Cedarburg Pharmaceuticals

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AMRI To Acquire Cedarburg Pharmaceuticals, Inc.

Albany, NY (March 24, 2014) – AMRI (NASDAQ: AMRI) today announced that it has signed a definitive agreement to acquire all the outstanding shares of Cedarburg Pharmaceuticals, Inc. for $38.2 million in cash. The transaction, including $2.8 million of assumed liabilities, is valued at $41 million. Cedarburg Pharmaceuticals is a contract developer and manufacturer of technically complex active pharmaceutical ingredients (API’s) for both generic and branded customers. The transaction is consistent with AMRI’s strategy to be the preeminent supplier of custom and complex drug development services and product to both the branded and generic pharmaceutical industry.

“We are very excited to be joining efforts with Cedarburg as they bring a unique blend of expertise in complex API, a scalable business infrastructure and extensive customer relationships that will augment our existing capabilities and services,” said William S. Marth, AMRI’s president and chief executive officer. “This transaction represents an important first step in building out our API capabilities, broadens our offerings and customer base and provides us with an ideal platform to pursue additional value creation opportunities.”

Located in Grafton Wisconsin, Cedarburg Pharmaceuticals is a trusted, long-time partner to many of the industry’s leading pharmaceutical companies and is well respected for its expertise in developing technically differentiated APIs, its reliability of supply and track record of quality. Cedarburg’s core capabilities include controlled substances, steroids, prostaglandins, vitamin D analogs, conjugation chemistry and inorganics for the analgesic, ophthalmology and oncology therapeutic areas. Cedarburg has provided API development and manufacturing support for 13 approved products. Cedarburg’s attractive development pipeline includes multiple late stage products and is expected to be an important contributor for future growth.

On a stand-alone basis, Cedarburg’s forecasted full year 2014 revenue is approximately $19 million, with adjusted EBITDA between $5.5 million and $5.7 million, implying a purchase price multiple of approximately 2 times 2014 revenue and approximately 7 times 2014 adjusted EBITDA at the midpoint of the range. Adjusted EBITDA excludes any deal related costs or purchase accounting impacts.
The transaction is expected to close in early April 2014. Based on the anticipated timing of the close, the acquisition is expected to add between $13 and $14 million to AMRI’s revenue in 2014. AMRI anticipates full year run-rate synergies of approximately $1.5 million of EBITDA within 12 months of closing and the acquisition is expected to be accretive to AMRI’s 2014 adjusted diluted EPS in the range of $0.06 to $0.07 per share. Items excluded from non-GAAP financial results are expected to include all transaction-related costs, including amortization of intangible assets. The acquisition and associated fees are expected to be financed through cash currently held by AMRI.

Cedarburg is expected to continue to operate independently within AMRI’s API business unit. Chuck Boland, currently co-founder and executive vice president of business development will lead the Cedarburg team and report into George Svokos, AMRI’s senior vice president sales and general manager – API.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, such as EBITDA and adjusted diluted EPS, which are adjusted to exclude, among other things, the impact of interest income and expense, depreciation and amortization expense, and income tax expense or benefit. We exclude these items from the non-GAAP financial measures because they are outside our normal operations. There are limitations in using non-GAAP financial measures, as they are not prepared in accordance with generally accepted accounting principles, and may be different than non-GAAP financial measures used by other companies. In particular, we believe that the inclusion of supplementary non-GAAP financial measures in this press release helps investors to gain a meaningful understanding of our core operating results and future prospects without the effect of these often-one-time charges, and is consistent with how management measures and forecasts the Company’s performance, especially when comparing such results to prior periods or forecasts.  Non-GAAP results also allow investors to compare the Company’s operations against the financial results of other companies in the industry who similarly provide non-GAAP results. The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. Cedarburg Pharmaceutical’s projected 2014 EBITDA and the contribution to AMRI’s adjusted diluted EPS are only provided on a non-GAAP basis. It is not feasible to provide reconciliation to the most comparable projected U.S. GAAP measure because the excluded items are difficult to predict and estimate and are primarily dependent on future events.

