Sr NVD Finance staff in meetings to plan future of NVD

[Anonymous]

Is it the whole division or just Vaccines? What about Diagnostics out in California? I wonder who would buy that division, they make no money but I hear Vaccines has always got the top bonus payout as well as research.

I have been exchanging emails with a friend in Ibanking in Frankfurt and the summary from gossip in the bards there is that there are serious offers at the high range sited above at $500M but the problem for Novartis is that the offers do not include taking possession of all of NVD but only portions. He indicated that no one is interested in taking it whole with all debt etc as would be common in such deals. The feeling is that there is more down-side risk than financial benefits that would come from taking the whole deal and writing off the debt and or revenues for selling or writing off the expenses of shutting down the portions that they do not want to use going forward. We didn't specifically talk about Diagnostics but I think that would be the case for anyone who is looking at NVD anyway. If they are only willing to pay $.5B for portions of a company that was, just 8 years ago, worth $8B then why would they even mention a portion of the business like Diagnostics?

He did say the offer for $.5 B did include all the IP (to include a few of the scientists / researchers that they might recruit away but not all) and 2 of the TO sites (to include about half the people). When I asked about the other sites and the rest of the people he just replied with a and said that the deal was that Novartis would have to have Novartis keeping all those portions and either selling them off and or paying for the costs of getting rid of the people and or shutting down the sites. He did give the particular example that Rino has back-doored everyone by working with the Italian Govt to require that anyone that wants to shut down the site at Sienna has to pay for the site to be integrated into the university there to include paying the salaries of the researchers and research already underway there for 3 years. This "poison pill" ensures that no one wants to buy it off of Novartis who knew, or should have known, about these requirements when they bought Chiron. He said that China and Brazil TO sites are jokes and Novartis will be forced to write those off as sunk costs. He also added the Novartis will have to take care of Andrin and his Sr Staff as all outsiders look at them as over paid amateurs.

It looks like the best deal for Novartis for NVD will involve a big loss for Novartis and the end of most of us in this business - good luck.

 

[Anonymous]

He did give the particular example that Rino has back-doored everyone by working with the Italian Govt to require that anyone that wants to shut down the site at Sienna has to pay for the site to be integrated into the university there to include paying the salaries of the researchers and research already underway there for 3 years. This "poison pill" ensures that no one wants to buy it off of Novartis who knew, or should have known, about these requirements when they bought Chiron. He said that China and Brazil TO sites are jokes and Novartis will be forced to write those off as sunk costs. He also added the Novartis will have to take care of Andrin and his Sr Staff as all outsiders look at them as over paid amateurs.

It looks like the best deal for Novartis for NVD will involve a big loss for Novartis and the end of most of us in this business - good luck.

The Rino clause was overlooked by NVS when they were doing their due diligence on the Chiron acquisition. This will be another shareholder suit when the whole stinking deal is wrapped up. NVS will have endure a lengthy period of dry anal rape.

As these items have been uncovered during the negotiation processes with the big Pharmas that have expressed interest, the asking price has been dropping. Now the likely range is $100-350 million. If NVS doesn't bend over soon and grab ankles, there will be no offers at all. I can think of at least two dead bodies that are hidden, any one of which could be a dealbreaker.

 

[Anonymous]

The Rino clause was overlooked by NVS when they were doing their due diligence on the Chiron acquisition. This will be another shareholder suit when the whole stinking deal is wrapped up. NVS will have endure a lengthy period of dry anal rape.

As these items have been uncovered during the negotiation processes with the big Pharmas that have expressed interest, the asking price has been dropping. Now the likely range is $100-350 million. If NVS doesn't bend over soon and grab ankles, there will be no offers at all. I can think of at least two dead bodies that are hidden, any one of which could be a dealbreaker.

At that value Novartis would probably be better just hanging onto Vaccines and turning it around on their own no?

 

[Anonymous]

At that value Novartis would probably be better just hanging onto Vaccines and turning it around on their own no?

Not at all. They have failed. The organization has been incapable of multiplying value for the shareholders all these years. In fact, they have lost substantial value. It is clear they don't know what they are doing, and have no viable plan to solve the problems. In those situations the company must divest the failed assets and let a competitor who knows what they are doing take on the risk. Lean and mean.

