Mayne Pharma Group Ltd. · ASX:MYX
Mayne Pharma — Merger or Acquisition (October 2012)
52 slides from Mayne Pharma's merger presentation, Oct 4, 2012
Slide 1: Acquisition of Metrics, Inc.
For personal use only Mayne Pharma Group Limited Acquisition of Metrics, Inc. 4 October 2012
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer For personal use only IMPORTANT: You must read the following before continuing. The following notice and disclaimer applies to this presentation (Presentation) and you are therefore advised to read this carefully before reading or making any other use of this Presenta
Slide 3: Important Notice and Disclaimer (cont'd)
Important Notice and Disclaimer (cont’d) For personal use only This Presentation speaks only as of the date set forth on the cover page hereof. The information in this Presentation, therefore, remains subject to change. In addition, this Presentation contains statements which are either missing info
Slide 4: Foreign Selling Restrictions
Foreign Selling Restrictions For personal use only International Offer Restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. New Shares may not be offered or sold in any country outside Australi
Slide 5: Foreign Selling Restrictions (cont'd)
Foreign Selling Restrictions (cont’d) For personal use only Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies Ordinance (Cap. 32) of Hong Kong (the "Companies Ordinance"), nor has it been authorised by the Securities and Futures Commission
Slide 6: Agenda
Agenda For personal use only Section Page 1 Transaction overview 6 2 Overview of Mayne Pharma (pre acquisition) 8 3 Overview of Metrics 16 4 Strategic rationale 26 5 The new Mayne Pharma Group 33 6 Acquisition funding 39 7 Key risks 44 www.maynepharma.com 5
Slide 7: 1. Transaction overview
Unsaved Document / 11/07/2012 / 12:33 For personal use only 1. Transaction overview 6
Slide 8: Transaction overview
Transaction overview Agreement to acquire Metrics, Inc. (“Metrics”) for US$105 million up-front + up to US$15 million earn out For personal use only Metrics overview US based provider of contract development services to the pharma industry and also develops and manufactures niche generic products
Slide 9: 2. Overview of Mayne Pharma (pre acquisition)
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Slide 10: Overview of Mayne Pharma
Overview of Mayne Pharma Executive summary FY12 sales revenue by channel For personal use only Mayne Pharma is an ASX-listed specialty pharmaceutical company − Originally the drug delivery technology arm of FH 22% Out-licensed sales Faulding & Co In-market global sales today of developed product
Slide 11: Mayne Pharma operations
Mayne Pharma operations Develop and manufacture proprietary and generic products For personal use only using oral drug delivery technologies For out-licence For domestic sale Research and Mayne Pharma Australia development Contract services FY12 Sales revenue A$30.7m A$9.8m na A$11.4m Key products
Slide 12: Evolution of Mayne Pharma
Evolution of Mayne Pharma For personal use only 1845 1970s Development of enteric coated erythromycin (Eryc®) FDA approval and first US sales of Eryc® by Warner Lambert (Chilcott) 1980s Salisbury site acquired in 1983 by FH Faulding & Co Limited Development of delayed release doxycycline cap
Slide 13: Mayne Pharma international footprint
Mayne Pharma international footprint For personal use only FY12 sales revenue contribution RoW 15% Australia 46% Corporate registered office Melbourne, Victoria US 39% Product Distribution Partners (outside Australia only) Head office and manufacturing facility ® Boryung (Korea), Akbar Pharma (Sri
Slide 14: R&D pipeline
R&D pipeline Current Tier 1 product candidate pool representing US$5.8 billion in annual sales(1) For personal use only R&D program focused on the development of generic and proprietary complex Size of market Key patent modified release oral products Product Indication US$m(1) expiry SUBACAP® MP
Slide 15: SUBACAP – An Improved Anti-Fungal
SUBACAP® – An Improved Anti-Fungal For personal use only Overview of SUBACAP® Market potential Significantly improved formulation of itraconazole (anti- Targeting the global itraconazole market fungal) based on SUBA® technology (improved bioavailability) >US$500 million ex-wholesaler sales in 20
Slide 16: US Doryx
For personal use only US Doryx® ● Mayne Pharma FY13 US Doryx® sales are expected to be Warner Chilcott Doryx® 150mg tablet significantly below FY12 sales due to timing of generic (Weekly prescription volume) launch and destocking of the pipeline in line with the new 16,000 14,000 underlying demand p
Slide 17: 3. Overview of Metrics
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Slide 18: Overview of Metrics
Overview of Metrics Founded in 1994 with head office and principal 99,200 ft 2 facility located in Greenville, North Carolina For personal use only US based provider of contract development services to the pharma industry and also develops and manufactures niche generic products which it distrib
Slide 19: Metrics investment highlights
Metrics investment highlights For personal use only 1 A leading provider of contract pharmaceutical development services in the US 2 World class product development capability 3 Substantial existing product portfolio and pipeline 4 Flexible channel to market via own sales capability or third parties
Slide 20: A leading provider of contract pharmaceutical development services in the US
A leading provider of contract pharmaceutical 1 development services in the US For personal use only Value proposition: Valuable integrated service partner saving clients time and money Vertically integrated model offering analytical services, formulation and commercial manufacturing Services ov
Slide 21: World class product development capability
2 World class product development capability For personal use only 150 analytical chemists, including management and support staff 15 experienced formulation scientists supported by 10 technicians People 25 formulation scientists and analytical chemists dedicated to the development of own prod
Slide 22: Substantial existing product portfolio...