Conference Call and Webcast

AMRI will hold a conference call at 10:00 a.m. ET on Monday, March 24, 2014 to discuss the transaction. The conference call can be accessed by dialing 888-455-2260 (domestic calls) or 719-325-2464 (international calls) at 9:50 a.m. ET and entering passcode 6793528. The audio webcast will be available live via the Internet and can be accessed on the company’s website at www.amriglobal.com. Replays of the audio webcast can also be accessed for up to 90 days after the call via the investor area of the company’s website at www.amriglobal.com/investor_relations/.

About AMRI

Albany Molecular Research, Inc. (AMRI) is a global contract research and manufacturing organization offering customers fully integrated drug discovery, development and manufacturing services. For over 22 years, AMRI has demonstrated its adaptability as the pharmaceutical and biotechnology industries have undergone tremendous change in response to multiple challenges. This experience, a track record of success and locations in the United States, Europe and Asia now provides our customers with SMARTSOURCING™, a full range of value-added opportunities providing customers with informed decision-making, enhanced efficiency and more successful outcomes at all stages of the pipeline. AMRI has also successfully partnered R&D programs and is actively seeking to out-license its remaining programs for further development. For more information about AMRI, please visit our website at www.amriglobal.com or follow us on Twitter (@amriglobal).

Forward-looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include, but are not limited to, statements regarding the pending acquisition of Cedarburg Pharmaceuticals, Inc., the projected revenue and non-GAAP EBITDA of Cedarburg, Cedarburg’s projected contribution to AMRI’s adjusted diluted EPS, the potential synergies associated with the transaction, the potential impact on AMRI’s operations and financial results, statements made by the company’s Chief Executive Officer, statements regarding the strength of the company’s business and prospects, statements regarding the actions taken to reduce cost and improve operating performance, and statements concerning the company’s momentum and long-term growth, including expected results for 2014 and possible investment opportunities. Readers should not place undue reliance on our forward-looking statements. The company’s actual results may differ materially from such forward-looking statements as a result of numerous factors, some of which the company may not be able to predict and may not be within the company’s control. Factors that could cause such differences include, but are not limited to, the ability of the Company to close the transaction with Cedarburg and effectively integrate Cedarburg’s business; possible negative impacts to the revenue expected to be received by Cedarburg following the closing of the transaction; trends in pharmaceutical and biotechnology companies’ outsourcing of chemical research and development, including softness in these markets; sales of Allegra® and the impact of the “at-risk” launch of generic Allegra®, the OTC conversion of Allegra® and the generic and OTC sales of Allegra in Japan on the company’s receipt of significant royalties under the Allegra® license agreement; the success of the sales of other products for which the company receives royalties; the risk that the company will not be able to replicate either in the short or long term the revenue stream that has been derived from the royalties payable under the Allegra® license agreements; the risk that clients may terminate or reduce demand under any strategic or multi-year deal; the company’s ability to enforce its intellectual property and technology rights; the company’s ability to obtain financing sufficient to meet its business; the company’s ability to successfully comply with heightened FDA scrutiny on aseptic fill/finish operations; the results of further FDA inspections; the company’s ability to effectively maintain compliance with applicable FDA and DEA regulations; the company’s ability to integrate past or future acquisitions and make such acquisitions accretive to the company’s business model; the company’s ability to take advantage of proprietary technology and expand the scientific tools available to it; the ability of the company’s strategic investments and acquisitions to perform as expected, as well as those risks discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on March 17, 2014, and the company’s other SEC filings. Cedarburg revenue and EBITDA, potential increases in AMRI’s adjusted diluted EPS, potential synergies available following closing of the pending transaction and other forward looking information offered by senior management today represent a point-in-time estimate and are based on information as of the date of this press release. Senior management has made numerous assumptions in providing this guidance which, while believed to be reasonable, may not prove to be accurate. Numerous factors, including those noted above, may cause actual results to differ materially from the guidance provided. The company expressly disclaims any current intention or obligation to update the guidance provided or any other forward-looking statement in this press release to reflect future events or changes in facts assumed for purposes of providing this guidance or otherwise affecting the forward-looking statements contained in this press release.

