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Aurobindo Pharma acquires 7 oncology injectables from Spectrum Pharma

Aurobindo Pharma USA Inc’s wholly owned subsidiary Acrotech Biopharma LLC which in turn is a wholly own subsidiary of Aurobindo Pharma Limited. On 2nd March 2019 Aurobindo Pharma Limited’s subsidiary, Accrotech Biopharma LLC completed the acquisition of seven marketed injectable products from Nevada based Spectrum Pharmaceutical.

The company on 17th January 2019 started the process of acquisition for a definitive agreement of USD 300 million. (USD=$)

Terms of the offer:

Acrotech acquired for an upfront cash purchase agreement of $160 million. Further, the remaining $140 million will be paid after the regulatory approval and on the basis of sales milestone.

The acquired portfolio of Acrotech bio-pharma will bring in 7 oncology injectable. Along with this an experienced branded commercial infrastructure in the US. So as to continue the commercialization of these brands

Furthermore, this company expects revenue generation of $105 million post-acquisition for first 12 months. According to the calendar year ended December 2017 the acquired portfolio generated around $116.2 million.

Also, the traction from the acquisition will be EPS accretive from the initial one year of ownership

EPS accretion:

During mergers and acquisition, the acquiring firm’s earning per share (EPS) increases post acquisition it is said to be an accretive deal. Although, if the subsequent deal triggers the EPS to decline the said deal is considered to be dilutive.

Benefits of the acquisition:

This deal will establish Aurobindo pharma’s presence in branded oncology segment in the US with well-recognized products in this segment. Also, it creates an ideal launch pad for their wholly owned subsidiary Acrotech in the US. Further, the Company gets experienced manpower in branded Oncology segment.

Legal Advisory:

Legal counsel to this agreement was Reed Smith LLP and financial adviser was Leerink Partners LLC for Aurobindo Pharma.

Acquisition Agreement Milestones bifurcation of remaining $140 million:

Marquibo: is an anticancer drug vinCRIStine sulfate LIPOSOME injection encapsulated formulation used to treat Philadelphia chromosome-negative acute lymphoblastic leukemia patients. Those who are in second or greater relapse or whose disease has progressed following two or more lines of anti-leukemia therapy.

Milestone: 

  • $30 million for Regulatory approval for diffuse of large B-cell Lymphoma by MARQIBO along with its label.
  • further, $10 million for USFDA approval for the product MARQIBO for any indication apart from the B-cell Lymphoma indication, pediatric or single vial ALL.
  • $30 million for the net revenue from MARQIBO during any trailing 12 months. While the milestone period is either equal to or greater than $300 million
  • Other  $10 million of the net sales from MARQIBO in any trailing 12 months during the milestone period are either equal to or greater than $400 million

Khapzory: is contraindicated in those who have had severe hypersensitivity to leucovorin products, folinic acid, or folic acid. It is treated to the patients with metastatic colorectal cancer with a combination of fluorouracil (medication to treat cancer)

Milestone to be achieved:

  • $5 million for the net revenue of khapzory during any 12 trailing months in the milestone period either equal to or more than $50 million.
  • $5 million for cumulative net revenue of Khapzory is greater than or equal to $150 million during the milestone duration.
  • $10 million for cumulative net sales are equal to or greater than of Khapzory $200 million
  • $15 million for cumulative net revenue from Khapzory are greater than or equal to $300 million in the milestone period
  • $25 million for cumulative net sales for Khamzory are equal to or greater than $400 million during the duration of the milestone.

The milestone period lasts until 5 years post the closure of the transaction.

Other Information:

Aurobindo Pharma’s Unit IV in Pashamlaram, Hyderabad was inspected by the US food and Administrative (USFDA) received form 483 with 2 observation. These observations are not in relation with the company’s data integrity or any repeated observations. Further, these observations are moreover procedural in nature.

Company Information:

Aurobindo Pharma Limited a Hyderabad based company is the leading manufacturer and marketer of Active Pharmaceutical Ingredient (API) and generic pharmaceutical across the globe. The company has a robust portfolio that is spread across the major therapeutic segment.

Acrotech Biopharma LLC is placed on a global platform to commercialize innovative proprietary medications. It is a New-Jersey-based wholly owned subsidiary of Aurobindo Pharma USA Inc. The company focuses on seeking collaboration to build small molecule and biologic expertise so as to create breakthrough science that can change they treat the diseases.  Their preeminent focus is to build its presence in unmet segments like oncology, neuroscience, orphan disease, and dermatology segments.

Stock Moment

On 5th February 2019, Aurobindo Pharma closed at Rs. 736.10 up by 1.54% apiece.

 

SUN PHARMA LTD. RESULT UPDATE FOR Q3FY19

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