I actually think the original number of $50 million is all they will be able to squeeze out of NVS in the short term. Longer term they can unwind capital investments (usually 10 cents on the dollar) and real estate, and write off debt in an efficient manner.

It is an epic disaster, a tragic waste of resources and potential. And what is even more galling is that the morons responsible for the fiasco all walk away very rich men.

 

[Anonymous]

At that value Novartis would probably be better just hanging onto Vaccines and turning it around on their own no?

This has been covered in other threads but what would a turn around look like, how much would it cost and how long would it take?

At the current burn rate the ROI is epically bad so that they would have to cut $200-$300 M / yr while they did it. Where do they cut it? All of Comm Ops in NA would be less than half of that then Development? They can't Develop and License new vaccines as it is so if you cut them more what is left? Vas doesn't really know what he is doing and is obviously just making this up as he goes along. Tech Ops has Liverpool, Marberg and Holly Springs with nothing commercially to make in order to sell. And Sienna has Rino's science that has now turned out to be average snake oil.

So I go back to the first sentence above and am really interested in serious responses.

 

[Anonymous]

went to a job interview today and embarrassingly bumped into a colleague from nvd as he was walking out of room interviewing for the same job. told this to my head hunter and she said, "yaw well, there are more nvd / novartis resumes on the market right now then any other company. just feel lucky that you are not in the market in nj".

you think that mp's recent promo to vp sales means that his resume was taken from his head hunter? anyone believe that he will move to nj?

good luck all

 

[Anonymous]

went to a job interview today and embarrassingly bumped into a colleague from nvd as he was walking out of room interviewing for the same job. told this to my head hunter and she said, "yaw well, there are more nvd / novartis resumes on the market right now then any other company. just feel lucky that you are not in the market in nj".

you think that mp's recent promo to vp sales means that his resume was taken from his head hunter? anyone believe that he will move to nj?

good luck all

So we probably will see the end of nvd sometime in 2013/14. They move all the hq people to nj now what ? They get the same layoff package they would have gotten if they didn't move?

 

[Anonymous]

So we probably will see the end of nvd sometime in 2013/14. They move all the hq people to nj now what ? They get the same layoff package they would have gotten if they didn't move?

if you are talking about rna hq, sure, for those of us screwed enough to have to actually move first before we find another gig. as noted above, everyone is on the street hawking their cv's to anyone who will schedule an interview. like someone said in another set of comment streams, the layoff package is like the consolation prize given to those at the end of musical chairs when you don't have anyplace else to sit. don't wait for the music to stop before looking for another game to play in. for those of us who don't and have to take the money from a nvd game in nj it will be the biggest screw-job ever.

 

[Anonymous]

Just vaccines. Diagnostics has become a low margin- high headache business. Like vaccines too as Novartis likes to manage it. That's part of why the low price. There is alot of long term investment and housecleaning needed.

The past bonus structure is a sore point. There are some high-level mutterings about a clawback of bonuses at the top of the NVD management.

if they want to start with clawback of bonuses in vaccines why stop there? why not keep going and move from incompetence and management malpractice to fraud and conspiracy?

 

[Anonymous]

if they want to start with clawback of bonuses in vaccines why stop there? why not keep going and move from incompetence and management malpractice to fraud and conspiracy?

Or the base salary for the entire EC - how does anyone justify the million $ / yr plus salaries for those morons?

 

[Anonymous]

if they want to start with clawback of bonuses in vaccines why stop there? why not keep going and move from incompetence and management malpractice to fraud and conspiracy?

so lets make the maths for the tally

$8.5 B (original purchase price) - $.5B (est of current selling price) = $8B
Cost of shutting down parts of NVD no one wants = $.75B
Total NVD operational losses = $1.25B
Time Value of Money / Opportunity Costs = $.75B
Novartis' reputational losses = ?
Total = $10.75B

And you say that the shareholders should be upset that NVD Sr Leaders paid each other and their friends millions of $'s in bonuses over this same time while the shareholders lost over $10B?

I say Enron type shareholder lawsuit!

 

[Anonymous]

Anyone have any names for potential buyers? Even if just rumors?
Odds that the whole NVD unit will be purchased outright vs. getting scrapped for parts?

