Acacia is valued at €94.7m in sale to Eagle Pharmaceuticals

Acacia Pharma Group plc has been valued at €94.7m in a proposed sale to New Jersey-based Eagle Pharmaceuticals.

Eagle Pharmaceuticals was founded in 2007 and is a specialty pharmaceutical company focused on developing and commercialising injectable products, primarily in the critical care and oncology areas.

The proposed transaction has been approved by the boards of directors of both companies and is expected to close by the end of June, subject to approval by both sets of shareholders and other regulatory hurdles.

Eagle will pay €71.6m in cash, with the remaining €23.2m expected to be paid in Eagle common shares. The agreement also provides for Eagle to guarantee €25m of debt within Acacia.

The proposal provides Eagle with two currently marketed, acute-care hospital products with the potential to disrupt the marketplace – Barhemsys and Byfavo.

Barhemsys is the first and only antiemetic approved by the US Food and Drug Administration (FDA) for rescue treatment of postoperative nausea and vomiting (PONV) despite prophylaxis.

Byfavo is indicated for the induction and maintenance of procedural sedation in adults undergoing procedures lasting 30 minutes or less.

Acacia is based at The Officers’ Mess Business Centre in Duxford, and operates a US facility in Indianapolis. The company, also founded in 2007, has been “negatively impacted by physical access limitations caused by the global Covid-19 pandemic, and a significant latency of demand due to postponement of surgical procedures”. Accordingly, it would require a minimum of $115m of additional cash to fund operations to break even, based on projections assuming break-even by 2025.

Scott Byrd, chairman of Acacia, said: “I am proud of the progress that Acacia has achieved in bringing Barhemsys through clinical trials to the market and in the progress it has subsequently made in launching both this product and Byfavo in the US.

“Both products are designed to address clear and important hospital needs and to date have received positive feedback from customers and strong formulary acceptance, positioning them well for future success.

“However, the global Covid-19 pandemic has resulted in significant and sustained challenges that have significantly disrupted hospital operations, limited access, and dramatically increased the time and investment required for product launches.

“The Acacia board believes this proposed transaction represents an opportunity for Acacia shareholders to realise value for their investment in cash and, through Eagle, retain an interest in the future value that may be generated from Barhemsys and Byfavo being part of a larger portfolio of hospital products, in the hands of a well-capitalised company.

“We are therefore unanimously recommending this proposed transaction to our shareholders.”

Meanwhile, Eagle also experienced a difficult trading period through the earlier stages of the pandemic. In 2021, the company reported total revenue of $171.5m and a net loss of $8.6m.

Scott Tarriff, president and CEO of Eagle, said: “We are delighted to announce that we have agreed to terms for the proposed acquisition of Acacia.

“This will be a very important acquisition for us, both financially and strategically. In recent years, the pharmaceutical industry has witnessed slower uptake of new products and longer ramp periods. In the face of further challenges brought about by the Covid-19 pandemic, many smaller underfunded companies experienced significant hurdles launching products.

“We therefore believe that Eagle is well suited to drive uptake of these two new products, building from Acacia’s established foundation since its launch, through our experienced and specialised hospital-based sales organisation with minimal additional infrastructure.”

The company expects the transaction to be earnings-accretive in 2024.