Bentley Pharmaceuticals, Inc. announced that its board of directors has completed a strategic review of the company and unanimously approved a plan to separate its drug delivery business from Bentley in a transaction that will result in two independent and highly focused public companies. The board of directors also announced its intention to explore strategic alternatives with respect to its generics business.
"The Board believes that by separating Bentley into two focused and better understood companies, the opportunities for both the drug delivery business and the generics pharmaceutical business could be substantially enhanced and greater value could be created than under the current structure," said James R. Murphy, chairman and CEO, Bentley.
"Operating separately will allow each company to benefit from greater strategic and managerial focus. The separation will enable the two businesses to compete more effectively in their respective markets and optimize their respective business goals, research initiatives and capital requirements. We believe that our decision to separate our two businesses and to explore all available strategic alternatives with respect to the generics business may result in increased value for our shareholders," added Murphy.
Completion of the proposed spin-off is subject to numerous conditions, including final approval by Bentley's Board of Directors and the filing and effectiveness of a registration statement with the Securities and Exchange Commission.
Bentley plans to spin off the drug delivery business as an independent, publicly traded company to be known as CPEX Pharmaceuticals, Inc. Bentley's drug delivery business segment reported revenues of $8.4 million in 2006. Bentley plans to implement the spin-off through a taxable stock dividend of all CPEX Pharmaceuticals common stock to Bentley shareholders.
Bentley will focus on the generics pharmaceutical business. Until CPEX Pharmaceuticals can fully establish its own operations, Bentley will provide transitional services, including managerial, operational and administrative support, for a period up to 24 months. The key executive officer positions, as well as the Board of Directors, of each of the companies will be named prior to the consummation of the plan.
"The generics and drug delivery businesses have very different strategic goals, key performance indicators and shareholder expectations. Because the synergies between these businesses are limited, we concluded that separating them at this time would result in greater transparency for our shareholders, and allow the businesses to compete more effectively in their respective markets," said Murphy.
CPEX Pharmaceuticals will focus on developing innovative drug delivery technologies based on the company's unique CPE-215 permeation enhancement technology. This technology has been validated through commercialisation of Testim, a testosterone gel marketed by Auxilium Pharmaceuticals and is also currently being used to develop Nasulin, an intranasal insulin product. Following the consummation of the plan, CPEX Pharmaceuticals will be based in Exeter, NH and will employ approximately 20 individuals.
The generics pharmaceutical business is the larger of the two business segments of Bentley, with revenues in 2005 and 2006 of $91.6 million and $101.1 million, respectively. Following the consummation of the plan, Bentley will maintain its significant commercial and manufacturing presence in Europe and continue to develop, market and license current and pipeline pharmaceuticals. Following the spin-off, Bentley will employ approximately 425 individuals, including its current senior management team in Spain. Bentley will also continue to maintain corporate headquarters in Exeter, NH.
The company's current manufacturing, sales and marketing, and R&D centers in Europe will be virtually unaffected by the spin-off.
"Over the past five years our generics business has grown from $38.7 million in revenue to $101.1 million, and is the 7th largest generic company in Spain. Along the way it has modernized its facilities, improved efficiencies in manufacturing and product introduction, and built a sophisticated sales and marketing infrastructure focused on capturing market opportunities within Spain and outside its borders. We believe that the time is right to conduct a review of the strategic alternatives available to the generics business and that such review can deliver greater value for our shareholders," said Murphy.
At this time, the company intends to pursue all options available to seek the highest value for shareholders. However, the company can give no assurance that either a transaction involving the generics business or that the spin-off of the drug delivery business will occur or that Bentley's business will not be affected by the uncertainty arising from any potential transaction.