Mayne Pharma (ASX: MYX) – last price A$2.50 – ~A$211mm market cap – $500k-$1mm ADV

Thesis summary: eighteen months ago a sponsor-backed buyer contracted to pay A$7.40/share for Mayne Pharma. Today, after one of the ugliest broken deals in recent Australian M&A history, the stock sits at $2.60 – roughly a third of contracted value – whilst 20-25% of the register has turned over into the hands of US and UK event-driven funds who bought their stock in the $2s. This morning’s FY26 print – underlying EBITDA of A$31.7mm, down 33% – removes the last vestige of standalone credibility for the incumbent strategy and in my view opens the door to an immediate and, frankly, long-overdue break-up of the business. As a standalone entity, MYX earns ~A$32mm run by a head office, but would generate ~A$100mm in EBITDA to an acquirer, a spread the last buyer already underwrote just over a year ago. I see potential for a near-term double, and quite possibly much more, simply through change of control and/or direct activism off today’s bombed-out base: my numbers say $5-7+share on a break-up, with a paid-to-wait downside case (Salisbury monetization plus a chunky capital return) that works even if nothing else does. Rarely do you get the opportunity to buy genuinely actionable names at the moment of maximum pessimism, just before the value unlock is catalyzed through direct activism. This is one of those times.

Background: how we got here

Some housekeeping first, because the story is not well understood outside a small circle of (increasingly bitter) Aussie M&A arbitrageurs.

Mayne Pharma is a specialty pharmaceutical business with three segments:

• a US Women’s Health franchise (NEXTSTELLIS contraception; the menopause portfolio of BIJUVA and IMVEXXY; plus ANNOVERA), licensed in large part from TherapeuticsMD in 2023 and growing nicely – FY26 revenue of US$118.2mm and direct contribution of US$40.3mm;
• a US Dermatology business (generic ACCUTANE at ~62% share of the isotretinoin market, generic RHOFADE launched July 2026, and a freshly-built direct-dispensing channel, DistributeRx) doing US$94.1mm of revenue and US$31.1mm of direct contribution;
• and an Australian/International segment anchored by the Salisbury, South Australia manufacturing site – A$70.7mm of revenue but only A$4.8mm of direct contribution, i.e. ~4% of group direct profit.

In other words, ~85% of revenue is earned in the United States – US$212mm of US sales against A$384mm of group revenue – inside a sleepy, Australian-listed, Adelaide-domiciled corporate entity. At the outset, I should underline this key structural reason for the break-up (quite independent of the Cosette saga): an ASX-listed small-cap whose core businesses are American women’s health and dermatology will never be appropriately valued in this market as currently structured. The natural owners of these assets – US specialty pharma consolidators, US healthcare investors – do not screen the ASX; the Australian institutions who do have neither the mandate nor the sector expertise for US branded pharma; and the index money that once papered over the gap has left. The only durable fix is to put the US businesses in American hands (which is what I believe will happen imminently here).

On 20 February 2025, the board – then in play following Viburnum’s agitation – signed a scheme implementation deed with Cosette Pharmaceuticals (a US specialty pharma company owned by Avista Capital and Hamilton Lane), at A$7.40 cash, a ~60% premium to the undisturbed ~$4.60. Deloitte’s independent expert valued MYX at $6.61-7.99/share, using a DCF cross-checked at 2.2-2.5x revenue. Shareholders approved the scheme on 18 June 2025.

Unfortunately everything went downhill from there. In May 2025, the FDA sent MYX a letter regarding promotional claims; Cosette seized upon this – and a soft quarter – to allege a Material Adverse Change and served no fewer than four termination notices. MYX called the bluff and sued. Whilst that litigation was on foot, Cosette did something genuinely remarkable: on 24 June 2025 it quietly told the Foreign Investment Review Board (FIRB) that, contrary to the intentions it published in the scheme booklet, its “current intention is to seek to dispose of or close” the Salisbury site – a 200-plus employee facility in a politically sensitive state – thereby detonating its own FIRB approval. The market learned of this only on 8 September, after the South Australian Premier intervened. The sequence from there was as follows:

• 15 October 2025: Justice Black of the NSW Supreme Court ruled no MAC had occurred, every termination notice was invalid, and the SID remained on foot – with costs against Cosette;
• 30 October 2025: the Treasurer wrote that the acquisition would be “contrary to the national interest” – citing only Cosette’s newfound Salisbury intentions;
• 19 November 2025: the Takeovers Panel declared unacceptable circumstances (TP25/096), finding the market had traded uninformed for two and a half months and ordering Cosette to accept any reasonable FIRB conditions on Salisbury;
• 24 November 2025: the End Date passed, FIRB approval never having been granted;
• 11 December 2025: MYX terminated the SID for Cosette’s “wilful and intentional” material breaches, expressly preserving all claims;
• 18 February 2026: MYX filed damages proceedings against Cosette, its holding company, Avista Capital and its CEO David Burgstahler personally, “seeking substantial damages on behalf of Mayne Pharma shareholders”;
• 2-3 June 2026: Cosette’s appeal of the October judgment was heard (judgment reserved); A$14.4mm of costs has already been recovered.

With the merger collapsing, much of the Board, and the C-suite, turned over as well: Chair Frank Condella retired in January 2026, and CEO Shawn O’Brien departed in February (CFO Aaron Gray promoted). Essentially, then, you have a company that has spent eighteen months doing essentially nothing except litigate, bleed fees, and watch its shareholder base capitulate. FY26 underlying EBITDA printed this morning at A$31.7mm, down 33% – with management blaming litigation as the distraction, in that it had “placed considerable demands on management focus and organisational bandwidth” – and the stock sits at $2.60. To be clear, I do not regard the FY26 print as a reason for despair; I regard it as the final, clarifying piece of evidence that this collection of assets should not be run as a standalone listed company at all.

Consider how far this business has derated, in a very short-time, from binding takeout value to current trading levels. At the scheme price, the market was asked to capitalize this business – setting the earn-outs to one side for a moment – at circa 11x FY25 EBITDA, or high-teens on the depressed FY26 outcome. Today you are being asked to pay 3.6x FY25 / 5.4x FY26 on identical assets:

Not too much about the business – as opposed to the situation – deteriorated by two-thirds over this period. Women’s Health grew throughout (BIJUVA TRx +26% in FY26; IMVEXXY net sales +36% in 4Q; the FDA even removed BIJUVA’s black-box warning in February 2026); Dermatology remains a cash cow mid-transition to a smarter channel; NEXTSTELLIS won PBS listing at home. But post earnings disappointment there is simply no credibility left in the idea that – should the incumbent Board attempt to posit it, which they may not – this company is appropriately structured as an independent entity. Therein lies our opportunity today.

The register has turned over

The sine qua non of any activist campaign is having the register aligned, and here it has become obvious of late that a plurality of the shareholders would support immediate and aggressive value maximization. Vanguard – the definitional passive holder – ceased to be substantial in February 2026, selling stock in the $2.80s. Into that vacuum, at prices between roughly $2.20 and $2.60, have stepped precisely the sort of people who do not buy pharmaceutical companies for the dividend. Per the substantial holder registry – and confirmed by the AFR this month – offshore hedge funds now hold roughly 20% of the company:

Let’s examine the pedigree of each of the main investors here, because I think it evidences quite clearly the next steps at MYX in a way that really derisks the investment:

Funicular Funds (9.90%) is Jacob Ma-Weaver’s San Francisco vehicle (advised by his Cable Car Capital, founded 2013; Ma-Weaver is ex-Amici Capital, a healthcare specialist shop). This is a concentrated, ~$200mm fund that does not seem to sit and wait. For example, at RiceBran Technologies Funicular went 13D and built to an extraordinary ~50% economic interest whilst the company restructured; at Pioneer Merger Corp it went 13D at 6.3% and explicitly threatened litigation over a $32.5mm termination fee owed to shareholders from a busted deal – pause on the parallel there for a moment – and at Synlogic it ended up with board-level involvement after agitating around strategic alternatives and return of capital. Here, Funicular went substantial at MYX in 2026 and has kept buying – most recently 1.5mm shares in the week of 24 June at ~$2.31-2.33, taking it to 9.90%. Today Funicular is the largest and (presumably) the most important voice on the register, and he has clear aggressive activist pedigree in healthcare.