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Cedarburg Pharmaceuticals, Inc. to be Acquired by Albany Molecular Research, Inc.

Grafton, WI (March 24, 2014) — Cedarburg Pharmaceuticals, Inc. today announced that it has signed a definitive agreement to be acquired by Albany Molecular Research Inc. (NASDAQ: AMRI), a global contract research and manufacturing organization. The transaction is expected to close in early April 2014.

Theron E. Odlaug, Ph.D., Cedarburg’s executive chairman, commented, “The Company’s board of directors would like to thank Tony Laughrey, CEO, and his management team for their efforts in bringing the company to this point.  Mr. Laughrey added “It has been my pleasure to work with such a dedicated group of employees over the last seven years and I am sure the combination with AMRI will be welcomed by our customers.”

Wells Fargo Securities, LLC acted as exclusive financial advisor to Cedarburg Pharmaceuticals, Inc. and Polsinelli PC (Kansas City) provided legal support.

 About Cedarburg Pharmaceuticals, Inc.

Cedarburg Hauser Pharmaceuticals is an experienced contract development and manufacturing company for active pharmaceutical ingredients (API) and pharmaceutical intermediates that combines the benefits of working with a contract research organization (CRO) and a contract manufacturing organization.

 About Albany Molecular Research, Inc.

Albany Molecular Research, Inc. (AMRI) is a global contract research and manufacturing organization offering customers fully integrated drug discovery, development and manufacturing services. For over 22 years, AMRI has demonstrated its adaptability as the pharmaceutical and biotechnology industries have undergone tremendous change in response to multiple challenges. This experience, a track record of success and locations in the United States, Europe and Asia now provides our customers with SMARTSOURCING™, a full range of value-added opportunities providing customers informed decision-making, enhanced efficiency and more successful outcomes at all stages of the pipeline. AMRI has also successfully partnered R&D programs and is actively seeking to out-license its remaining programs for further development. For more information about AMRI, please visit our website at www.amriglobal.com or follow us on Twitter (@amriglobal).

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CMOs and CDMOs for Virtual Pharma

Emergence of Virtual Pharma and Need for CDMOs

Historically most innovative new drugs came from the labs of large pharmaceutical companies. The proverbial patent cliff has led to a decrease in revenue which in turn has led to increased pressure from investors and slashed R&D budgets. Rather than develop innovative compounds in house, large pharma has largely moved towards a licensing and acquisition strategy – choosing to acquire compounds or companies only after they have seen some clinical success and the probability of commercialization has drastically increased. This has led to the emergence or small and virtual pharmaceutical and biotechnology companies who rely on academic collaborations and entrepreneurship to develop new drugs and now hold the onus of innovation.

Small and virtual pharma companies are largely characterized by a lack of internal process development and manufacturing capabilities. Without internal capabilities, these companies rely on external contract development and manufacturing organizations (CDMOs) to manufacture their compounds in sufficient quantities to run early phase clinical trials. With their reliance on external resources to advance compounds, it is important for these companies to identify CDMOs whose business is aligned with their needs.

Identifying CDMOs whose business is aligned with the needs of small and virtual pharma companies can be a challenge. Peter Pollak and Andrew Bardot’s article Picking Tomorrow’s Winners, featured in the October 2013 issue of Contract Pharma featured outlines business development strategies utilized by large contract manufacturing organizations (CMOs) — those with multi-ton capacity and the luxury of picking and choosing their preferred projects. However it is quite evident that small and virtual pharma companies are underserved by large CMOs with the Pollak and Bardot article which goes so far as to say “this business is not attractive because of the small chance of success and small quantities of APIs being produced.”

