MentallyHealth.Org

Elan Drug Technologies, Alkermes merge to form new company in Ireland

October 05, 2017

Immediate profitability on a cash earnings basis and diversified, growing revenues from 25 commercial products; Robust revenue growth with expected Adjusted EBITDA1 margin expansion; Five high-growth commercial products (RISPERDAL CONSTA, INVEGA SUSTENNA, AMPYRA, VIVITROL and BYDUREON), all with long patent lives and significant growth potential in large therapeutic areas. In particular, two of these products, RISPERDAL CONSTA and INVEGA SUSTENNA, both commercialized by Johnson & Johnson, represent two very important long-acting injectable atypical antipsychotic medications for schizophrenia and bipolar I disorder; A strong, CNS-focused pipeline of proprietary and partnered product candidates in clinical development, including several late-stage proprietary product candidates; Complementary new drug development capabilities that leverage proprietary science and innovative medicinal chemistry capabilities. Proprietary technologies include EDT's NanoCrystal? technology for poorly water soluble drug compounds; EDT's proprietary technologies for oral controlled release drugs and Alkermes' long-acting injectable drug technologies; and GMP manufacturing facilities in Wilmington, Ohio, Gainesville, Ga., and Athlone, Ireland, with world-class capabilities for producing complex drug products.

Transaction Terms

In connection with the transaction, which was approved by the boards of Elan and Alkermes, at closing, Elan will receive $500 million in cash and 31.9 million ordinary shares of Alkermes plc common stock. Alkermes and Elan will enter into a shareholder agreement that, among other things, contains a lockup, standstill and voting agreement for Elan's shares of Alkermes plc. Existing shareholders of Alkermes, Inc. will receive one ordinary share of Alkermes plc in exchange for each share of Alkermes, Inc. they own at the time of the merger. Alkermes plc shares will be registered in the U.S. and are expected to trade on the NASDAQ exchange. The transaction is expected to be taxable to existing Alkermes, Inc. shareholders. Alkermes has obtained a commitment from Morgan Stanley & Co. and HSBC to provide up to $450 million of term loans to finance the transaction.

Financial Guidance

On a trailing 12-month basis as of March 31, 2011, the combined company would have had pro forma revenues of approximately $450 million and Adjusted EBITDA of approximately $80 million. On a pro forma basis, revenues are expected to grow in fiscal year 2012 and reach double digit growth rates in fiscal year 2013 and beyond. Pro forma Adjusted EBITDA margins for fiscal year 2012 are expected to be in the 15-20% range, yielding pro forma Adjusted EBITDA of between $70 million and $90 million. Pro forma Adjusted EBITDA margins are expected to expand to 30-35% in fiscal year 2013 and beyond. While synergies are not the main driver of the transaction, approximately $20 million of annual synergies in U.S. operations have been identified and are expected to be fully realized by fiscal year 2013. Alkermes plc will be headquartered in Dublin, Ireland, creating a financially and legally efficient structure.

Source: Alkermes, Inc.