Trium Capital (5.02%), the London event-driven fund, showed at Acelyrin in April 2025 exactly how it behaves when it believes a pharma board is torching value: a public letter demanding the company liquidate and return its cash (~$4.45/share against a $2.50 stock) rather than proceed with a dilutive merger. Again, it’s worth noting the analogous circumstances: a pharma company trading far below demonstrable asset value, with a board contemplating (or walking along) the wrong path – Trium’s playbook is to say so, loudly.

Rubric Capital (5.36%), David Rosen’s New York fund, is perhaps the heaviest hitter of the three in pharma specifically: at Mereo BioPharma in 2022 Rubric ran a full proxy campaign – nominating five directors – and settled with four board seats, forcing a strategic refocus and cost discipline on a company that had lost its way. Once again, exactly the kind of player you want to see at the table in a scenario such as this.

In sum, I believe at least 20% of this register is already fully on board with a break-up and value-maximization plan in the near term. This also says nothing for the disgruntled retailed portion in the stock; nor my own position. That is to say, if incumbent management were even contemplating ‘playing hard-ball’ against a hypothetical break-up campaign, in my view they would make 2-3 phone calls (to the top holders) and immediately cave. And how much would the stock rip simply if management did cave, hire an adviser and proceed to a full sale?

Moreover, this is not conjecture on my part; the AFR is reporting the same thing in as many words:

Note the corroborating detail in that last clipping: buy-side sources telling Street Talk the company is worth double, with a SoTP of $3.73-5.77 and an MST DCF at $5.40 – against $2.60 last.

I would offer one further observation on the register setup (in light of my recent battles at other names). I have fought register battles before where the entire campaign was hostage to an entrenched founder-chairman sitting on 30%-odd of the stock, for whom the asset was identity, legacy and family project all at once. This is emphatically not that setup. There is no founder here, no blocking stake, no dynasty. MYX is run by professional corporate managers with de minimis personal shareholdings, on a board that has already turned over almost completely, at a company whose last strategic decision – the Cosette sale itself – was precipitated by a shareholder (Viburnum) considerably smaller than today’s activist cohort. The numbers are, even before any public campaign, demonstrably aligned with value maximization; the register merely needs to make the ‘ask’, and the timeline of that ask, explicit. As setups go, this is about as clean as the ASX offers.

What MYX earns for an acquirer

MYX in FY26 generated A$107.3mm of direct segment contribution – gross profit less the direct selling costs of each business. Between that number and the A$31.7mm of underlying EBITDA sits ~A$75.6mm of indirect and unallocated cost. It is worth being concrete about what actually lives in there, because almost none of it touches a patient or a prescription: a full public-company apparatus (board fees, ASX listing, registry, audit, D&O insurance – the latter presumably not getting cheaper after the last two years); an executive office and group finance, tax, HR and IT functions straddling two hemispheres for a company with A$384mm of revenue; and a research, medical and regulatory affairs overhead sized for a standalone group. Every acquirer of scale already owns all of this once. Buying MYX does not require buying it a second time.

Crucially, there is a the deeper point about why the synergies are so fat relative to revenue: MYX did not create these assets; it assembled them. The women’s health portfolio was licensed from TherapeuticsMD (2022/23) and Mithra (NEXTSTELLIS, 2021); the dermatology franchise was accumulated through acquisition and in-licensing over a decade; even the manufacturing crown jewel of the old days was bought (Metrics, 2012) and subsequently sold (to Catalent, 2022). In other words, there is no discovery engine at the centre that a buyer must preserve.

What MYX owns is a book of gross profit – ~A$250mm of it in FY26 at a 65% margin – attached to licenses, ANDAs and brands that are entirely portable. This is precisely why specialty pharma assets change hands on multiples of gross profit (Cosette’s $7.40, fully grossed for the earn-outs, equated to ~3.6x MYX’s gross profit; today’s equivalent figure is ~2.0x, and barely 0.7x if you charge the earn-outs to the products rather than to the EV), and why acquirers can strip 80-90% of a target’s below-the-line cost with so little operational risk.

