MISSISSAUGA, ON, July 29,
2024 /CNW/ - Cipher Pharmaceuticals Inc. (TSX: CPH)
(OTCQX: CPHRF) ("Cipher" or the "Company") announces
the signing of a definitive asset purchase agreement with ParaPRO
LLC ("ParaPRO") and the closing of the acquisition of the global
product rights for Natroba™ (Spinosad), as well as the commercial
sales team in the United States
for total consideration of US$89.5
million.
Acquisition Details
- Cipher has acquired the profitable and growing U.S. based
Natroba™ operations and global product rights to ParaPRO's Natroba™
and its authorized generic Spinosad, a topical treatment for both
head lice and scabies. There are currently no generic alternatives
for these products. The indication for scabies, which represents a
larger market than head lice, currently carries FDA exclusivity and
patent protection until 2033.
- Cipher paid US$80 million in cash
(satisfied from US$40 million cash on
hand and US$40 million from a new
credit facility) and issued US$9.5
million in common shares of Cipher to ParaPRO (1,474,097
shares at a deemed issue price of CAD$8.91).
- Cipher announces entering into a new credit agreement and
partnership with the National Bank of Canada, with a US$65
million revolving credit facility which was partially drawn
to fund the Natroba™ transaction, and will be available to provide
financing to fuel Cipher's continued future growth plans.
- Natroba™ (Spinosad) is widely recognized as one of the most
effective treatments for two parasitic indications in the United States. It is superior to
permethrin 1% for treating head lice and is the only treatment that
meets the FDA's criteria for a "complete cure" (elimination of all
signs and symptoms) in eradicating scabies infestations with a
single application.
- In addition, Cipher has acquired ParaPRO's highly experienced
and successful sales and marketing team, comprised of 50 employees.
They have a well-established network of physician relationships and
are highly experienced in state reimbursement, product marketing
and direct sales to healthcare practitioners in the areas of
dermatology, family practice, infectious disease, and
pediatrics.
- Cipher plans to submit Natroba™ for Health Canada approval
later in 2024 and to commercialize this unique product in
Canada directly through its
existing Canadian dermatology infrastructure.
- Cipher additionally plans to out-license Natroba™ in countries
outside North America. Cipher
believes that the North American and global market potential for
the product is significant. Existing head lice products in
North America and globally have
become ineffective from resistance developed by lice due to a gene
mutation, coupled with resistance by scabies mites to the most
often prescribed global products.
- Cipher plans to use the ParaPRO commercial footprint north of
Indianapolis in Carmel, Indiana as its U.S. headquarters and a
platform to launch unique complementary dermatology and infectious
disease products to Natroba™ across the
United States.
Craig Mull, Interim CEO
commented: "Our acquisition of the Natroba™ products and the
ParaPro commercial infrastructure is a pivotal step in our strategy
to establish a leading dermatology platform featuring unique,
innovative products. ParaPRO has a demonstrated strong sales, gross
margin and earnings profile, making it a natural fit with our
existing business. With this acquisition we have not only doubled
the current sales and earnings of Cipher's business today but we
have greatly enhanced the capabilities of our dermatology focused
strategy.
The founder of ParaPRO will continue be actively involved with
Cipher as a business partner, become our second largest
shareholder, and fully supports Cipher's strategy. As we continue
to execute our plan to acquire and in-license unique dermatology
products, such as our near-term pipeline product MOB-015 for the
treatment of nail fungus for the Canadian market, we believe
Cipher's growth potential is significant and will return
significant value to our shareholders.
In the U.S., permethrin 5% has approximately 71.4% market share
of the anti-parasitic market while Natroba™ (Spinosad) has
22.1%1. We believe there is tremendous market growth
opportunity in the U.S. market and globally given lice and scabies
have developed resistance to permethrin products (1%,5%), whereby
parents and patients are looking to a single treatment proven
option we believe is the unmet need that Natroba™ fulfills."
Bill Culpepper III, President
of ParaPRO commented: "We believe Cipher is an exemplary
partner to support and further expand the Natroba™ product line in
the U.S. and globally and will provide growth opportunities to the
U.S. based sales and marketing teams.
Credit Facility with National Bank of Canada
In conjunction with the above acquisition, Cipher is pleased to
welcome National Bank Financial Markets ("National Bank") as a new
financial partner as Lead Arranger and sole Bookrunner of a
syndicated credit facility (the "Facility").
Under the terms of the Facility, National Bank will provide
Cipher access to US$65 million
through a revolving credit facility plus an optional US$25 million accordion feature. The Facility
matures three years from closing and has an optional annual
extension clause.
Bryan Jacobs, CFO
commented: "We would like to welcome National Bank as a
business partner providing financial support to drive the growth
objectives of Cipher's business. This expanded Facility provides
Cipher with ample liquidity to not only fund the acquisition of
Natroba™ and ParaPRO's commercial assets but was designed to
provide further financial support to fund future accretive
acquisitions as we look to further build out our Canadian and U.S.
dermatology platforms."
Other Financial Matters:
As a result of entering into the new Facility, Cipher terminated
its previous undrawn credit facility with the Royal Bank of
Canada.
About Cipher Pharmaceuticals Inc.
Cipher Pharmaceuticals (TSX: CPH) (OTCQX: CPHRF) is a specialty
pharmaceutical company with a robust and diversified portfolio of
commercial and early to late-stage products, mainly in dermatology.