3 Substantial existing product portfolio... Overview Product Indication Market Size(1) For personal use only Large scale manufacturing facility with production Oxycodone HCl / Pain APAP tablet US$490 million capacity of 1 billion tablets per year with batch sizes typically ranging between < 1kg to
Slide 23: ... and pipeline
3 ... and pipeline Size of For personal use only Estimated Product Indication market(1) Metrics develops and brings generic drugs to target filing US$m market typically focussing on products which meet the following criteria: Syrup Pain 19 Filed − Schedule II-V products Capsule Headache and migrai
Slide 24: Flexible channel to market via own sales capability or third parties
Flexible channel to market via own sales 4 capability or third parties Midlothian Laboratories (“Midlothian”) Product revenue by distribution channel (LTM Jun 12) For personal use only In 2011 Metrics acquired Midlothian, a wholesale distributor of generic drugs Acquisition created a more flexib
Slide 25: Diversified US market footprint
5 Diversified US market footprint Metrics sales regions and office locations For personal use only Greenville, North Carolina Base Facility 99,200 ft2 Services − Analytical services − Formulation development − Commercial manufacturing − Generic drug development − Drug distribution Manufacturing ca
Slide 26: Strong financial track record
6 Strong financial track record Metrics Financials(2) Observations For personal use only (US$ millions) Revenue 2011 growth primarily driven by increased sales of existing Dec-10 Dec-11 LTM(1) products as well as the acquisition of Midlothian Contract services 25.6 23.9 24.1 LTM growth reflects
Slide 27: 4. Strategic rationale
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Slide 28: Acquisition highlights
Acquisition highlights Direct access to the world’s largest pharmaceutical market and participants For personal use only 1 Mayne Pharma’s US centric pipeline can be distributed directly through Metrics’ established wholesale channels Established and complementary relationships with a diverse arr
Slide 29: Direct access to the world's largest pharmaceutical market and participants
Direct access to the world’s largest 1 pharmaceutical market and participants Global pharmaceutical market by region For personal use only (US$ billions) 322 264 Provides direct access for Mayne Pharma’s existing products to the US market which accounts for ~40% of the global pharmaceutical market
Slide 30: Strengthens and diversifies revenue streams
2 Strengthens and diversifies revenue streams(1) Metrics provides Mayne Pharma with significant leverage into a large and growing US market For personal use only New Mayne Pharma Mayne Pharma Metrics Group By segment Branded Products Contract Services Generic Products 35% 22% 53% Contract Services 3
Slide 31: Expands and diversifies the new product pipeline
Expands and diversifies the new product 3 pipeline Combined portfolio (number of products) Observations For personal use only 35 ● Metrics has 9 current products with a further 11 in 30 25 5 11 development; 2 of which are pending approval with 5 20 1 4 the FDA and 9 others to be filed in FY13 15 2 5
Slide 32: Strong and complementary management team
Strong and complementary management 4 team Key employees For personal use only Established and experienced William Phillip (Phil) Hodges, President Metrics, Inc. leadership team will remain with Founded the Metrics business in 1994 30+ years experience in the pharmaceutical industry business d
Slide 33: Complementary business with significant combination opportunities
Complementary business to Mayne Pharma 5 with significant combination opportunities Material upside is expected from cross selling opportunities: no synergy benefits are assumed in FY13 guidance For personal use only Mayne Pharma cross Select current and pipeline Mayne Pharma products to be distri
Slide 34: 5. The new Mayne Pharma Group
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Slide 35: The new Mayne Pharma Group
The new Mayne Pharma Group For personal use only Contract Services Products Manufactures and develops proprietary and generic drugs, Develops pharma formulations and testing sold through distribution partners or own wholesale methodologies and provides contract manufacturing distribution Major clien
Slide 36: Opportunity to drive growth
Opportunity to drive growth For personal use only Immediate priorities (<12 months) Ongoing initiatives (>12 months) • Commence integration • Relevant Metrics US approved and • SUBACAP® commercialisation in immediately following completion filed products to be filed in Australia the US and Japan • K
Slide 37: Pro forma capitalisation