 

[Anonymous]

Anyone have any names for potential buyers? Even if just rumors?
Odds that the whole NVD unit will be purchased outright vs. getting scrapped for parts?

I agree that depending upon who buys it determines how much of it they are interested in taking. As described above, the only parts of the NVD that offer any potential value are parts of Tech Ops (Holly Springs and Rosia) all of the IP (if cheap enough) and a few of the researchers to support those portions of the IP. But, depending upon the acquirer some additional portions might be of value. First, let's discount what can't be valued at or above worthless; Most of Research Operations - Rino and his marry band are expensive and a repository of yesterdays ideas. If stripped of any IP that is of potential value that can then be transferred to modern research organization it, as an organization is worthless, while some of the individuals are very good when transferred to other organizations. Development - same. Much more expensive compared to industry benchmarks due to low internal expertise and capabilities requiring maximum outsourcing. Basically left over from legacy of Chiron.

The total value of NVD is less than the sum of its parts - that is the lesson Novartis learned when it purchased Chiron and hoped to get a viable "turn-key" vaccines business. They obviously didn't.

If a large pharma buys it than there is one of 2 scenarios but neither are a whole purchase as the net value of NVD is negative the only question is how much of it will they take - if they are large enough with deep pockets maybe they keep one or both of Tech Ops Brazil and or China (long view of growing markets) and maybe portions of the Vaccines US Comm Ops if they can give them products that they already have to sell. The other scenario is that same for a large or medium pharma and that is to keep only the portions that offer any hope of a medium term value listed above.

Other functions like Quality, Regulatory etc aren't even part of this analysis as it is obvious that NVD offers no special competencies there. Portions will stick around for the transition and maybe eventual integration into the acquiring org but the rest will be pruned off.

A special case may stop everything though - if the above claim regarding Sienna is true then that might scupper the whole deal. Since the TO sites are worthless, in the short run, without the vaccine production and if the IP in Sienna can't be separated from the operations there and since no one in their right minds would take Sienna with those potential costs then no individual portion is worth a penny.

 

[Anonymous]

A special case may stop everything though - if the above claim regarding Sienna is true then that might scupper the whole deal. Since the TO sites are worthless, in the short run, without the vaccine production and if the IP in Sienna can't be separated from the operations there and since no one in their right minds would take Sienna with those potential costs then no individual portion is worth a penny.

No, I think that NVS will eat that part of the contract. Not so much money compared to the disastrous elements of the rest of the deal.

 

[Anonymous]

Another one wants to kick the tires. They are all zeroing in on 100-500 $mill. The devil is in the details. Of course golden parachutes are a big part of it. It is a sad spectacle to witness.

Who are "they" exactly? Which pharmas are seriously considering some sort of acquisition?

 

[Anonymous]

Who are "they" exactly? Which pharmas are seriously considering some sort of acquisition?

Take a guess brainiac. You can count on one hand the pharmas that produce vaccines.

 

[Anonymous]

Take a guess brainiac. You can count on one hand the pharmas that produce vaccines.

its gsk, they need menveo but not much else. both sides are waiting for the failure of the bexsero filing so that there is no doubts about the value and like most all cross-border deals it will announced in the 1st qtr so that the due diligence and final acquisition can hopefully be completed by the end of that fiscal year. it makes all the accounting and govt filings easier.

 

[Anonymous]

Take a guess brainiac. You can count on one hand the pharmas that produce vaccines.

Could be SP too right?

 

[Anonymous]

its gsk, they need menveo but not much else. both sides are waiting for the failure of the bexsero filing so that there is no doubts about the value and like most all cross-border deals it will announced in the 1st qtr so that the due diligence and final acquisition can hopefully be completed by the end of that fiscal year. it makes all the accounting and govt filings easier.

That makes sense, but it could be other vaccine makers. If Bexsero can be licensed, then it is a big winner, adding it to Menveo. As it stands, Bexsero is a dog and needs alot of development work. Menveo is also a dog, relative to the competition, and needs a complete retooling. So $85 million sits on the table as an offer. Just think what Andrin and Vas have been paid over the years. Almost the same.

 

[Anonymous]

If Bexsero can be licensed, then it is a big winner, adding it to Menveo.

Bexsero just got approved in Europe.