Cipher acquires products that fulfill unmet medical needs, manages
the required clinical development and regulatory approval process,
and currently markets those products in Canada, the U.S.,
and South America. Fogler Rubinoff LLP and Troutman Pepper
Hamilton Sanders LLP acted as advisors to Cipher. For more
information, visit www.cipherpharma.com.
About ParaPRO LLC
ParaPRO LLC, is a specialty pharmaceutical company focused on
innovating antiparasitic formulations that minimize the disruption
and economic burden on patients and families and providing support
for the broader professional community with the most current
insights, tools and resources that educate and inform. In 2021, the
company introduced the first product indication for scabies to be
approved by the U.S. Food and Drug Administration (FDA) in more
than 30 years and the only targeted topical therapy that meets the
FDA's new criteria for a "complete cure" of scabies. In 2023
ParaPRO invested in Aperta Biosciences to pursue development of
advanced therapeutic solutions for blepharitis and other
demodex-implicated diseases. Stifel, Dinsmore & Shohl LLP and
Osler, Hoskin & Harcourt LLP
acted as advisors to ParaPRO. For more information,
visit www.ParaPRO.com.
Forward-Looking Statements and Non-IFRS Measures
This document includes forward-looking statements within the
meaning of applicable securities laws. These forward-looking
statements include, among others, statements with respect to the
ParaPRO transaction, our plans and intentions with respect to
commercializing, out-licensing and marketing Natroba™ in
Canada and elsewhere, our plans
and intentions with respect to the introduction of additional
dermatological products in Canada,
the United States and elsewhere,
the potential for future acquisitions, our objectives and goals and
strategies to achieve those objectives and goals, as well as
statements with respect to our beliefs, plans, expectations,
anticipations, estimates and intentions. The words "may",
"will", "could", "should", "would", "suspect", "outlook",
"believe", "plan", "anticipate", "estimate", "expect", "intend",
"forecast", "objective", "hope" and "continue" (or the negative
thereof), and words and expressions of similar import, are intended
to identify forward-looking statements. By nature, forward-looking
statements involve inherent risks and uncertainties, both general
and specific, which give rise to the possibility that predictions,
forecasts, projections and other forward-looking statements will
not be achieved. Certain material factors or assumptions are
applied in making forward-looking statements and actual results may
differ materially from those expressed or implied in such
statements. We caution readers not to place undue reliance on these
statements as a number of important factors, many of which are
beyond our control, could cause our actual results to differ
materially from the beliefs, plans, objectives, expectations,
anticipations, estimates and intentions expressed in such
forward-looking statements. These factors include, but are not
limited to, publication of negative results of clinical trials; our
ability to enter into development, manufacturing and marketing and
distribution agreements with other pharmaceutical companies and
keep such agreements in effect; our dependency on a limited number
of products; our dependency on protection from patents that will
expire; integration difficulties and other risks if we acquire or
in-license technologies or product candidates; reliance on third
parties for the marketing of certain products; product approval
process by regulators which can be highly unpredictable; the timing
of completion of clinical trials, regulatory submissions and
regulatory approvals; reliance on third parties to manufacture our
products and events outside of our control that could adversely
impact the ability of our manufacturing partners to supply products
to meet our demands; we may be subject to future product liability
claims; unexpected product safety or efficacy concerns may arise;
we generate license revenue from a limited number of distribution
and supply agreements; the pharmaceutical industry is highly
competitive with new competing product entrants; requirements for
additional capital to fund future operations; products may be
subject to pricing regulation; dependence on key managerial
personnel and external collaborators; certain of our products are
subject to regulation as controlled substances; limitations on
reimbursement in the healthcare industry; extent and impact of
health pandemic outbreaks on our business; unpredictable
development goals and projected time frames; rising insurance
costs; ability to enforce covenants not to compete; we may be
unsuccessful in evaluating material risks involved in completed and
future acquisitions; we may be unable to identify, acquire or
integrate acquisition targets successfully; compliance with privacy
and security regulation; our policies regarding product returns,
allowances and chargebacks may reduce revenues; additional
regulatory burden and controls over financial reporting; general
commercial litigation, class actions, other litigation claims and
regulatory actions; the difficulty for shareholders to realize
in the United States upon judgments of U.S. courts
predicated upon civil liability of the Company and its directors
and officers who are not residents of the United States; the potential violation of
intellectual property rights of third parties; our efforts to
obtain, protect or enforce our patents and other intellectual
property rights related to our products; changes in U.S., Canadian
or foreign patent laws; inability to protect our trademarks from
infringement; shareholders may be further diluted if we issue
securities to raise capital; volatility of our share price; the
fact that we have a significant shareholder; our operating results
may fluctuate significantly; and our debt obligations will have
priority over the common shares of the Company in the event of a
liquidation, dissolution or winding up. We caution that the
foregoing list of important factors that may affect future results
is not exhaustive. When reviewing our forward-looking statements,
investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. Additional
information about factors that may cause actual results to differ
materially from expectations, and about material factors or
assumptions applied in making forward-looking statements, may be
found in the "Risk Factors" section of our MD&A for the year
ended December 31, 2023 and the Company's Annual Information
Form, and elsewhere in our filings with Canadian securities
regulators. Except as required by Canadian securities law, we do
not undertake to update any forward-looking statements, whether
written or oral, that may be made from time to time by us or on our
behalf; such statements speak only as of the date made. The
forward-looking statements included herein are expressly qualified
in their entirety by this cautionary language.
The Toronto Stock Exchange does not accept responsibility for
the adequacy or accuracy of this release.
SOURCE Cipher Pharmaceuticals Inc.