Pro forma capitalisation Sources & uses Pro forma summary balance sheet at 30 June 2012 A$m(1) A$m For personal use only Pro-forma Pro forma Pro forma as at 30 (3) Sources Uses Mayne Metrics adjust June 2012 Cash 11.6 - (1.4) 10.2 Equity 65.0 Up front payment to vendors 102.6 Receivables 3.8 12.1 -
Slide 38: The new Mayne Pharma Group FY13 guidance
The new Mayne Pharma Group FY13 guidance (1) A$m 1H13(2) 2H13 FY13(3) FY13 outlook For personal use only Revenue $25–30m $44–52m $69–82m Mayne Pharma forecast revenue growth (ex US Doryx®) of 6% on pcp driven by expected price increases and volume growth in select products - Mayne Pharma $19–22m $
Slide 39: The new Mayne Pharma Group outlook beyond FY13
The new Mayne Pharma Group outlook beyond FY13 For personal use only Solid revenue and margin growth expected across all business segments of the combined entity Mayne Mayne Pharma revenue expected to exhibit strong growth in FY14 (over FY13) through Pharma Improved sales and marketing of existi
Slide 40: 6. Acquisition funding
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Slide 41: Acquisition funding
Acquisition funding Equity raising For personal use only A$65.0m total equity raising, comprising: A$30.4m underwritten 1-for-1 pro-rata accelerated non-renounceable entitlement offer(1) (Entitlement Offer) Approximately A$5.7 million institutional tranche (Institutional Entitlement Offer) A
Slide 42: Acquisition funding: equity raising (continued)
Acquisition funding For personal use only Equity raising (continued) Issue price of A$0.20 per new share issued under the equity raising (New Share) Offer pricing 20.3% discount to theoretical ex-raising price (TERP)(1), with TERP calculated to reflect all offer components New Shares issued wi
Slide 43: Acquisition funding: equity raising (continued)
Acquisition funding For personal use only Equity raising (continued) Under the Entitlement Offer all eligible shareholders are entitled to subscribe for up to their 1-for-1 entitlement In addition, eligible retail shareholders may apply for Additional New Shares in excess of their entitlement th
Slide 44: Transaction timetable
Transaction timetable(1) Institutional Entitlement Offer opens Thursday 4th October For personal use only Institutional Entitlement Offer, Unconditional Placement and Conditional Placement bookbuild Friday 5th October MYX shares recommence trading Monday 8th October Notice of meeting dispatched to S
Slide 45: 7. Key risks
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Slide 46: Key risks
Key risks This section discusses some of the risks associated with an investment in Mayne Pharma. Mayne Pharma's business is subject to a number of risk factors both For personal use only specific to its business and of a general nature which may impact on its future performance and forecasts. Befor
Slide 47: Key risks: operational risks (continued)
Key risks For personal use only Operational risks (continued) Product liability Mayne Pharma’s business exposes it to potential product liability risks that are inherent in the marketing and use of its products and as and uninsured such Mayne Pharma has secured insurance to cover various product lia
Slide 48: Key risks: operational risks (continued)
Key risks For personal use only Operational risks (continued) Relationships Mayne Pharma remains exposed to competitor pressures in retaining and attracting customers. The loss of a key customer, the inability with customers to renew contracts on similar terms, or the inability of the business to at
Slide 49: Key risks: acquisition risks
Key risks Acquisition risks Completion risk Completion of the transaction is expected mid November 2012. Material conditions precedent are Mayne Pharma obtaining committed debt For personal use only and equity funding by 12 December 2012 (Funding Condition), Metrics obtaining stockholder approval (w
Slide 50: Key risks: acquisition risks (continued)
Key risks For personal use only Acquisition risks (continued) Analysis of Mayne Pharma has undertaken financial, business and other analyses of Metrics in order to determine its attractiveness to Mayne acquisition Pharma and whether to pursue the acquisition. It is possible that such analyses, and t
Slide 51: Key risks: general risks
Key risks For personal use only General risks Share price The market price of Mayne Pharma Group shares will fluctuate due to various factors, many of which are non-specific to Mayne Pharma fluctuations Group, including recommendations by brokers and analysts, Australian and international general ec
Slide 52: Key risks: general risks (continued)
Key risks For personal use only General risks (continued) Change in Mayne Pharma Group is subject to the usual business risk that there may be changes in accounting policies which impact Mayne Pharma accounting policy Group. Asset As a consequence of the global financial crisis, ASIC has specificall
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