Flamel Technologies announced on 14th March 2012 the acquisition of Eclat Pharmaceuticals, a specialty pharmaceutical company that is focused on the development, approval, and commercialization of niche brands and generic products.
About Eclat Pharmaceuticals
Prior to the acquisition, Eclat Pharmaceuticals was an affiliate of Deerfield Capital L.P., which together with its other affiliates is Flamel's largest shareholder.
Eclat has one approved product on the market, Hycet® (hydrocodone acetaminophen oral solution), as well as a suite of products in various stages of development.
Eclat's founder and chief executive officer is Mike Anderson. Mr Anderson has over forty years of experience in the pharmaceutical industry at companies including AH Robins, Schein Pharmaceutical, and KV Pharmaceutical Co.
Mike Anderson appointed Flamel's Chief Executive Officer
Steve Willard has resigned as Flamel's chief executive officer, and Mike Anderson, Eclat's chief executive officer, has become chief executive officer of Flamel.
Mr Willard will remain a director of Flamel and an employee of a US subsidiary of Flamel.
About the acquisition of Eclat Pharmaceuticals
Under the terms of the acquisition, a newly formed US subsidiary of Flamel has issued a $12 million senior note to Eclat Holdings, LLC, the former owner of Eclat, that is guaranteed by Flamel and its subsidiaries and secured by the equity interests and assets of Eclat.
The note is payable over six years only if certain contingencies tied to the approval and net sales of certain Eclat products are satisfied. The note accrues interest at an annual rate of 7.5%, payable in kind, until satisfaction of certain of the foregoing contingencies. Flamel also will pay Eclat Holdings an earnout payment of 20% of the gross profit generated by the Eclat launch products.
In addition to the note, Flamel has issued two warrants that are subject to shareholder approval:
- one warrant is exercisable for up to 2,200,000 American Depositary Shares (ADSs), each representing one Ordinary Share, of Flamel at an exercise price of $7.44 per share, and
- the second warrant is exercisable for up to 1,100,000 ADSs at an exercise price of $11.00 per share.
The warrants are exercisable for a six year term, and Flamel also has committed to registering the ADSs underlying the warrants with the SEC if shareholder approval is obtained. If shareholder approval is not obtained, the warrants will be cash settled, and the term will be extended to seven years.
The warrants also contain a limitation generally preventing them from being exercised during any time that would result in the holder beneficially owning greater than 19.985% of our ordinary shares.
Statements
Stephen H. Willard stated, "We are glad to have arrived at such a mutually beneficial agreement with Eclat, a company that complements Flamel in key areas, such as U.S. product development and market analysis. We believe we have structured this acquisition in the best interest of both parties by limiting risk to Flamel shareholders through an earn-out structure for the Eclat shareholders."
Mr Willard continued, "In addition to pipeline assets, the acquisition brings Mike Anderson and his strong industry experience and knowledge to Flamel. I am pleased that Mike has agreed to become Flamel's new chief executive officer, as I believe he is the ideal person to implement our planned transition to a more vertically integrated drug development model with an increased commercial capability."
Mike Anderson, Flamel's chief executive officer, commented, "I am excited at the potential to develop new products using the Medusa®, Micropump®, Trigger LockTM, and LiquiTime® platforms. I have been greatly impressed by the expertise, dedication, and passion that the scientists at Flamel bring to their work every day in creating solutions for Flamel's partners and believe that Flamel's best-in-class drug delivery platforms can serve as the foundation to create multiple new products with the potential to address important areas of unmet medical need."
Mr Willard concluded, "We expect that the combination of Mike's drug development and regulatory expertise with Flamel's best-in-class drug delivery platforms will create dramatic opportunities for the growth of Flamel Technologies. I am very much looking forward to working with Mike in my continuing role as a member of the Board of Directors."
Elie Vannier, the Chairman of Flamel's Board of Directors, commented, "The Eclat acquisition offers Flamel shareholders an important strategic complement to our leading drug-delivery technology platforms. We are excited at the new initiatives that Mike will be undertaking to leverage our leading drug delivery technologies. I would like to take this opportunity to express the Board's gratitude to Steve Willard for his service to the Company over the past twelve years. We are pleased that Steve has agreed to continue serving as a member of the Board of Directors and understand his wish to be able to be closer to his family in the U.S."
Flamel expects to furnish a report on Form 6-K with the U.S. Securities and Exchange Commission that will contain more detailed disclosure regarding this acquisition.