My bridge from standalone EBITDA to acquirer’s EBITDA looks something like this:

Let’s consider some of the larger line items out of opex here:

• eliminating duplicative corporate and shared services (+A$36mm) and pure listed-company costs (+A$8mm) requires no operational heroics whatsoever; these disappear at completion, as they were going to under Cosette;
• rationalizing the group R&D/medical/regulatory overhead (+A$15mm) assumes the acquirer retains ~A$17mm of quality, pharmacovigilance and product-critical regulatory spend (which may be conservative, as a lot of this spend is duplicative in any case); and
• Field-force and marketing overlap (+A$10mm) takes a modest ~7% of the ~A$140mm of segment-level selling cost.

This nets to ~A$69mm of synergies, or ~18% of revenue. Is 18% of revenue in synergies for a pure pharma deal heroic? Hardly – it seems to me to be middle of the road for deals of this stripe. Teva/Actavis Generics (2016) targeted ~US$1.4bn of annual cost synergies and tax savings – roughly a quarter of target revenue. Amneal/Impax (2018) guided to US$200mm within three years against Impax revenue of ~US$775mm – ~26%. Mylan/Meda (2016) targeted US$350mm on Meda’s ~US$2.3bn of sales – ~15%, on a lower-overlap cross-border deal. My 18% sits comfortably within the band.

Pro-forma EBITDA margins (assuming the above cost-out) says something similar. If you run my ~A$100mm of synergized EBITDA on A$384mm of revenue, you get a ~26% EBITDA margin – against Deloitte’s own IER comparables: Organon guides to ~30% (adjusted), Amneal printed ~21% in FY25, and the broader comp set (Gedeon Richter, Harrow, HLS, Knight) spans roughly 15% to 35%.

In other words, the synergized margin I am underwriting is unremarkable – mid-table for the peer group Deloitte itself selected. What is remarkable, and anomalous, is MYX’s standalone 8-11% margins – the artefact of dragging a full corporate superstructure behind a massively subscale, overly-costed corporate base.

Valuation – and how to handle the earnouts

The elephant in the room re MYX’s valuation is clearly the substantial earnouts, held on balance sheet at NPV of estimated future liabilities. When MYX licensed the TXMD women’s health portfolio and NEXTSTELLIS, it paid largely in paper promises: an 8% royalty to TXMD on net sales of the licensed products, a 10% royalty to the Population Council on ANNOVERA, US$40mm milestones if ANNOVERA ever reaches US$400mm cumulative sales (and again at US$1bn), plus milestone-linked deferred consideration on NEXTSTELLIS and a fixed Greenville contribution from the Metrics exit. The accountants PV all of this into a liability that stood at A$336mm at December 2025 (down from ~A$400mm a year prior). I will make two general observations here before proceeding to a broader valuation discussion:

1. These are mostly royalties, not debt. The overwhelming bulk is contingent on future revenue – paid quarterly out of sales as and if they occur, over two to ten years. If the products underperform, the payments shrink with them: reassessments reduced the liability by A$54.5mm in 1H FY26 alone. In other words, there is a natural hedge – the state of the world in which the earn-outs are paid in full is the state of the world in which Women’s Health has grown far beyond my numbers (and as you will see below, I am basing valuation purely on today’s EBITDA, and synergies from cost-outs on today’s cost base, with nothing for future revenue growth);

2. They are nonetheless real. Despite the above, we still need to accord some liability for the earnouts for conservatism, as realistically no acquirer is going to transact outside of this lens.

Keeping this in mind, here is how I frame a low/mid/high case on SoTP valuation:

Let me offer a few thoughts on how I think through each of these assumptions. Firstly, I use 6.5-8.5x EV/EBITDA multiple across my cases, for four reasons. First, Deloitte’s own comparables trade well above it: Amneal – the closest US listed analogue, a scaled specialty/generics hybrid – currently trades at ~11x EV/EBITDA, and Harrow, the growth name of the set, at 17-18x; even the sleepier European names (Richter and friends) sit around 6-7x. Hence, the top of my band still prices MYX at a ~25% discount to the nearest listed comp, with zero premium for control. Second, the one control transaction we can actually observe on these exact assets – Cosette’s – implied ~A$900mm of fully-grossed EV, or ~9x my synergized EBITDA; my high case stops half a turn short of that. Third, precedent US specialty consolidations have printed high-single to low-double-digit multiples of pre-synergy EBITDA; I am applying single digits to post-synergy EBITDA, which quietly gifts a share of the synergies to the buyer. Fourth, the cross-check: my mid-case equity value of ~$5.75 sits ~15% below the bottom of the independent expert’s range – admittedly after a weak earnings year but again noting that that IER was based upon a long-term DCF.

