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Highlights

  • Mayne Pharmaceuticals’ shares drop nearly 30% to AU$4.55 amid takeover uncertainty.

  • Cosette Pharmaceuticals raises concerns of a “material adverse change” that could void acquisition deal.

  • Issues cited include litigation, poor trading performance, and FDA warnings over advertising practices.

Shares in Mayne Pharmaceuticals (ASX:MYX) plummeted 29.78% to AU$4.55 in morning trade on Wednesday after Cosette Pharmaceuticals, its prospective acquirer, raised concerns about a possible “material adverse change” in Mayne’s financial condition, threatening to withdraw from the AU$672 million takeover deal.

The dramatic sell-off follows correspondence sent by Cosette, a US-based pharmaceutical firm, to Mayne on 17 May, stating that recent developments could trigger a termination clause in their scheme implementation deed, which was signed in February 2025.

In a statement to the ASX, Mayne confirmed receipt of Cosette’s notice and rejected the claims in a formal response dated 20 May. The Australian-based company maintains that no such material adverse change has occurred.

Cosette has not provided precise figures detailing the financial impact but pointed to a series of developments that, in its view, collectively weaken Mayne’s financial and operational outlook. These include:

  • Underperformance since the April earnings update, which Cosette says reflects ongoing deterioration in trading conditions.

  • Ongoing litigation with US-based TherapeuticsMD, a women’s healthcare company.

  • A recent FDA letter that accuses Mayne of misrepresenting the risks of its oral contraceptive product in promotional materials, raising regulatory concerns.

According to the terms of the deal, both parties are now required to engage in discussions over a 10-business-day consultation period, which commenced on 17 May. If no resolution is reached within that window, Cosette may terminate the acquisition agreement, ending a proposed transaction that would have seen the US firm take over the Adelaide-headquartered pharmaceutical company.

The prospective deal had been a significant strategic move for Mayne, which has struggled with earnings volatility and legal challenges in recent years. The transaction offered shareholders a cash exit and was seen by analysts as a pathway to stabilise the business under new ownership.

Cosette’s decision in the coming days will be closely watched, with the consultation period due to expire by the end of May.