Benzinga | Mar 9, 2021 09:15AM EST

ANI Pharmaceuticals To Acquire Novitium Pharma For $163.5M

* 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

ANI Pharmaceuticals, Inc. ("ANI" or the "Company") (NASDAQ:ANIP) today announced that it 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. The transaction has been approved by the ANI Board of Directors and is expected to close in the second half of 2021, subject to regulatory approvals and approval by ANI shareholders as required by Nasdaq listing standards as described below. Equity holders of Novitium have approved the transaction.

"Strengthening our well-established Generics business with enhanced development capabilities and increased focus on niche opportunities is a key pillar of ANI's growth strategy. The acquisition of Novitium aligns with this strategy, adding a best-in-class R&D engine that delivers sustainable growth through new product launches and offering upside through niche 505(b)(2) opportunities. The addition of a U.S. based, state-of-the-art manufacturing facility and enhanced scale to our CDMO business are other attractive advantages of this acquisition. We also look forward to welcoming Samy, Chad, Vijay and the entire Novitium team to ANI," stated Nikhil Lalwani, President and CEO.

"We expect the transaction will be immediately accretive to our adjusted EBITDA. Upon closing of the transaction, our strengthened pro forma capital structure, including the new senior credit facilities underwritten by Truist Securities and the PIPE from Ampersand Capital Partners will enable us to facilitate long-term growth," concluded Lalwani.

Samy Shanmugam, Co-Founder and President, and Chad Gassert, Co-Founder and CEO, commented, "We are delighted to join ANI as we enter this next phase of exciting growth at Novitium Pharma. We look forward to supporting ANI to execute on their strategy of growing their business, expanding and diversifying their product portfolio, and creating long-term value for their investors."

Transaction Strongly Positions ANI for Future Growth

* 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.

Terms of the Transaction & Financing

Under the terms of the transaction, the Purchase Price of $163.5 Million is comprised of (i) a cash payment of $89.5 million and (ii) $74 million in equity. Novitium is also eligible to receive (i) $25 million in contingent payments upon the achievement of financial targets related to Generics products and filing of certain ANDAs and (ii) $21.5 million in contingent payments upon the achievement of financial targets from the 505(b)(2) products.

ANI will finance the transaction with a new $300 million Term Loan B, issuance of $74 million in equity to the sellers, and a $25 million PIPE investment by Ampersand Capital Partners. The facility also includes a new $40 million revolving credit facility. The new debt financing will be secured by substantially all the assets of ANI and its subsidiaries and used for the cash portion of the acquisition and to refinance ANI's existing senior credit facilities. The proposed capital structure further facilitates sustainable growth for ANI.

Approvals

The transaction is expected to be completed in the second half of 2021, subject to the satisfaction of customary closing conditions, l approval from relevant regulatory agencies, including clearance under the Hart-Scott Rodino Antitrust Improvements Act, and approval by ANI shareholders under Nasdaq listing standards as the result of the equity portion of the Novitum transaction and the shares issuable in the PIPE transaction.