EUSA Pharma Inc, a transatlantic specialty pharmaceutical company focused on oncology, pain control and critical care, said it has entered into a definitive agreement to acquire all the outstanding shares of Cytogen Corporation for $22.6 million. To meet the acquisition consideration, and fund further investments, EUSA Pharma has concurrently raised over $50 million in an investment round, led by TVM Capital, an international venture capital firm.
Cytogen is a specialty pharmaceutical company with three oncology and pain control products on the American market, a specialist US sales force and an established commercial infrastructure.
Under the terms of the all-cash merger agreement Cytogen shareholders will receive $0.62 per share, representing a 35 per cent premium on the company's share price at the close of trading on 10 March 2008, and valuing the company at $22.6 million.
The Cytogen Board has approved the cash merger agreement and resolved to recommend that the company's shareholders adopt the agreement. Completion of the acquisition is conditional on the approval of a majority of Cytogen's shareholders and fulfillment of certain pre-closing conditions. Upon completion, EUSA intends to apply to delist all Cytogen's issued shares from the NASDAQ stock exchange.
To meet the consideration for the acquisition, provide working capital to integrate and refocus the Cytogen organisation and undertake further investments, EUSA Pharma has raised over $50 million in an investment fundraising. This investment round, which is conditional on the completion of the Cytogen acquisition, is led by TVM Capital and supported by EUSA's existing investors, Essex Woodlands, 3i, Goldman Sachs, Advent Venture Partners, SV Life Sciences, NeoMed and NovaQuest.
"The acquisition of Cytogen is of great strategic importance for EUSA as it completes the building of our transatlantic commercialization infrastructure, as well as fitting perfectly with our focus on oncology and pain control," said Bryan Morton, chief executive, EUSA Pharma. "Over the last 18 months EUSA has built a strong European organisation covering over 20 countries and marketing a portfolio of six specialty pharmaceuticals. Cytogen's products and US infrastructure are the ideal complement to our business, offering us the opportunity to commercialise a rapidly growing portfolio of medicines on both sides of the Atlantic."
The acquisition is expected to boost the sales of three of the company's products such as Caphosol, ProstaScint and Quadramet. Caphosol is a supersaturated calcium phosphate rinse indicated for the treatment of oral mucositis, a common and debilitating side-effect of radiation therapy and high-dose chemotherapy, and for the treatment of xerostomia.
ProstaScint is a monoclonal antibody-based agent used to image the extent and spread of prostate cancer. Quadramet is a radiopharmaceutical for the treatment of pain in patients whose cancer has spread to the bones.
Commenting on the acquisition, Rolf Stahel, chairman, EUSA Pharma, said, "The acquisition of Cytogen marks a step change in the growth of EUSA and completes the foundations of a world-class specialty pharmaceutical company. This transaction will transform our business, putting in place a truly transatlantic growth platform, and positioning the company as the partner of choice for future acquisitions and specialty product in-licensing."
The enlarged group will have broad sales and marketing capabilities, via direct sales forces in the US and across Europe, and through distribution partners in a number of territories including Canada, South America and Asia. EUSA will have a portfolio of nine marketed medicines and five late-stage development products. The acquisition of Cytogen provides EUSA with the capabilities to commercialize a number of these medicines on both sides of the Atlantic.
In addition, the enlarged group's transatlantic infrastructure provides the company with a strategic growth platform to exploit additional products through acquisition and in-licensing. With its highly focused business model, EUSA will have the opportunity to compete effectively with major players, making it an attractive partner for companies seeking specialist transatlantic commercial and late-stage development expertise.