REPH, $4.10 +24%, nice news today, holding a position from $2.80s, low float so could move fast.
Recro Pharma to Acquire IV/IM Meloxicam and Gainesville, GA GMP Manufacturing Facility and Business Unit From Alkermes
6:00a ET March 9, 2015 (GlobeNewswire) Print
- Transformative Acquisition Diversifies Recro Pharma's Development Risk with Second, Complementary Acute Pain Product
- Phase III-Ready, Long-Acting Injectable Meloxicam Has Demonstrated Robust Efficacy, Good Tolerability in Multiple Phase II Trials
- Transaction Includes Cash Flow Positive Manufacturing, Royalty and Formulation Business
- Alkermes to Receive Up-front Cash, Warrant, Milestone Payments and Royalties on Meloxicam Net Sales
- Up-front Payment Funded Via Secured Loan from an affiliate of OrbiMed
- Recro to Host Conference Call and Webcast Today at 8:00 AM ET
Recro Pharma, Inc. (Nasdaq:REPH) today announced a definitive agreement under which Recro Pharma will acquire assets from Alkermes plc including worldwide rights to IV/IM meloxicam, a proprietary, Phase III-ready, long-acting COX-2 NSAID for moderate to severe acute pain, as well as a contract manufacturing facility, royalty and formulation business in Gainesville, GA.
Under the terms of the agreement, Recro Pharma will pay Alkermes $50 million at closing, and gain the rights to IV/IM meloxicam and ownership of a GMP manufacturing facility and related business located in Gainesville, GA. Alkermes is entitled to receive up to an additional $120 million in milestone payments upon the achievement of certain regulatory and net sales milestones and royalties, in each case, related to IV/IM meloxicam. At closing, Recro Pharma will issue Alkermes a seven-year warrant to purchase an aggregate of 350,000 shares of Recro Pharma common stock. The $50 million up-front payment will be funded via a five-year senior secured term loan with an affiliate of OrbiMed ("OrbiMed"). The acquisition is subject to customary closing conditions, including antitrust regulatory approval, and is anticipated to close in the second quarter of 2015.
"This transaction is transformative for Recro Pharma, as it brings together two complementary therapies for treating moderate to severe acute pain, IV meloxicam and our lead product Dex-IN, as well as a commercial manufacturing infrastructure that will add scale and capability and may, over time, provide cash flow to fund development of our pipeline," said Gerri Henwood, Recro Pharma's President and Chief Executive Officer. "This transaction was funded through a minimally dilutive transaction with OrbiMed and we believe this transaction represents a significant endorsement of Recro. We look forward to the upcoming interim results and expected mid 2015 top-line data readout of our Post Op Day 1 Phase II trial of Dex-IN, to the potential of moving one or both of these programs into Phase III by year end and to realizing value from our new manufacturing capabilities."
Strategic and Financial Benefits of the Transaction
-- Diversifies Recro Pharma development risk with second, complementary acute pain product -- IV/IM meloxicam was designed using NanoCrystal platform, a technology that enables enhanced bioavailability of poorly water-soluble drug compounds;
-- IV/IM meloxicam was designed using NanoCrystal platform, a technology that enables enhanced bioavailability of poorly water-soluble drug compounds;
-- In five Phase II studies in over 700 patients with acute pain, IV or IM meloxicam has demonstrated favorable analgesic properties, including rapid onset of pain relief and time to peak analgesic effect, 18 to 24 hour duration of pain relief and good tolerability;
-- Positive Phase II post op hysterectomy and dental pain studies demonstrated large effect sizes;
-- Dex-IN, Recro Pharma's intranasal formulation of dexmedetomidine, has upcoming interim analysis of ongoing Post Op Day 1 Phase II trial; and
-- Depending on Dex-IN clinical success, possibility for two proprietary compounds to enter Phase III by year end.
-- Manufacturing & royalty business provides new capabilities and scale -- 85,000 sq. ft., ~165 employee, DEA-licensed facility located in Gainesville, GA, which manufactures five commercial products;
-- 85,000 sq. ft., ~165 employee, DEA-licensed facility located in Gainesville, GA, which manufactures five commercial products;
-- $70M+ historical revenues; manufacturing division cash flow positive;
-- Enhances ability for business development opportunities; and
-- Depending on performance, potential for cash flows to fund development over time.
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