Case Study - Ista
Ista Pharmaceuticals focused on developing and commercializing products primarily targeting ophthalmologists, optometrists and allergists. In 2008, like many smaller capitalization companies, Ista’s stock came under heavy selling pressure. Unfortunately for the company, this happened at a time when it needed to refinance maturing debt. Still a year away from turning a profit and with its stock heavily discounted, Ista needed a creative partner to avoid massive dilution. Deerfield offered to provide Ista with $65 million on terms that were much less dilutive than an equity offering and bridged the gap to profitability. This investment approximately equaled the company’s enterprise value. At Ista’s request, Deerfield allowed two of Ista’s long term shareholders to participate in 20% of the
investment. Over the course of the next year, Ista found an attractive acquisition prospect. In seeking financing for this $400 million purchase, Ista talked to a number of reliable potential financial partners. Only Deerfield was able to construct a proposal that permitted Ista to satisfy the structural, timing, and certainty of closing conditions of a competitive bid process. In 2012, Ista received a hostile takeover bid from Valeant and asked Deerfield to assist it in assessing and ensuring funding for potential acquisitions that provided a competitive alternative to external offers for the company. Deerfield provided assurance of funding and participated in the due diligence process on the potential purchases. Valeant’s initial bid for Ista was $6.50 per share and four months later Bausch and Lomb agreed to acquire the company for $9.10 per share through a friendly negotiated process.