Keys to a Partnership between CDMOs and Virtual Pharma

With small and virtual pharma companies relying on CDMOs to scale-up and manufacture their compounds, and large CMOs largely indifferent when it comes to these projects, a real opportunity is created for small and medium sized CDMOs who can align their business with the needs of these customers. The Pollak and Bardot article cites a number of 10,452 projects currently in R&D pipelines. With each of these projects representing an opportunity, it is apparent that there is sufficient demand to support business operations at both small and large CDMOs. Small and virtual companies are best served by CDMOs who:

  1. Focus on creating strong, customer-focused relationships
  2. Focus on serving customers with projects that fit core competencies
  3. Mitigate risk to ensure financial stability

The series of posts that follow will explore each of these in greater detail and demonstrate how small and virtual pharma companies can enter into mutually beneficial relationships with CDMOs.

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Alex Tretyakov Hired as Director of Process Development

Grafton, WI (February 11, 2014) – Cedarburg Hauser Pharmaceuticals (CHP), an experienced contract development and manufacturing organization (CDMO) specializing in small molecule APIs, has announced the hire Alex Tretyakov, Ph.D. as its Director of Process Development.

Alex_Tretyakov

“In his 25 plus years of industry experience Alex has demonstrated a real ability to streamline processes and drive growth via scientific excellence.” says CEO, Tony Laughrey. “We are counting on Dr. Tretyakov to help accelerate Cedarburg Hauser’s growth and are excited to have him on board.”

In his new role, Dr. Tretyakov will lead Cedarburg Hauser’s process and analytical development groups.  Dr. Tretyakov will also join CSO John Lynch in serving as the technical face of the company and infusing his unique insight into customer projects.

“Dr. Tretyakov has earned an excellent reputation in our industry by delivering on-time solutions with quality chemistry.” says Chuck Boland, Executive Vice President. “These attributes are important as they ensure the success of a project and help establish Cedarburg Hauser as an industry leader.”

Most recently, Dr. Tretyakov served as the Vice President of R&D at PCI Synthesis and previously held the same position at Cambridge Major Laboratories. Tretyakov holds a Ph.D in organic chemistry from the University of Oklahoma, and completed his M.S in organic chemistry and B.S. in Chemical Engineering at the Leningrad Chemical Pharmaceutical Institute.

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Recapping InformEx 2014

The 2014 edition of InformEx, held from January 21-24 in Miami, has come and gone. The Cedarburg Pharmaceuticals team was happy to escape the frigid Midwest winter and spend some quality time in the warmth of south Florida (even if most of it was spent indoors). With over 50 meetings scheduled at the Cedarburg Pharma booth, it was a busy yet productive week for the team.

Representatives from Cedarburg Pharmaceuticals at Habitat for Humanity during InformEx 2014.

Cedarburg Pharmaceuticals at Habitat for Humanity during InformEx 2014.

The week started off with a bang as a few members of the team headed out to Oakland Park, FL to participate in a day of giving back to the local community with Rx-360 and Habitat for Humanity Broward County. The Habitat for Humanity crew split into three groups – roofing, painting, and priming. Director of Project Management, Mark Millar and Marketing Manager, Bob Forner climbed up onto the roof and helped lay down sheet while Project Manager Rebecca Bishop joined the priming group.

Cedarburg Pharmaceuticals presents an exhibitor showcase at InformEx 2014.

Scott Mohler presents an exhibitor showcase at InformEx 2014.

Back in Miami the rest of the team kept tabs on the latest industry news and trends, attending a day of Exhibitor and Technology Showcases. Director of Business Development, Scott Mohler, took the microphone to close out the day as he presented Cedarburg Pharmaceutical’s Exhibitor Showcase. The showcase focused on Cedarburg’s expertise and experience developing and validating processes and included a topical reference to the hit TV show Breaking Bad.

Cedarburg Pharmaceuticals Booth at InformEx 2014

Our CEO shows off the booth.

The exhibition officially opened on Wednesday morning when Cedarburg Pharmaceuticals revealed its new booth design, featuring two large meeting areas as well as a more casual lounge area. The booth graphics highlighted some of the company’s strengths – Regulatory Excellence, Trusted Performance, Scientific Expertise and API Development to Commercial Manufacturing. The booth provided a great base for the team to network and conduct business.

