Cerulean Pharma Inc (NASDAQ:CERU): What's A Buyout Worth To Shareholders?

Cerulean Pharma Inc (NASDAQ:CERU) is running up towards the end of the week on suggestions that the company could be fielding buy out offers, or at least pitching for the sale of some of its lead development assets. The company closed out on Friday last week in and around $1.5 a share. Cerulean kicked off the session on on Thursday morning at around $3.5 – a more than 115% run across the few session period. Year to date, this extends to a 320% gain.So what's the word on the buyout, and what would any potential suitor be getting for its money? Further, and perhaps most importantly, what might said suitor pay for the privilege?Let's take a look.This one's a biotech company with a core focus on the development of oncology therapies, using its lead proprietary technology, its so called Dynamic Tumor Targeting Platform. The platform creates what are called nanoparticle-drug conjugates (NDCs). These, to employ a bit of jargon, consist of an anti-cancer payload that is chemically conjugated to a polymer backbone with a linker. The blood vessels that feed tumors, and surround the tumor cells, are more porous than those of healthy cells. The idea is that the NDCs are small enough to squeeze through the tumor tissue and get to the cells that way, but are too big to squeeze into healthy cells. Once in tumor cells, they gradually deliver the anti cancer agent, and kill off the cancer.That's the theory, at least, and there's plenty of evidence to suggest its valid. The two lead applications of this theory are drugs called CRLX101 and CRLX301, and these are the two assets that are the company's shop window in any potential buyout scenario. The former has orphan designation, is in a phase II investigation in an ovarian cancer indication and Fast Track designation in combination with paclitaxel for platinum-resistant ovarian carcinoma, fallopian tube or primary peritoneal cancer. The drug is a topoisomerase inhibitor (by way of the active compound it delivers, a well established anti cancer agent called camptothecin. It's got a safety database that's over 400 patients strong, and it's the primary value driver that underpins the company right now.The latter, the 301 asset, delivers a super concentrated formulation of docetaxel, which again, is a very well established anti cancer agent. It's highly toxic, however, and this limits dosage (and in turn, potency as a cancer agent). It's currently in a phase I/II a trial in a solid tumor indication.Now, these assets are important, and they are going to be the headline acquisition if a big name swoops in and buys Cerulean out. What we see as the real target, however, is the platform itself. The real value in these assets are there potential for enhancing current therapies. This is why Novartis AG (ADR) (NYSE:NVS) teamed up with the company last year, and this is what (we think) any big name wants to get its hands on – a technology that can churn out more effective versions of their currently available oncology portfolio.So here's the big question – what's it worth?There's just shy of $40 million cash on hand and around $14 million debt at last count. The deal with Novartis is worth up to a potential $1 billion, and the assumption is that this will be adopted into the buy, unless of course it's Novartis that puts in the wining bid.Based on the current valuation alone, cash on hand, and the macro environment, we thing there's a 35%+ premium payable on current PPS, which at the low end would value any buyout at in and around $4.50 a share.We will be updating our subscribers as soon as we know more. For the latest updates on CERU, sign up below!Disclosure: We have no position in CERU and have not been compensated for this article.