Case Insight – ANI Pharmaceuticals acquisition of Novitium Pharma

ANI Pharmaceuticals Inc. has signed a definitive agreement to acquire Novitium Pharma, a privately held, New Jersey-based pharmaceutical company with development, manufacturing, and commercialization capabilities for $163.5 million, including $89.5 million in cash and $74 million in equity plus two potential future cash earn-outs of up to $46.5 million. 

Key Points

• Creates Sustainable Generics Growth Engine with Approximately 25+ Launches Expected in 2021 and 2022
• Expands Brand Portfolio with Addition of 505(b)(2) Pipeline and Enhances Scale of CDMO Business
• Purchase Price of $163.5 Million, including $89.5 Million in Cash and $74 Million in Equity, plus Two Potential Future Earnouts of Up to $46.5 Million
• Expected to be Accretive to Adjusted non-GAAP Earnings per Share within First 12 Months
• Strengthens Capital Structure with New Senior Credit Facilities of $340 Million (Replacing the Company’s Existing Term Loan A) Committed by Truist Securities and $25 Million PIPE by Ampersand Capital Partners

Outcome of the deal

• Proven R&D Engine Fuels Sustainable Growth
  Novitium anticipates launching 25+ additional products in 2021 and 2022, including products with U.S. Food and Drug Administration (“FDA”) Competitive Generic Therapy (“CGT”) designation. The Company currently has 21 abbreviated new drug applications (“ANDAs”) filed with the FDA and more than 30 additional products under development. Novitium’s leadership of Samy Shanmugam, Chad Gassert, Vijay Thorappadi and the entire team has an excellent track record of execution and efficiency from filing to launch. Integration of Novitium’s R&D operations will establish a center of excellence for ANI’s generics product development program.

• Expands ANI’s R&D Pipeline Focused on Niche Opportunities
  Novitium is currently advancing three 505(b)(2) candidates in Oncology and Hypertension. These 505(b)(2) products will build on ANI’s increasing focus on niche opportunities, including its first Paragraph IV filing in 2020 and the filing of injectables ANDAs in 2021.

• Enhances Scale of CDMO Business and U.S.-Based Manufacturing Capacity
  Novitium adds nine new customers to ANI’s growing CDMO business. Additionally, Novitium brings with it a 50,000 sq ft East Windsor, NJ facility, including 27 manufacturing suites and eight clinical suites supporting R&D, commercial manufacturing and packaging. An ongoing 20,000 sq ft building expansion will add 18 new manufacturing suites. Novitium’s annual production capacity is approximately two billion units in aggregate across tablets, capsules, liquid suspensions and solutions, powders and powder for oral suspension, controlled release and potent compounds.

• Compelling Financial Profile
  The combination is expected to be accretive to ANI’s adjusted non-GAAP EPS in the first 12 months after closing. The transaction is expected to add approximately $15 million to adjusted EBITDA in the second half of 2021, assuming a mid-year 2021 close. The acquisition diversifies ANI’s revenue base by contributing to each of its reporting segments: Generics, Contract Manufacturing, Royalties/Other and, following the launch of Novitium’s 505(b)(2) pipeline products, the Brand segment.