Pharmaceutical Resources, Inc announced a definitive agreement to acquire Kali Laboratories, Inc., a generic pharmaceutical research and development (R&D) company located in Somerset, New Jersey, for approximately $135 million in cash and warrants. With 25 products in development, another 14 filed and awaiting regulatory approval, and an R&D organization of 55 employees, the acquisition of Kali immediately and significantly expands PRX's R&D capabilities. PRX also gains a 45,000 square foot manufacturing facility in Somerset.
"We view this acquisition as the first step toward significantly expanding the scope of our research and development capabilities, and substantially increasing the size of our product portfolio," said Scott Tarriff, president and chief executive officer of PRX. "This accretive acquisition immediately increases our net number of pending ANDAs from 26 to 37 and we now expect to submit, or license, at least 20 in 2004. It also diversifies our pipeline, provides more visibility with four additional first-to-file product opportunities, and will add more stability to our future earnings. Most importantly, it strategically enhances our prospects for sustained long-term growth."
With the acquisition of Kali, PRX, or its marketing partners, now expect to launch a total of at least 36 new products in 2004 and 2005. This represents half the total number of products currently marketed by PRX.
The acquisition of Kali is expected to add approximately $1.00 to earnings per share through 2005. The accretion in earnings per share is dependent primarily upon successfully gaining timely regulatory approval of certain significant new products, most notably the generic version of Ultracet.
On April 29, PRX expects to report first-quarter diluted earnings per share of approximately $.80, an increase of almost 20 percent from the same period a year ago. This performance, however, reflects a shift in product mix since the fourth quarter of 2003, and the delayed introductions of generic versions of Rebetol, Glucovance, and Catapres TTS.
Under the terms of the agreement, PRX will purchase all of the capital stock of Kali Laboratories, Inc. The cash acquisition, which is valued at approximately $135 million, will not require the approval of PRX's stockholders. The transaction will be accounted for using the purchase method and is expected to close in the second quarter of 2004.
"The entire Kali organization is very excited about the many opportunities that become available to us as new members of PRX," said Veerappan Subramanian, Ph.D., R.Ph., president and chief executive officer of Kali. "Our willingness to enter into this combination is based on the experience we have gained from working with this excellent partner.
Together, we can build a company whose success far exceeds what either of us could achieve individually. We believe the resources and capabilities that PRX can provide will help us to accelerate our development efforts and bring more products to market faster."