OK in theory but there is another sound and tangible link which may add to the possibility of M&A activity between the two companies. One of the directors on the board of psivida is Dr Roger Aston who is the co-founder of Psivida.
Dr Aston was previously the CEO of Peptech. He was also founder and CEO of Biokine Technology Ltd (UK) prior to acquisition by the Peptech Group. He was also a Director of Cambridge Antibody Technology Limited (CAT) in the UK. For those that aren't aware, Peptech had a sizeable shareholding in CAT back in the nineties but was forced to sell the entire holding to raise funds shortly before CAT went on to become a billion dollar company. The principle scientist of CAT, Dr Greg Winter subsequently founded Domantis and beacause of his brilliance and past history, Peptech were very keen to invest as the largest stakeholder in his Domantis company which is a ground breaking start-up company which was just recently acquired by GlaxoSmithKline (GSK) for $575 million (Domantis is primarily in drug discovery phase without a single product close to market). Peptech's share of their Domantis shareholding upon sale was $178 million hence the fat PTD wallet. Did I mention that Dr Roger Aston previously worked for Wellcome poc (now Glaxo Smith Kline)?

Funnier things have happened.

And apart from the operational synergies outlined above, PTD would also be acquiring a company that has the following positive aspects:
1) Psivida currently negotiating a licencing deal with a top 5 global pharmaceutical company by end of March 2007 (my bet is Roche or Novartis).
2) Multiple evaluation agreements signed with at least two other top 5 global pharma companies for Psividas Biosilicon and drug delivery technolgy in the fields of opthamology and oncology.
3) Evaluation agreement with a large global medical device company to evaluate cardiovascular delivery of drugs usings Psivida's technology
4) A recently announced collaboration with a global electronics company to evaluate the Biosilicon technolgy for the development of transdermal drug delivery systems.
5) An agreement with ITOCHU Corporation (one of the world's largest comapnies) to develop technologies for the Japan and Asian market.
6) Pending spin out of Aion Diagnostics and trade sale or out licencing all non-core applications such as orthopedics and Biosilicon food industry products

Too many other far reaching oppurtunities and collaborations to mention. Best you review Psivida's ASX announcements if not familiar. Happy days in 2007 with value recognition imminent, with or without Peptech in my opinion.

Cheers
Sarge