You will see also that my treatment of the earnouts is (I believe) quite conservative: I assume almost full NPV value for the earnouts – ie, near maximum liability – in the low case, and still get equity value well north of $3/share. Even in the mid-and upside cases too, though, I am not removing much at all from the earn-out liability (which sat at $354mm last reported). So again, these numbers don’t strike me as aggressive.

We can also try to value the assets on Segment SoTP, as a sense-check on the multiple analysis. The same answer assembles from this methodology too, where I have tried to estimate what each contribution margin pool at Women’s Health and Dermatology would be sold for; then added International at asset value; then deducted capitalized corporate overhead and other costs (netting cash, etc).

Adding a few more specific comments on each of these line items:

• Women’s Health. FY26 direct contribution of US$40.3mm ≈ A$62mm – revenue less product costs less the segment’s own sales force and marketing. From this I net the recurring earn-out royalty burden that properly belongs to these products (~A$20mm/year: the 8% TXMD royalty across the licensed portfolio plus the 10% Population Council royalty on ANNOVERA), leaving ~A$42mm of net contribution. I capitalize that at 5.5x standalone / 6.5x to an acquirer. For context: this is a growing, branded, patent-protected franchise (BIJUVA TRx +26% in FY26, IMVEXXY 4Q net sales +36%) – 5.5x net contribution is a private-market fire-sale multiple, and the acquirer column still sits far below where scaled US women’s health assets have historically cleared.
• Dermatology. FY26 direct contribution of US$31.1mm ≈ A$48mm, negligible attached royalties. Flat-to-declining but strongly cash-generative, with the DistributeRx channel shift and the gRHOFADE launch offsetting base erosion: 4.5x standalone / 5.5x acquirer – generic-portfolio multiples, no heroics.
• Australia / International. I ignore the segment’s paltry A$4.8mm contribution entirely and value it as an asset: A$60mm in both columns – a freshly-upgraded (A$18mm capital program, inaugurated December 2025) sovereign-strategic manufacturing site (that I believe has land value in the $30-40mm range), plus the attached export book. A domestic trade or government-adjacent buyer clears this without any FIRB friction whatsoever.
• Corporate & indirect. The swing factor, and the whole thesis in one line. Standalone, I assume a competent board rationalizes the ~A$76mm indirect cost base down to ~A$50mm (self-help is available even without a deal: the Cosette-era litigation spend, duplicated advisory costs and bloated centre do not survive contact with an engaged register) and I capitalize that drag at 4.0x, i.e. −A$200mm (that is, more or less in line with EV/EBITDA multiple today). To an acquirer, only ~A$7mm of stranded costs persist (capitalized at 6x = −A$42mm); the rest is the synergy pool documented above;
• Below the line, both columns: cash and marketables of A$80mm; converts at A$41mm face; and the fixed/deferred (non-royalty) residual of the earn-out complex – NEXTSTELLIS milestone-linked deferred consideration and the Greenville contribution – at ~A$120mm of debt-like obligation. (Cross-check on the earn-out split: total earn-out cash payments are running ~A$41mm/year; capitalize that at ~8x and you land on ~A$330mm – almost exactly the Dec-25 book value of A$336mm).

If you examine the left-hand column above, it is worth nothing that even here, on fire-sale segment multiples, a full standalone corporate drag and every fixed obligation at face, I still get shares worth around ~$2.80: above the current share price. The market at $2.50 is essentially valuing break-up optionality at near zero or negative (when I think it happens imminently). The right column – which is simply the Cosette math re-derived from segment level, and which lands within a few cents of my mid case – is what the same assets fetch the moment the head office becomes someone’s synergy line. And I have ascribed precisely zero, in every scenario, to the damages claim against Cosette, Avista and Mr Burgstahler personally – a suit “seeking substantial damages” over a ~$670mm scheme, prosecuted by a plaintiff who has so far won every substantive round and already banked A$14.4mm of the defendant’s money. Nor anything for the franking pool, the tax assets, or a premium on Salisbury (the Adelaide facility) from a domestic buyer the South Australian government may well help underwrite.

