News Column

AMRI to Acquire Oso Biopharmaceuticals Manufacturing

June 20, 2014



By a News Reporter-Staff News Editor at Drug Week -- AMRI (NASDAQ: AMRI) announced that it has signed a definitive agreement to acquire all of the outstanding membership interests of Oso Biopharmaceuticals Manufacturing, LLC ("OsoBio") for $110 million in cash. OsoBio is recognized as a premier contract manufacturer of highly complex injectable drug products, including sterile liquid, suspension and lyophilized formulations. The acquisition and associated fees are expected to be financed through cash currently held by AMRI, and, subject to Hart-Scott-Rodino clearance and other conditions to closing, is expected to be completed in the third quarter of 2014 (see also AMRI).

"The acquisition of OsoBio is highly complementary to our finished dose manufacturing business, and is consistent with our strategy to be the preeminent supplier of custom and complex drug development services and products to the pharmaceutical industry," said William S. Marth, AMRI's president and chief executive officer. "OsoBio adds significantly to our sterile manufacturing capabilities, extending our industry-leading position in early stage contract manufacturing to now include OsoBio's preeminent large-scale commercial production. In addition, we expect to realize savings in capital costs associated with the previously planned facility expansion."

"We are very excited about the synergies that our Albuquerque operations will bring to AMRI as part of their organization," said Milton Boyer, OsoBio's President. "The addition of AMRI's experience and capabilities in early phase development greatly increases the value proposition for our customers, providing a single source to address all sterile fill/finish needs from phase 1 development complete to commercial supply."

Located in Albuquerque, New Mexico, OsoBio is a trusted, long-time partner to many of the industry's leading pharmaceutical companies and is well respected for its expertise in manufacturing complex injectables, its reliability of supply and superior track record of quality. OsoBio's core capabilities include liquid fill and lyophilized products, highly potent compounds, cytotoxics, proteins and peptides, monoclonal antibodies, vaccines, liposomal suspensions and controlled substances. OsoBio has provided manufacturing support for more than 250 unique products and their attractive development pipeline, which includes multiple late-stage products, is expected to be important contributor for future growth.

On a stand-alone basis, OsoBio's forecasted full year 2014 revenue is between $58 million and $60 million, with adjusted EBITDA of between $9 million and $10 million, implying a purchase price multiple of 11 times 2014 adjusted EBITDA at the top end of the range. Adjusted EBITDA excludes any deal related costs or purchase accounting impacts.

AMRI anticipates full year run-rate synergies of approximately $3 million of EBITDA within 12 months of closing. Subject to Hart-Scott-Rodino clearance, the Company anticipates the acquisition will be accretive to 2014 earnings and intends to provide investors with updated 2014 guidance for the combined company when it releases its second quarter 2014 financial results. OsoBio is expected to continue to operate independently within AMRI's Drug Product business unit. Milton Boyer, the current president and chief executive officer, will lead the OsoBio team and report into Steven Hagen, Ph.D., AMRI's senior vice president of manufacturing and pharmaceuticals.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, such as EBITDA, which is adjusted to exclude, among other things, the impact of interest income and expense, depreciation and amortization expense, and income tax expense or benefit. We exclude these items from the non-GAAP financial measures because they are outside our normal operations. There are limitations in using non-GAAP financial measures, as they are not prepared in accordance with generally accepted accounting principles, and may be different than non-GAAP financial measures used by other companies. In particular, we believe that the inclusion of supplementary non-GAAP financial measures in this press release helps investors to gain a meaningful understanding of our core operating results and future prospects without the effect of these often-one-time charges, and is consistent with how management measures and forecasts the Company's performance, especially when comparing such results to prior periods or forecasts. Non-GAAP results also allow investors to compare the Company's operations against the financial results of other companies in the industry who similarly provide non-GAAP results. The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. OsoBio projected 2014 EBITDA is only provided on a non-GAAP basis. It is not feasible to provide reconciliation to the most comparable projected U.S. GAAP measure because the excluded items are difficult to predict and estimate and are primarily dependent on future events.

Keywords for this news article include: AMRI, Drugs, Therapy, Biopharmaceuticals, Investment and Finance.

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Source: Drug Week


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