The decision by Irish drugmaker Alkermes ($ALKS) to narrow its focus and sell a manufacturing plant is providing a chance for Pennsylvania-based Recro Pharma ($REPH) to expand its pain drug position and jump into the contract manufacturing space to pick up some extra cash.
Dublin-based Alkermes said today that it would sell a manufacturing facility in Gainesville, GA, to Recro, as well as number of pain drugs, for $50 million in cash and up to $120 million in milestone payments. Alkermes will also get low double-digit royalties on net sales from the commercialization of meloxicam IV/IM, a late-stage, parenteral formulation of a nonsteroidal anti-inflammatory drug that Recro is acquiring. As well as the meloxicam product, Recro is getting Alkermes rights to Ritalin LA, Focalin XR, Verelan, Zohydro ER and Bidil. The deal is expected to close in the second quarter.
The facility is one that Alkermes picked up in 2011 when it agreed to team up with Elan Drug Technologies, Elan's drug delivery and manufacturing unit, in a $960 million cash-and-stock deal.
|Alkermes CFO James Frates|
"We are streamlining Alkermes' manufacturing operations for our commercial products and late-stage pipeline into our two GMP facilities in Athlone, Ireland, and Wilmington, OH," Alkermes CFO James Frates said in a statement Monday. "With this transaction, we are capturing value from non-core assets, as we continue to execute on our strategy and focus on the key driver of our future growth--our late-stage pipeline of innovative medicines for central nervous system diseases."
There are 165 employees at the 85,000-square-foot, DEA-licensed facility, which manufactures the 5 approved drugs that Recro is buying. It said that the plant historically has had more than $70 million in revenues and has been cash-flow positive. It also has the potential to help Recro fund its drug development with its contract manufacturing, royalty and formulation business.
"This transaction is transformative for Recro Pharma, as it brings together two complementary therapies for treating moderate to severe acute pain, IV meloxicam and our lead product Dex-IN, as well as a commercial manufacturing infrastructure that will add scale and capability and may, over time, provide cash flow to fund development of our pipeline," Gerri Henwood, CEO of Malvern, PA-based Recro, said in a statement.
Recro put the brakes on a midstage study of Dex-IN, a nonopioid pain drug, last year after an interim analysis showed it was unlikely to hit its goal. The company at the time said after evaluating the data that it intended to pursue a study of 50-mcg Dex-IN in a postop Day 1 setting where results seemed promising.
- here's the Alkermes release
- here's the Recro release (PDF)