Quick Pitch: Theratechnologies (THTX)

Potential Takeover — 75%+ Upside (at $2.57/share)

This is a potential buyout setup that has a number of aspects to like:

• Credible and motivated bidder that has been pursuing the target company for almost a year and has already made three offers. The latest is at an 75% premium to the current price;
• Management team that wants to sell the company, having just been in late-stage buyout talks with another bidder;
• Freshly launched strategic review;
• Large shareholder openly supporting a sale.

The situation is certainly intriguing, and the potential upside is significant. However, this setup also falls on the riskier side, given that the offer is non-binding, was made without any due diligence, and there’s a large downside (–50%) to pre-announcement prices, along with a few other puzzling uncertainties. Below, I’ll lay out how I see the bull thesis, followed by a breakdown of the key concerns.

Theratechnologies (THTX) is a developer/marketer of two commercialized drugs focused on HIV-related treatments. THTX has already received three takeover offers from a CDMO/packaging company Future Pak. The latest one is at $3.51/share in cash + a CVR worth up to $0.99/share. The cash portion alone would result in about 36% return from the current $2.57/share levels. The CVR looks more like a delayed part of the consideration rather than a speculative bonus—if the buyout closes, the CVR is very likely to pay out in full after 3 years.

Let’s start with a brief timeline of how we got here:

• August 2024: Future Pak submitted an acquisition proposal valuing THTX at $100m (or $2.17/share) in cash. It was rejected by the board as “not attractive.” This was only disclosed by THTX on April 11, 2025.
• January 2024: Future Pak submitted another bid for THTX (terms not clear). The board was unable to entertain this bid “as the Company was under exclusivity with another potential acquiror”. This was also disclosed only on April 11, 2025.
• April 11: Due to minimal engagement from THTX, Future Pak revealed its third (current) bid of $3.51/share in cash + a CVR worth up to $0.99/share to the public. The bidder noted that this offer provides “solid foundation for constructive dialogue” and urged shareholders to “engage with the proposal and ensure that the Board fulfills its duty to pursue the highest-value outcome available”.
• April 11: Soleus Capital (which owns 10% of THTX) sent a public letter to the chairman, arguing that the sale of THTX is in the best interests of shareholders. Soleus stated that “significantly more value would accrue to shareholders” under Future Pak’s offer than in a standalone scenario, and called management’s behavior “unacceptable.” The fund did not know at the time that management had been already engaging with another bidder. Soleus Capital is a life sciences-focused hedge fund with a track record of activism, including its recent involvement in the EPIX case (also covered on SSI).
• April 11: Later on the same day, THTX management provided some background to the whole situation. It revealed that the reason for lack of engagement with Future Pak was that management had already been in exclusive, advanced discussions with another potential acquiror of the company.” Management also noted:

“The Potential Acquiror has performed extensive due diligence on the Company and the parties are negotiating a definitive agreement relating to a potential acquisition of all outstanding shares of the Company. Based on the Company’s discussions to date with the Potential Acquiror, in the event a definitive agreement is entered into with the Potential Acquiror, it will contain a “go shop” provision allowing the Company, for a limited period following signature, to engage with other potential acquirors, including Future Pak.”

• April 15: Four days later, THTX announced a strategic review with no mention at all of the previous ‘Potential Acquiror’.

“Following careful consideration of the current circumstances, including the publicly announced proposal from Future Pak, the Board of Directors of the Company (the “Board”) has decided to further evaluate the potential sale of the Company through an open and non-exclusive process. In connection with this determination, the Board has authorized the special committee, consisting of independent and disinterested directors (the “Special Committee”), to oversee the process and make a recommendation to the full Board.”

So in just 4 days management’s position has shifted from ‘we are already in a final stages of negotiating definitive agreement with the Potential Acquiror’ to ‘let’s run a full strategic review on an open, non-exclusive basis’. The reasons for this U-turn are unclear, but I’m guessing either the ‘Potential Acquiror’ walked away, or the offer under negotiation was too low—especially in light of the now-public bid from Future Pak and the subsequent run-up in THTX’s share price.

However, I do not think this is a red flag. The company had been engaged with the ‘Potential Acquiror’ for months, and management’s comments indicated the process was already well past due diligence stages. The board signaled pretty strong confidence that the buyout agreement will be signed, e.g. it even went as far as to suggest Future Pak to wait and then use the go-shop period. It’s also unlikely that the tariff drama had anything to do with the decision as any impact is likely to be minimal. So if the talks with Future Pak or any other bidders that might emerge from the strategic review ultimately fall through, there’s still a chance this original ‘Potential Acquiror’ could return.

When it comes to Future Pak, it looks like a credible and motivated buyer. Future Pak is a contract manufacturing/packaging subsidiary of Woodward Pharma Services, which in turn focuses on acquiring, licensing, and commercializing branded and generic prescription drugs for the U.S. market. Over the years, it has purchased multiple drug assets (e.g. here and here), and its full portfolio can be seen here. Woodward already has some exposure to HIV-related treatments: one of its products, Fluconazole, is an antifungal medication used to treat infections that commonly occur in HIV-infected patients.

