Sector News

Horizon Pharma explores potential stake sale – sources

June 29, 2016
Life sciences

Specialty pharmaceutical company Horizon Pharma Plc has hired Bank of America Corp to help it explore selling a significant equity stake to an investor that would bolster its balance sheet, people familiar with the matter said on Monday.

It is not clear how Horizon would use the proceeds, but the move illustrates the Dublin, Ireland-based company’s drive to shore up its capital and position itself for new acquisitions. Horizon has a market capitalization of $2.4 billion and a debt pile of close to $1.3 billion.

Horizon is in the early stages of exploring new financing options, and there is no certainty that any transaction will occur, the people said, asking not to be identified because the deliberations are confidential.

“We are always pursuing potential transactions and our preferred capital source is debt raised alongside an announced transaction. We have no plans to do any equity transactions to add capital to our balance sheet,” Horizon said in a statement.

Bank of America declined to comment.

Horizon makes drugs to treat ailments that include arthritis, inflammation and orphan diseases. It had net sales of $757 million in 2015.

Horizon Chief Executive Tim Walbert has been vocal about his desire to expand Horizon through acquisitions at a time when valuations throughout the life sciences sector are down significantly from their 2015 highs.

Walbert has also said the company has the ability to raise a significant amount of additional financing from debt markets, citing Horizon’s relatively low ratio of net debt to earnings before interest, taxes, depreciation and amortization.

The valuations of specialty pharmaceutical companies have fallen partly because Canadian peer Valeant Pharmaceuticals International Inc’s (VRX.TO) drug pricing practices have attracted scrutiny from regulators and politicians.

Valeant, as well as rival Endo International Plc (ENDP.O), have been contemplating asset sales as they seek to pay back debt accumulated during years of aggressive dealmaking, Reuters has reported.

Earlier this year, Horizon acquired Crealta Holdings for $510 million, adding its gout treatment to a portfolio of drugs focused on rare diseases, rheumatology and primary care.

Walbert has said he wants to increase Horizon’s focus on rare diseases, which would pivot the company away from primary care, where pricing pressure has been more pronounced.

In 2015, Horizon raised $1.75 billion through four debt and equity offerings. As a result, it lowered the annual cash interest rate on its debt from 7.7 percent to 4.7 percent.

Horizon last year launched and then abandoned a hostile bid to acquire peer Depomed Inc (DEPO.O), after a California court ruled that there was a risk that the overture was based on improper use of confidential information.

By Greg Roumeliotis and Carl O’Donnell

Source: Reuters

comments closed

Related News

May 15, 2022

Novo Nordisk and Flagship Pioneering announce a strategic collaboration to create a portfolio of transformational medicines

Life sciences

The companies will explore opportunities to apply Flagship’s innovative bioplatforms – an ecosystem that currently comprises 41 companies – to scientific challenges in disease areas within cardiometabolic and rare diseases and initiate research programmes based on these.

May 15, 2022

BD, Babson set sights on bringing simple blood collection into the home

Life sciences

BD is expanding its long-running partnership with the blood collection company Babson Diagnostics. The two companies have been working together since 2019 on a device that can gather small volumes of blood from the capillaries in the fingertip without requiring any specialized training, and beginning with a focus on supporting primary care in retail settings.

May 15, 2022

CSL’s $11.7B Vifor buy, 2021’s biggest biopharma M&A deal, hits antitrust delay

Life sciences

Wednesday, Australian biotech CSL said (PDF) the regulatory review of its $11.7 billion acquisition of Switzerland’s Vifor Pharma will take “a few more months,” suggesting it won’t be able to close the transaction by June 2022 as previously expected.