Jazz Pharmaceuticals buying EUSA Pharma for as much as $700 million

Transaction would provide Jazz Pharmaceuticals with an expanded portfolio of specialty pharmaceutical products and an enhanced commercial platform, incorporating EUSA Pharma's specialty commercial infrastructure in the United States and Europe and its international distribution network

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DUBLIN and LANGHORNE, Pa.—Jazz Pharmaceuticals plc andEUSA Pharma Inc. today announced that the companies have signed a definitiveagreement under which Jazz Pharmaceuticals would acquire EUSA Pharma, aprivately-held, specialty pharmaceutical company with headquarters in theUnited States and United Kingdom, for $650 million in cash and a potential $50million milestone payable in cash based upon its lead product, Erwinaze(asparaginase Erwinia chrysanthemi), achieving a specified U.S. net salestarget in 2013.
The transaction would provide Jazz Pharmaceuticalswith an expanded portfolio of specialty pharmaceutical products and an enhancedcommercial platform, incorporating EUSA Pharma's specialty commercialinfrastructure in the United States and Europe and its internationaldistribution network. The combined organization's portfolio would have productsmarketed in the U.S. and Europe, including Erwinaze, a life-saving treatmentfor patients with acute lymphoblastic leukemia (ALL). The transaction isexpected to be immediately accretive to Jazz Pharmaceuticals' adjusted earningsper share upon closing in 2012 and in 2013 is expected to provide additionalrevenue of $210 million to $230 million, additional adjusted EBITDA of $75 millionto $85 million, and an additional $0.75 to $0.85 in adjusted earnings pershare.
"EUSA Pharma is a compelling strategic fitwith our specialty focus and commercial expertise, and furthers our mission toimprove patients' lives by delivering therapies that address serious unmetmedical needs," said Bruce C. Cozadd, chairman and CEO of JazzPharmaceuticals. "This transaction would expand our global footprint andmarketed product portfolio to include Erwinaze, a treatment for alife-threatening form of leukemia, as well as other highly specializedproducts. Our organizations are highly complementary, and we look forward toworking with our new colleagues to build an even stronger rapidly-growingcompany."
"The combination of Jazz Pharmaceuticals andEUSA Pharma would bring together two highly successful businesses, with teamswho are passionate about providing patients with access to vital specialtytherapies," said Bryan Morton, founder, president and CEO of EUSA Pharma."There is a strong fit between our two companies' products, people andvalues, and the combination would represent a positive transaction for thepatients we serve, our collective employees and our shareholders. As a largerand stronger combined organization, we would have greater resources to continueour growth toward becoming a leader in the specialty pharmaceutical sector,bringing our medicines to patients worldwide."
EUSA Pharma is a specialty pharmaceutical companyfounded in 2006, with a portfolio of 10 oncology, critical-care and oncologysupportive care products currently marketed directly in the United States andEurope and via distributors in other countries. Its largest product isErwinaze, developed as a treatment option for patients with ALL who arehypersensitive to E. coli-derivedasparaginase. Approximately 3,600 people younger than 20 years are diagnosedwith ALL each year, with a peak incidence between ages 2 and 5 in the UnitedStates. Erwinaze was approved by the U.S. Food and Drug Administration inNovember 2011, and has orphan drug exclusivity through November 2018 andbiologic data exclusivity through 2023. In addition, it is currently approvedin seven countries outside the United States, where it is marketed by EUSAPharma under the trade name Erwinase.
In addition to ongoing development to expand theavailable methods of Erwinaze administration to include IV delivery, EUSAPharma's pipeline includes two additional drug candidates: Asparec, a pegylatedrecombinant Erwinia asparaginase currently in Phase I development in Europe forthe treatment of ALL in patients with hypersensitivity to standard-of-care E. coli-derived asparaginase therapy;and Leukotac (inolimomab), an anti-CD25 monoclonal antibody in a Phase IIIpivotal study in Europe for treatment of steroid-refractory acute graft versushost disease.
EUSA Pharma's other products in the United Statesare Caphosol (supersaturated calcium phosphate rinse), ProstaScint (capromabpendetide) and Quadramet (Samarium Sm 153 Lexidronam Injection). Outside the UnitedStates, EUSA Pharma's principal products are Caphosol, Collatamp (lyophilizedcollagen implant impregnated with the aminoglycoside antibiotic gentamicin),Fomepizole (fomepizole), Kidrolase (Escherichiacoli L-asparaginase), and Xenazine (tetrabenazine).
EUSA Pharma has approximately 180 employees, withoperations in the United States in Langhorne, Pa., and in Europe mainly atoffices in Oxford, U.K., and Lyon, France). EUSA Pharma's founder, BryanMorton, would remain with the organization with responsibility for the newinternational operations.
The proposed acquisition, which has been approvedby the boards of directors of both companies and the stockholders of EUSAPharma, is subject to the satisfaction of customary closing conditions andregulatory approvals, including antitrust approval in the United States. Theproposed acquisition is not subject to approval by the shareholders of JazzPharmaceuticals. The closing of the transaction is anticipated to occur in June2012.
Jazz Pharmaceuticals expects to finance thetransaction with a combination of cash on hand and proceeds from a new $500million term loan for which Barclays Bank PLC has provided a binding commitmentletter. The commitment letter also provides for an additional $100 millionrevolving credit facility. The commitment to provide the term loan andrevolving credit facility is subject to the satisfaction of customaryconditions.
(From a Jazz Pharmaceuticals news release)

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