In its offer letter Future Pak noted that the transaction would not be subject to a financing contingency, given it had the “full support of its strategic financial partner, Colbeck Capital Management.” Colbeck is a credit-focused investment manager that finances a wide range of situations, including event-driven deals and healthcare transactions. In January 2025, Colbeck raised $700m for its third flagship fund, bringing the total AUM to $3bn. Colbeck had already supported Woodward/Futura Pak roll-up strategy back in 2021 with $125m funding.

One of Future Pak’s previous attempts to acquire a pharma company might have left a negative impression in the eyes of investors. Last year Future Pak submitted several bids for Vanda Pharmaceuticals, raising its offer from $7.25–$7.75/share to $8.50–$9.00. However, the offer was then rather quickly withdrawn, citing the “continued lack of engagement from Vanda and the receipt of Vanda’s rejection of Future Pak’s final proposal.”

The current situation is quite different. THTX’s management is willing to sell and was apparently in the final stages of the process already. The company has now launched a strategic review, once again signaling openness to a sale. Future Pak also seems far more motivated this time. It has been pursuing the acquisition for 8 months already and even went public asking shareholders to pressure management into engaging.

So, I think there’s a decent chance the strategic review will result in a buyout at substantially above current trading levels. Despite the massive premium to pre-announcement prices, Future Pak’s offer doesn’t actually look particularly expensive. It comes at around 4x multiple on gross profits from the two already commercialized treatments with stable/growing revenue trajectories.

At current levels the market is pricing in only a 38% chance of Future Pak’s offer going through, which seems too low.

While the downside to pre-announcement prices appears significant, it is somewhat offset by the possibility of other bidders entering the picture during the strategic review as well as by the prior interest in THTX by the original ‘Potential Acquiror’.

THTX Background

Theratechnologies had previously maintained a pipeline of preclinical and early-stage oncology drugs, which absorbed a significant portion of its R&D spending and contributed to the company’s persistent unprofitability and cash burn. In March 2024, the company shifted its strategy, immediately cutting all preclinical R&D activities. It continued funding the ongoing Phase 1b trial of its most advanced asset, which wrapped up in December 2024, but indicated it would seek partnerships rather than fund further development. This move quickly made the company cash flow positive and unveiled substantial EBITDA margins.

The current portfolio is comprised of two approved treatments in the U.S. as well as two freshly licensed drugs for commercialization in Canada.

• Egrifta SV: the only FDA-approved treatment for HIV-related lipodystrophy, a condition where the body abnormally distributes fat. Egrifta SV specifically targets the reduction of excess visceral abdominal fat. The original Efrifta was approved in 2010. The improved formulation Egrifta SV, with smaller injection volume, simplified preparation and improved safety profile, was launched in 2019, and has meaningfully accelerated the revenue growth. Basically all of the sales are in the U.S
• Trogarzo: a medication for multi-drug resistant HIV, intended for patients with limited remaining treatment options. THTX has licensed it from TaiMed for commercialization in the U.S. and Canada. Basically all of the sales are in the U.S.
• Olezarsen and Danidalorsen: In Dec’24, the company licensed these two rare genetic disease drugs from Ionis Pharmaceuticals for commercialization in Canada. Olezarsen has two indications: for treatment of familial chylomicronemia syndrome (FCS) and for treatment of severe hypertriglyceridemia (sHTG). Olezarsen for FCS was approved by the FDA in December 2024, and THTX expects to submit it for approval in Canada later this year. Olezarsen for sHTG has just launched Phase 3 trial. Donidalorsen focuses on hereditary angioedema (HAE). Donidalorsen is currently under FDA review, with a PDUFA date set for August 2025. THTX plans to file for Canadian approval immediately following U.S. approval.

Historical performance can be seen in the table below (fiscal years ends in November, Q1 in February).

Note: Q1 ’25 results don’t fully reflect the company’s true earning power, as Egrifta sales were impacted by supply chain disruptions that cost roughly $11m in lost sales that quarter. The issue has since been resolved.

Egrifta is clearly THTX’s main and the most attractive asset. It’s the only approved drug in its niche and has delivered solid growth since the launch of its new formulation in 2019. Just four weeks ago, THTX secured FDA approval for its new Egrifta formulation, Egrifta WR. The new version requires 50% lower administration volume and needs preparation only once a week, compared to daily preparation for Egrifta SV. The key point is that the move to Egrifta WR brings fresh patent protection. Unlike Egrifta SV, which faced potential biosimilar drug competition after its exclusivity expired in 2023, Egrifta WR is now patent-protected until 2033. With Egrifta still being the only FDA-approved treatment for its indication, and the WR formulation offering clear advantages over SV, the drug’s revenue trajectory seems secure for the coming years. We are also likely to see acceleration in sales of the new formulation, much like what happened after Egrifta SV was introduced in 2019. Transition to Egrifta WR is expected in early 2026.

