Merus Labs has entered into an agreement with UCB to acquire rights to Elantan®, Isoket® and Deponit® in Europe and select other markets.
These products belong to a category of pharmaceuticals called nitrates, and are used to treat both acute and chronic coronary artery disease. "This transformational acquisition is a major step forward in our strategy to acquire important established medicines and leverage our scalable commercial platform," stated Barry Fishman, Chief Executive Officer. "These essential products expand our presence in the cardiovascular market, materially increase our revenues, and significantly improve our cash flow".
Acquisition Benefits
- Established prescription products with proven safety and efficacy, predictable future cash flows, and no patent cliff.
- Leverages existing commercial platform, with over 80 percent of revenue in countries where Merus' existing products are currently sold.
- Products are currently sold in 20 European countries plus Mexico, Turkey and South Korea.
- A variety of formats are available, including tablet, spray, patch and injectable presentations.
- An opportunity exists to launch the products in certain new markets and to expand formulations in existing markets.
Transaction Highlights
- Merus has agreed to acquire product rights for a one-time payment of €92 million or 2.7 times last 12 months net revenue of approximately €34 million.
- At current exchange rates, the products are expected to generate approximately $22 million in annual EBITDA.
- On an annualized basis, the new products are expected to increase our existing products adjusted EBITDA by approximately 70 percent.
- The acquisition will be funded with cash-on-hand and a new Euro-denominated five year term debt facility (matching where the majority of the product revenue will occur) at an interest rate of 4.5 percent per annum, decreasing as the Company de-leverages.
All conditions to closing under the purchase agreement, other than payment of the purchase price have been satisfied, and payment of the purchase price and closing are anticipated to be completed during the next five business days.