Alliance Pharma Gains 18 New Prescription Products in AcquisitionAlliance Pharma (AIM: APH) said it has agreed a significantly earnings enhancing acquisition, buying a portfolio of 18 prescription products. The company has conditionally agreed to acquire certain assets of privately owned Cambridge Laboratories in a deal worth between £14.3m and £16.4m, plus an additional £1.4m for Cambridge’s product inventory. 

Alliance PharmaTo fund the acquisition Alliance has conditionally placed 28.8m new shares, raising £7.5m in cash, and has extended its lending facilities with Lloyds Banking Group.

"This acquisition represents a major step in the development of Alliance”, chief executive John Dawson said, “We are delighted to have found a business such as this that fits very well with our strategy of acquiring low-risk, established products and of organic growth via selective promotion”.

The Cambridge Laboratories portfolio has 18 prescription products across a broad range of therapeutic areas include oncology, toxicology and others. In commercial terms, the company’s key products are primarily in the oncology area. The ImmuCyst product is an immunotherapy for bladder cancer, Procarbazine forms part of a chemotherapy treatment for Hodgkin's Lymphoma and its Gelclair product is an oral gel used in the management of oral mucositis, which is a side-effect caused by chemotherapy and radiotherapy.

The product portfolio also includes a toxicology product which is contracted for a UK government stockpile, and is replaced on a 2-3 year cycle.  Cambridge’s existing £5.6m contract runs from October 2009 to January 2011.

Certain products are on licences from various third parties and these licences are typically due for renewal every five years.  In addition to the product portfolio, certain other assets of Cambridge Laboratories will be acquired by Alliance, including the offices in Dublin and Newcastle. 

It is currently proposed that the support functions will be merged into Alliance’s existing offices in Chippenham, Wiltshire, resulting in approximately 25 potential redundancies.

Alliance believes the acquisition will be significantly earnings enhancing in the current financial year. Cambridge’s total sales, excluding the toxicology product, were £10.6m and the pro forma gross margin was £4.9m, in the year ended December 31 2009. The oncology products represented approximately 40% of the sales and together they have achieved 18% annual sales growth over the past three years.  

Under the terms of the deal, Alliance will pay a base consideration of £14.3m, with a deferred element subject to the ImmuCyst licence being extended to 31 March 2012. In respect of the base consideration, Alliance will make an initial £10.2m payment upon completion, followed by three scheduled cash payments. The value of the deferred element payment is between £1.6m and £2.1m, dependent upon certain sales targets for ImmuCyst.

The fund the initial case payment Alliance has conducted a £7.5m placing and Lloyds Banking Group is providing Alliance with an additional £4m term loan and has increased the company’s existing £5m working capital facility to £6m. 

Alliance expects the placing shares to be admitted on AIM by the 22 February. The company’s broker Numis Securities arranged the placing at a price of 26p per share. The placing has expanded the company’s investor base with both with existing and new UK-based investors subscribing for the new shares. "We are also delighted by the support received for the Placing and Acquisition from current investors and welcome four new blue-chip institutional shareholders to our share register in this significantly oversubscribed Placing", Dawson commented. 

Separately, Alliance also announced that it expects to declare a 23p per share final dividend in March’s preliminary results for the year ended 31 December 2009. In January’s update on the previous financial year Alliance said trading during was strong in the 2009 financial year and as a result, expected to report turnover for the full year of approximately £31 million, an increase of approximately 42 percent on the previous year. 
Alliance Pharma (AIM: APH) said it has agreed a significantly earnings enhancing acquisition, buying a portfolio of 18 prescription products. The company has conditionally agreed to acquire certain assets of privately owned Cambridge Laboratories in a deal worth between £14.3m and £16.4m, plus an additional £1.4m for Cambridge’s product inventory. 

To fund the acquisition Alliance has conditionally placed 28.8m new shares, raising £7.5m in cash, and has extended its lending facilities with Lloyds Banking Group.

"This acquisition represents a major step in the development of Alliance”, chief executive John Dawson said, “We are delighted to have found a business such as this that fits very well with our strategy of acquiring low-risk, established products and of organic growth via selective promotion”.

The Cambridge Laboratories portfolio has 18 prescription products across a broad range of therapeutic areas include oncology, toxicology and others. In commercial terms, the company’s key products are primarily in the oncology area. The ImmuCyst product is an immunotherapy for bladder cancer, Procarbazine forms part of a chemotherapy treatment for Hodgkin's Lymphoma and its Gelclair product is an oral gel used in the management of oral mucositis, which is a side-effect caused by chemotherapy and radiotherapy.

The product portfolio also includes a toxicology product which is contracted for a UK government stockpile, and is replaced on a 2-3 year cycle.  Cambridge’s existing £5.6m contract runs from October 2009 to January 2011.

Certain products are on licences from various third parties and these licences are typically due for renewal every five years.  In addition to the product portfolio, certain other assets of Cambridge Laboratories will be acquired by Alliance, including the offices in Dublin and Newcastle. 

It is currently proposed that the support functions will be merged into Alliance’s existing offices in Chippenham, Wiltshire, resulting in approximately 25 potential redundancies.

Alliance believes the acquisition will be significantly earnings enhancing in the current financial year. Cambridge’s total sales, excluding the toxicology product, were £10.6m and the pro forma gross margin was £4.9m, in the year ended December 31 2009. The oncology products represented approximately 40% of the sales and together they have achieved 18% annual sales growth over the past three years.  

Under the terms of the deal, Alliance will pay a base consideration of £14.3m, with a deferred element subject to the ImmuCyst licence being extended to 31 March 2012. In respect of the base consideration, Alliance will make an initial £10.2m payment upon completion, followed by three scheduled cash payments. The value of the deferred element payment is between £1.6m and £2.1m, dependent upon certain sales targets for ImmuCyst.

The fund the initial case payment Alliance has conducted a £7.5m placing and Lloyds Banking Group is providing Alliance with an additional £4m term loan and has increased the company’s existing £5m working capital facility to £6m. 

Alliance expects the placing shares to be admitted on AIM by the 22 February. The company’s broker Numis Securities arranged the placing at a price of 26p per share. The placing has expanded the company’s investor base with both with existing and new UK-based investors subscribing for the new shares. "We are also delighted by the support received for the Placing and Acquisition from current investors and welcome four new blue-chip institutional shareholders to our share register in this significantly oversubscribed Placing", Dawson commented. 

Separately, Alliance also announced that it expects to declare a 23p per share final dividend in March’s preliminary results for the year ended 31 December 2009. In January’s update on the previous financial year Alliance said trading during was strong in the 2009 financial year and as a result, expected to report turnover for the full year of approximately £31 million, an increase of approximately 42 percent on the previous year.