Egrifta SV’s gross margins are around 90%. Trogarzo, is much less profitable (since it’s a licensed drug), with gross margins at 48%. Management initially expected Trogarzo’s revenues to go multiple times above Egrifta’s, however, that hasn’t panned out, and revenues have instead stayed around $30m over last 5 years.

The buyers would likely be looking at THTX mostly from the perspective of gross profits generated by Egrifta and Trogazo as the majority of the R&D and G&A overheads could be eliminated by incorporating these two drugs in a larger organization. The company is set to generate $60m+ in gross profits. Future Pak’s offer, including the full CVR, payout sums up to $250m, which is around 4x multiple on gross profits from the two already commercialized treatments with stable/growing revenue trajectories. That doesn’t seem particularly expensive, considering Egrifta’s dominance in its niche, its growth profile, and the upcoming patented new formulation.

Olezarsen and Danidalorsen are likely considered non-core assets in the eyes of acquirers, especially Future Pak, which made the first offer before the license agreement was signed. THTX paid $10m upfront and agreed to $13m in potential milestone payments plus tiered double-digit royalties for the Canadian licenses of these drugs. Management estimates that Olezarsen for FCS and Donidalorsen could together generate $30m in peak revenues. Meanwhile, Olezarsen for sHTG could be an even larger opportunity, with potential peak revenues of $60m. These licenses are likely worth the purchase price at most, so say $15-20m in incremental value, or approximately covering the current THTX net debt.

Risks & Uncertainties

• A large premium to pre-announcement levels. I know that premiums in biopharma buyouts can get astronomical, but 240% based on Future Pak’s latest bid is still in a league of its own, especially considering that it is for already commercialized assets with rather stable revenue profile. According to Accelerate’s Biotech M&A research from April 2024, since 2020, only seven transactions had premiums above 200%, and just two topped 300%. I’m not saying THTX can’t be another outlier but dealing with numbers like that naturally invites some skepticism. The only counter argument here is that the valuation doesn’t look particularly egregious on gross profit multiple and when put into perspective of THTX share price movements (see the next point).
• A wide gap between the Future Pak’s offers. The gap between Future Pak’s first offer ($2.17/share) and its third ($4.50/share) bid is also unusually wide. Normally, one would expect the bidder to come in with a reasonably serious offer upfront, then maybe raise it once or twice by 10–20% as negotiations progress and due diligence is done. However, the upward shift in Future Pak’s offers looks more reasonable when put into perspective of THTX share price at the time. THTX was trading near its lows (around $1.30/share) back in August when the first bid was made and rejected (so a large premium even on the first offer). The stock then re-rated closer to $2/share by November and hovered there until March’25. Future Pak’s second offer in January (terms were not disclosed, but Future Pak said it was at 100% premium to market prices) was naturally set even higher than the first one, given both the first rejection and substantially higher new trading levels. By around March, THTX’s share price had dropped back toward $1.30/share. We don’t know exactly when the third offer came in, but it also may have been based on some earlier (higher) trading levels, and it also had to be even higher than the second one. So the wide gap between the first and last offers might simply be due to distorted optics from the trading volatility and Future Pak chasing THTX’s internal expectations with higher and higher offers.
• No competing biosimilars have appeared since 2023, when Egrifta SV’s patents expired. That could suggest that no one found the niche attractive. However, it might also reflect that the market is fairly small and sub-scale for larger players and that any other potential competitors knew THTX was already developing a better formulation that would re-establish dominance soon, with new patent protections.
• Tariffs. Future Pak went public with its offer after the tariff drama started, so they do not seem to be concerned. THTX outsources all of its drug manufacturing. Egrifta is currently produced by CDMOs in California and Canada, but the new Egrifta WR formulation will be fully transferred to a new U.S.-based CDMO partner. Trogarzo manufacturing is outsourced to two third parties: WuXi AppTec Biologics in China and Samsung Biologics in South Korea. So Trogarzo might be exposed to tariffs. However, on the latest Q1 call (April 9) management has largely brushed off these concerns, referring to Trogarzo being under a “transfer price” arrangement.
• Poison Pill. The company has had a poison pill in place since 2010, but under the latest 2022 amendment, it’s set to expire after the 2025 AGM (likely May). As management is now openly interested in selling the company, I do not think this poison pill carries any relevance.

Future Pak’s CVR

The CVR is structured in two parts:

• If Egrifta franchise gross profit exceeds $30m/year during the three years after the buyout closes, 50% of that surplus amount will be paid to shareholders, up to a total of $40m (or $0.87/share).

• A one-time $10m (or $0.12/share) milestone payment if cumulative Egrifta gross profit exceeds $125m during that same three-year period.

It’s stated that gross profit will be calculated as “net sales minus cost of goods, per U.S. GAAP.” Egrifta SV’s cost of sales was $7.2m in FY2024 and $5m in FY2023, resulting in gross profit of approximately $53m in 2024 and $48.7m in 2023.

So unless performance materially deteriorates from recent levels, it seems very likely that the CVR will pay out in full.