 

Meeting with a potential customer at InformEx 2014.

Director of Project Management, Mark Millar meets with a potential customer at InformEx 2014.

The second half of the week was focused on meetings and making industry connections. The Cedarburg Pharma crew hosted over 50 meetings at their booth and networked with many more individuals both during the show and at post-show networking events. We expanded our knowledge base, learned about both industry trends and our customers, and also had the opportunity to discuss our capabilities and strengths. A special thanks to everyone who visited Cedarburg Pharmaceuticals at the show; we look forward to keeping in touch. If you weren’t at the show, feel free to reach out to us directly. We’d be happy to discuss your current or future API needs.

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Perampanel Gets Schedule III Classification From DEA

Perampanel - Chemical Structure

The United States Drug Enforcement Agency (DEA) has announced their decision to make perampanel and its salts schedule III compounds. The comment period on the decision will end on November 21, 2013, at which point the compound will officially be given the schedule III classification. Schedule III controlled substances have the potential for abuse and abuse may lead to moderate physical dependence or high psychological dependence. In this case, the schedule III classification was likely given due to feeling of euphoria and detachment that can be experienced while taking perampanel. The abuse potential was studied in a clinical trial conducted by Eisai, details of which can be found on the Eisai website.

Perampanel Overview

Perampanel is used in the treatment of epilepsy and works by preventing the increase in intraceullar Calcium via the selective blocking of AMPA receptors. This ultimately reduces the excitement of neurons. AMPA (α-amino-3-hydroxy-5-methyl-4-isoxazole-propionic acid) is a neurotransmitter which is thought to play a major role in epilepsy. A more detailed overview of perampenal can be found in the open access journal Therapeutics and Clinical Risk Management.

Perampanel was developed by Japanese drug maker Eisai who received EU approval in July 2012 followed by US approval in October 2012. Eisai will have exclusive marketing rights on perampanel in the United States until October 2017, although their method of use patent (US Patent #6949571) doesn’t expire until June 2021.

Impact of Schedule III Controlled Substance Classification

The classification of perampanel as Schedule III controlled substance has a substantial impact on the manufacturing, packaging, distribution and testing facilities chosen. Whether manufactured at an internal facility or at a contract manufacturing organization any controlled substance manufacturing or handling must be done at a DEA registered facility with security and storage that meet DEA specifications.

The classification also impacts a patient’s ability to access prescription refills. Schedule III compounds may only be refilled up to 5 times within 6 months of the prescription date, at which point the patient must obtain a new prescription.

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Cedarburg Hauser Upgrades API Manufacturing Plant

Sept 18, 2013 (Grafton, WI) – Cedarburg Hauser Pharmaceuticals (CHP) announces the improvement of its Active Pharmaceutical Ingredient (API) plant in Grafton, WI. These upgrades are a continuation of a long-term capital improvement initiative that results from an increased demand for the contract manufacturing of commercial APIs.

“Our customer’s demand for Cedarburg Hauser commercial APIs continues to grow; upgrading our facilities are a must as we grow with our customers” stated Cedarburg Hauser CEO Tony Laughrey. “We will continue to upgrade and expand our facilities, ensuring supply for our customers.”

The upgraded facilities are expected to facilitate in a 20-25% increase in API production. Improvements to the plant include the addition of a 30 ton process chiller, an additional 200 kilowatt backup generator and an industrial vacuum pump. CHP has also tripled its filtration capacity through the addition of new, large Aurora Filters.

“The upgrades to our manufacturing facility are all about operational efficiency” says John Flahive, Director of Operations. “With these improvements we are able to increase our functional capacity by approximately 20%, allowing us to produce more material in a shorter amount of time for our clients.”

