BioWorld Today Correspondent
Although it does not expect to launch its hotly anticipated hepatitis C drug TMC435 until late 2013, at the earliest, Medivir AB is putting in place the supporting infrastructure now, by bidding to acquire specialty pharma firm BioPhausia AB, in a cash-and-shares deal valued at SEK565 million (US$90.1 million).
The offer, which has the unanimous backing of BioPhausia's board and two of its largest shareholders, is expected to be completed in May. The offer price, at SEK1.65 per share, represents a 44 percent premium to BioPhausia's volume-weighted average price over the preceding 30 days. BioPhausia shareholders would, on completion of the transaction, hold 8.6 percent of Medivir's stock and 7.2 percent of its voting rights.
The acquisition is intended to provide Huddinge, Sweden-based Medivir with a commercial platform that will enable it to promote TMC435 in the Nordic market. Medivir's development partner, Tibotec Pharmaceuticals Ltd., a unit of New Brunswick, N.J.-based Johnson & Johnson, holds rights for all other territories.
TMC435, a protease inhibitor undergoing Phase III trials, was not the sole motivation for the deal, however. "Don't underestimate also the ambition to build a portfolio," Medivir CEO Ron Long told BioWorld Today.
The company holds marketing rights in Finland and Sweden to its first approved product, a cold sore treatment called Xerclear, which Meda AB, of Solna, Sweden, is commercializing in North America. London-based GlaxoSmithKline plc is promoting the product in the rest of Europe, Japan and Russia.
So far, however, Medivir has not managed to build out its portfolio any further, although it is eying up about six more product opportunities. "The fact that we don't have a platform is an absolute block to bringing products in," Long said.
Stockholm, Sweden-based BioPhausia, formed via a management buyout from the former Pharmacia organization (now part of New York-based Pfizer Inc.) in 1995, is intended to become that platform. It will provide Medivir with expertise in regulatory affairs, logistics, distribution, sales and marketing and quality assurance.
The company has three lines of activity, including its own products business, a licensed products business and a parallel-import products business.
The first of those offers the best strategic fit for Medivir and is also the most profitable. As a whole, BioPhausia reported first quarter net sales of SEK134 million and SEK31 million in earnings before interest, taxes, depreciation and amortization (EBIDTA).
About 30 percent of the transaction is being funded in cash, although Long said the impact on Medivir's forward cash position will be neutral, given BioPhausia's future cash flow.
"What I will always say to investors and analysts is we would not pursue acquisitions and product purchases unless I can demonstrate it will be accretive in a reasonable period," he said.
Medivir is open to further acquisitions, in order to build out its product portfolio. "Sometimes it's easier to buy the company than to buy the product," Long said.
Shares in Medivir (STOCKHOLM:MVIR-B) dipped slightly on the news, which was disclosed Monday. The stock closed at SEK145, having closed Friday at SEK146.75. It dropped a bit on Tuesday, to close atat SEK141.75.
Shares in BioPhausia closed Monday at SEK1.54, up 35 per cent on Friday's close of SEK1.14. Tuesday brought little change, and the stock closed at SEK1.53.