Halcygen to acquire wholly owned subsidiary of Hospira Inc
Acquisition Strengthens and Diversifies HalcyGen’s Business
HalcyGen Acquires:
* Manufacturing and marketing rights for SUBA-Itraconazole
* Increased Product Pipeline of Supergenerics
* Sales Revenue from Existing Proprietary Products
* Contract Manufacturing Facility and Sales
* Expected consolidated EBITDA for the financial year ending 30th June 2010 (part year, Nov 2009-Jun 2010): $12.3M
HalcyGen Pharmaceuticals Limited (ASX: HGN) has entered into a definitive agreement with Hospira Australia Pty Ltd, a wholly owned subsidiary of Hospira Inc., to acquire all the outstanding shares in Mayne Pharma International Pty Ltd (MPI) – one of the businesses Hospira purchased when it acquired Mayne Pharma Limited in 2007 – for US$15.0M and an “Earnings Sharing Arrangement”.
MPI was formerly known as FH Faulding & Co Ltd, and is a specialist pharmaceutical company with an intellectual property portfolio built around the optimisation and delivery of oral dosage form drugs. MPI has a long and successful history in developing and commercialising improved pharmaceuticals, and has launched and marketed numerous products through partnerships with global licensees. Although a wholly owned subsidiary of Hospira Inc., MPI has operated largely independently of Hospira’s global hospital products business.
HalcyGen was listed on the ASX in June 2007 following the signing of a global exclusive license agreement with MPI to access product development and marketing rights for SUBA-Itraconazole and an improved formulation of Minocycline. With HalcyGen’s lead product, SUBA-Itraconazole, moving closer to product registration, the Company has decided to acquire MPI to:
* acquire the manufacturing rights for SUBA-Itraconazole and associated financial benefits;
* acquire SUBA-Itraconazole marketing rights in Australia and New Zealand; and
* acquire royalty streams that may have been payable to MPI in the event that manufacturing was not undertaken at MPI.
Importantly, the acquisition also provides HalcyGen with a significant product portfolio and pipeline. HalcyGen obtains ownership of several key pharmaceuticals currently licensed to pharmaceutical partners worldwide, in particular Doryx® (an improved doxycycline enteric coated formulation), licensed to Warner Chilcott in the USA.
Through MPI’s portfolio of pharmaceutical drug sales, the Company is expected to show revenues of $63.2M for calendar year 2009 and an EBITDA of $31.2M for this same period. Following the acquisition, HalcyGen expects to report sales in excess of $42.2M for the financial year 2010 (being a part year of 1st Nov 2009 to 30th June 2010).
The “Earnings Sharing Arrangement” allows Hospira to receive a percentage of gross sales dependent on the achievement of gross sales in excess of certain target threshold levels by MPI. The “Earn Out” is capped on an annual basis over a six-year period.
The acquisition includes land (approximately 30 acres) situated in Salisbury, South Australia; associated buildings, inventory, plant and equipment; employees, customer contracts and relationships; as well as an intellectual property portfolio.
The acquisition is largely non-dilutive for HalcyGen, being implemented through a loan from National Australia Bank (NAB) of US$10.0M to be repaid within 2 years from profits and further supplemented by a $9.0M two-tranche placement of shares to be underwritten by Patersons Securities Limited, at $0.20 per share. The second tranche of the placement will be subject to shareholder approval.
The Company will also offer existing shareholders the opportunity to participate in a Share Placement Plan (SPP) at the same price of $0.20 per share. The record date for the SPP will be 7th October 2009. The SPP will be subject to shareholder approval and is also to be underwritten by Patersons Securities Limited to $4.5M.
At the completion of both offerings HalcyGen will have raised at least $11.0M and will have issued at least 55 million additional shares.
Under the terms of a Transitional Services & Distribution Agreement, Hospira will continue to distribute a number of MPI products in Australia for a short period of time.
HalcyGen’s CEO, Dr Roger Aston said, “We are excited by the prospects of building a diversified portfolio associated with the acquisition of MPI. The arrangement with Hospira to share revenues allows both companies the potential to reach their strategic and financial goals in relation to this transaction. The acquisition of MPI immediately gives HalcyGen global reach with distribution partners in Australia, USA, Europe and Asia. This deal also secures our manufacture of SUBA-Itraconazole, which we are confident of filing for registration in 2010 following recent meetings with EU regulatory authorities. This acquisition will support our underlying business strategy in order to create added value and increase long-term shareholder value. The synergy of the acquisition between MPI and HalcyGen is aided by our commitment to three key goals: operational integration, synergy in our products and skill base, and accelerated growth for shareholders.
Terrence C. Kearney, chief operating officer, Hospira, said, “The divestiture of MPI furthers Hospira’s Project Fuel optimization efforts to rationalize non-strategic assets to provide Hospira greater focus on our core Specialty Injectable Pharmaceuticals (SIP) and Medication Management Systems (MMS) businesses.”
The transaction is due to close in late October. HalcyGen will report further on the transaction upon completion.
-ENDS-
Media Enquiries:
HalcyGen: Dr Roger Aston or Craig Bottomley 03 8614 7777
Hospira: David Griss +61 3 8541 5215
HalcyGen Profile:
HalcyGen was founded to bridge the gap between main stream pharmaceutical companies and high volume generics companies through the development and licensing of new improved proprietary generic formulations known as “Super Generics” or “High Functionality Generics”. HalcyGen’s strategy is to capitalise on the value associated with the development and commercialisation of novel, improved variants of existing proprietary pharmaceuticals known as Super Generics.
The basis of the HalcyGen’s strategy is a strategic licensing partnership with Hospira, Inc. The Company will initially develop and market two products in partnership with Hospira. Subject to performance and meeting certain other criteria, the Company has the opportunity to develop further products with Hospira.
Through the global exclusive license granted to HalcyGen by Hospira, Inc., for the commercialisation of SUBAâ-Itraconazole, Hospira has a first right of refusal to manufacture SUBAâ-Itraconazole to support sales.
Hospira Profile:
Hospira, Inc. is a global specialty pharmaceutical and medication delivery company dedicated to Advancing Wellness™. As the world leader in specialty generic injectable pharmaceuticals, Hospira offers one of the broadest portfolios of generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management solutions. Through its products, Hospira helps improve the safety, cost and productivity of patient care. The company is headquartered in Lake Forest, Ill., and has approximately 14,000 employees. Learn more at www.hospira.com.
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