Date: 2014-12-04
Type of information: Company acquisition
Acquired company: PneumRx (USA - CA)
Acquiring company: BTG (UK)
Amount: up to $245 million
Terms: * On January 8, 2015, BTG plc announced that the parties received early termination of the waiting period and the acquisition completed on Wednesday 7 January 2015. * On December 4, 2014, BTG Plc announced that it has entered into an agreement to acquire PneumRx, a growing interventional pulmonology business, on a debt free cash free basis for an initial cash consideration of $230 million (approximately £1471 million) and up to $245 million (approximately £1561 million) in performance-related future milestone payments.The Acquisition will be funded in part by a cashbox placing with gross proceeds of approximately £150 million, representing approximately 5 per cent of the Company’s market capitalisation based on 03 December 2014 closing share price. BTG will make further contingent payments dependent on the achievement of performance-related targets. This comprises a milestone of $20 million payable if PneumRx meets a revenue target in 2015 and a milestone of $60 million if FDA approval is received before 31 December 2017. BTG may also pay tiered sales milestones of up to an additional $165 million, the last of which is payable if annual sales reach $500 million. Total contingent payments will not exceed $245 million (approximately £1561 million) and will be funded from BTG’s cash resources. Closing of the acquisition is conditional on Hart-Scott Rodino approval in the US. That is expected to be received in early January 2015. Rothschild is acting as financial adviser to BTG. Deutsche Bank AG, London Branch and J.P. Morgan Cazenove are acting as Joint Bookrunners in respect of the placing. Stephenson Harwood and Morgan Lewis & Bockius provided legal advice to BTG.
Details: PneumRx is headquartered in Mountain View, California. It owns, manufactures and distributes the RePneu® Coil System (RePneu®), a minimally invasive treatment for advanced emphysema, which seeks to enhance patients’ quality of life by improving lung function and exercise capacity. This implantable shape memory Nitinol4 coil device is designed to improve lung function in patients with emphysema. The coil restores the lung’s elasticity while holding small airways open, preventing airway collapse during exhalation. Treatment with RePneu® has been shown in European clinical studies to improve the quality of life of emphysema patients, demonstrated by clinically meaningful improvements in the St George’s Respiratory Questionnaire response and in the 6-minute walk test. RePneu® is sold in 11 European countries including Germany, Switzerland, Italy and Spain and has a fully recruited US pivotal clinical trial currently underway. US approval is anticipated during 2016. The RePneu® product and its method of reducing the volume of lung tissue are covered by granted US patents to 2029 and an EU patent to 2027 upon grant of the existing patent application. BTG believes that, subject to US approval and reimbursement, RePneu® has the potential to achieve revenues of over US$250 million by 2020, assuming less than 1% penetration of Gold Stages III and IV patients. BTG intends to support sales of RePneu® with a direct sales strategy in key European territories. The sales force will call on interventional pulmonologists and BTG believes that the acquisition will have scale benefits in Europe as BTG’s go-direct Interventional Oncology strategy is fully implemented in Q2 2015. PneumRx has 80 employees, of which 56 are based in the US and 24 based in Europe. In 2013, PneumRx achieved revenues of approximately US$16 million, a gross profit of approximately $14 million and generated a loss before tax of US$4 million. As of 31st December 2013, the gross assets of PneumRx were $22 million (approximately £141 million). Revenue in 2014 is expected to be approximately $25 million. BTG intends to support sales of RePneu® with a direct sales strategy in key European territories. The sales force will call on interventional pulmonologists and BTG believes that the acquisition will have scale benefits in Europe as BTG’s go-direct Interventional Oncology strategy is fully implemented in Q2 2015.
Related: Lung diseases Respiratory diseases
