Neos Therapeutics Inc (NASDAQ:NEOS) Just Got A Buyout Offer

Here's an interesting one.Regular readers will know that Neos Therapeutics Inc (NASDAQ:NEOS) is a company we've highlighted on a couple of occasions this year as being a stock to keep an eye at the smaller end of the biotechnology space.As we outlined in our most recent coverage (from early September, available here), the company has a portfolio of potentially promising assets and it's doing a great job of getting them, one by one, on shelves in the US in their respective indications. NEOS Daily ChartAnd we're talking about indications that have the potential to return hundreds of millions of dollars in revenues. For a company valued at a little over $150 million (as was the case when we last highlighted the stocks as one to watch) that's an attractive risk-reward balance.Despite its successful efforts, however, and its arch towards a considerable payday on its portfolio, markets have continued to put pressure on its share price. Sentiment has found it difficult to remain buoyant and – heading into the start of play on Thursday this week, Neos went for just $7.25 a share. That's up on the year open price but down on last month's highs in and around $9.50 a piece.Then a company called PDL BioPharma Inc (NASDAQ:PDLI) entered the picture and everything changed.According to reports that hit press yesterday, PDL wants to buy Neos outright and – in doing so – acquire the company's lead development platform, a platform called ODT that allows for the conversion of established and approved drugs into orally disintegrating administration assets.The bid was unsolicited and – so far – we don't know too much about it (both companies have stayed pretty quiet on the specifics). What we do know, however, is that it amounts to a $10.25 per share price, which represents a 40% premium to the price at which Neos opened the session yesterday.Perhaps unsurprisingly, the company soared on the back of the news, riding out the session to close at $10.05 a share – a 37% or so premium to the Neos' pre-offer pricing.So what happens next?According to reports, the company's board of directors has unanimously rejected the offer, "after determining the bid substantially undervalued the company, as it did not reflect the company's strategic value and future prospects."However, in addition to this rejection, the company has also said it will respond to the development in due course, suggesting that there may be some room for negotiation and – in turn – that we may see an even larger bid hit press over the coming weeks.So that's what we are looking out for next – any development related to the company's response to the offer and, in particular, the suggestion that PDL might be set to pay more on a per-share basis for Neos and its technology platform moving forward.The thing is that even if PDL doesn’t end up buying Neos, the offer itself (as well as management turning down outright at its current levels) serves as a strong validation of the potential of this technology going forward. It also validates the assets that are already in place (as well as those that are already on shelves), as well as reinforces the fact that insiders think that there's some considerable run room on current prices as the platform matures, even subsequent to the end of week run we've seen this week.Keep in mind that this is a very uncertain situation right now and – if PDL doesn’t come back with an increased offer – the future valuation of Neos reverts to its pipeline's potential, which is far more difficult to quantify (of course) than a per share dollar offer.With that said, this stock has done us well year to date and we think it could be well worth a punt on expectations that management can force a stronger deal out of PDL near term.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on NEOS, sign up below!Image courtesy of Melissa Wiese via FlickrDisclosure: We have no position in NEOS and have not been compensated for this article.