The downside case – in which you still win

Suppose no acquirer appears. Suppose the board, chastened by the FIRB experience, never runs a formal process. The standalone SoTP above already says the floor (~$2.80) sits above today’s price – but I would go further, because the register will not permit “standalone forever” to be the operating assumption in any case. The minimum program – the one I believe every substantial holder is already pushing for, and frankly the one this board could announce tomorrow without external prompting – is: monetize Salisbury (~A$60mm, to a domestic acquirer with state-government blessing, the FIRB problem being definitionally absent for an Australian buyer of a freshly-upgraded strategic facility); repay the converts; and return A$50-75mm to shareholders. At the current price, A$65mm of buyback retires roughly a quarter of the register. Run that through my mid case and the arithmetic is further accretive: A$469mm of residual equity value over ~59mm remaining shares is ~$8.00/share. Perhaps more importantly, a company that has sold its Australian anchor and shrunk its register by a quarter is not a company that then stays independent; it is a cleaner, purely-US asset that is easier to sell, with a shareholder base even more concentrated in hands that want it sold. Heads I win; tails I win slower, with a buyback tailwind.

With the weak FY26 earnings pre-announced and FY27 outlook due in late August, I expect the drumbeat of disgruntled shareholders to begin near-term if not imminently. Personally, I intend to engage the company immediately after the announced results. If there is no immediate willingness to pursue the course outlined herein, I imagine I will not be the only one making the obvious point to the Board regarding the sustainability of their position. Between Funicular’s 9.9%, Rubric’s 5.4% and Trium’s 5.0%, the votes required to reconstitute this board around a value-realization mandate are, for the first time in the company’s history, assembled in sympathetic and experienced hands: one of these funds has run a proxy contest at a listed pharma and won four board seats; another has litigated busted-deal recoveries; the third has publicly demanded a pharma liquidation. I struggle to imagine what argument a board of professional managers with minimal shareholdings could muster against a process designed to realize a number beginning with a $5, or even a $6. And while I do not expect it to come to a formal EGM contest, precisely because the logic is so difficult to contest, if it does then the numbers largely speak for themselves.

Risks

As always there are several risks here worth remembering, in no particular order:

• Appeal risk. The Court of Appeal judgment is reserved. A reversal would not resurrect Cosette’s terminated deal nor claw back the A$14.4mm of costs already paid, but it would dent the damages narrative, embolden the defendants, perhaps delay any more strategic timeline;
• Operating risk. FY26 was soft and 4Q softer (EBITDA A$4.6mm); dermatology genericization is a treadmill, and if the maiden FY27 guidance in August disappoints, the standalone earnings base beneath my low case could certainly erode further. I believe valuation here and the shape of the register more than compensates for this risk, but it is certainly there;
• Timeline risk. Activism in Australia is slower and more polite than the US variety; s249D mechanics favour determined holders, but campaigns are typically measured in months. Dead money for a couple of quarters is a genuine possibility; permanent impairment, at this price, I judge far less so.
• FX and product concentration. The assets are USD; the listing is AUD; a strengthening Aussie quietly shrinks every A$ figure in this memo, and the top handful of products drive most of the direct contribution.

Conclusion

Eighteen months ago, sophisticated buyers signed a contract valuing this company at A$7.40 per share, and an independent expert called that fair. The buyer then spent a year and a half trying to burn the deal down, and succeeded only in burning down the share price. The people who owned it then have largely left; the people who own it now mostly bought at a third of contracted value, are led by funds that have run proxy fights, demanded liquidations and litigated busted deals, and did not assemble 20% of this register to sit around and do nothing The business earns A$32mm for us and ~A$100mm for a larger, scaled, more logical owner. The delta between these two numbers is simply far too large for this register to allow it to persist, unmonetized.

Keep in mind, this is a significant position for me, and so it may well be my major project for the second half of this year, and I intend to engage with the company in the immediate term – constructively, at first, but with the clear objective of maximizing value for all shareholders on a defined timeline.

Disclosure: long MYX.AX