About Cedarburg Hauser Pharmaceuticals

Cedarburg Hauser Pharmaceuticals is an experienced, contract development and manufacturing organization (CDMO), specializing in small molecule active pharmaceutical ingredients (API) and pharmaceutical intermediates. Cedarburg Hauser leverages a talented group of scientists and supporting staff, as well as a centralized approach to project management, to ensure on-time and on-budget completion of projects involving the development, scale-up, and manufacturing of complex APIs.

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Cedarburg Hauser Receives 2013 CMO Leadership Award

CMO Leadership Award in Productivity

Grafton, WI (August 08, 2013)Cedarburg Hauser Pharmaceuticals (CHP), a contract development and manufacturing organization (CDMO), announces the receipt of a CMO Leadership Award for excellence in productivity. This is the second consecutive year CHP has received an award in this category.

“Receiving a CMO Leadership Award in productivity for a second consecutive year is a testament to our team.” says Tony Laughrey, Chief Executive Officer of Cedarburg Hauser. “Productivity is vital to our success as it allows us to deliver on-time solutions to our customers.” Laughrey continued.  “At Cedarburg Hauser, productivity is ensured with a project management team that effectively brings together scientists and operational resources to meet and exceed our customer’s expectations.”

The CMO Leadership Awards are presented by Life Science Leaders, based on research conducted by Nice Insight. The awards recognize companies ranked in the top 20 percent of their respective categories, and are based on a survey of over 10,000 pharmaceutical and biotechnology executives conducted by Nice Insight. More information on the award can be found at www.cmoleadershipawards.com.

About Cedarburg Hauser Pharmaceuticals 

Cedarburg Hauser Pharmaceuticals is an experienced contract development and manufacturing organization (CDMO), specializing in small molecule active pharmaceutical ingredients (API) and pharmaceutical intermediates. Cedarburg Hauser leverages a talented group of scientists and supporting -staff, as well as a centralized approach to project management, to ensure on-time and on-budget completion of projects involving the development, scale-up, and manufacturing of complex APIs.

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CPhI World-Wide 2013 Meeting Portal

 

Event: CPhI World-Wide 2013
Dates: October 22-24, 2013
Location: Frankfurt, Germany

CPhI Logo

Representatives from Cedarburg Hauser Pharmaceuticals will be attending CPhI World-Wide 2013 from October 22-24 in Frankfurt, Germany. To schedule a meeting with our team, please fill out the short form below. A member of our team will get back to you in a timely manner to schedule a meeting.

Schedule a Meeting

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European Commission Clears US to Export APIs

European-Flag

With the deadline for compliance with the Falsified Medicines Directive looming, the European Commission (EC) cleared US based API manufacturers to export APIs to European Union (EU) countries in a much anticipated decision.  While many pharmaceutical companies and their contract manufacturers had worked to put contingency plans in place, the decision is certainly a welcome development and should help prevent costly supply chain interruptions.

As a bit of background, the EC put the Falsified Medicines Directive (the Directive) into place on July 1st 2011 to help prevent counterfeit drug importation into the Europe Union.  The Directive requires all Active Pharmaceutical Ingredients (API) to be confirmed as EU GMP compliant by the exporting country. This could be accomplished in one of three ways:

1)      The “third country” can apply to be listed as exempt by the European Commission, confirming that they have regulatory standards equivalent to those in the EU.

2)      Companies that export APIs must obtain written confirmation from their respective regulatory bodies confirming that the API is EU-GMP compliant.

3)      In extreme cases, waivers can be granted for manufacturers with EU-GMP certificates if options one and two cannot be met and it will create a drug shortage.

The first option offers the most straight-forward and easiest pathway to market and is the pathway the United States chose to take. With the listing, the US joins Switzerland, Japan and Australia on the white-list and can freely export APIs to EU countries. Without the last minute listing, US based companies would have been forced into the second option. The second option would have required companies to apply for an export permit from the FDA, accompanied by documentation showing the product was manufactured in an EU-GMP compliant manner. This process of obtaining an export permit may have added weeks to the API lead time, impacting drug supply.

It will be interesting to see how the new provisions impact other prominent API manufacturing companies including Brazil, China and India, as they have not obtained “third country” listing, and will look to certify each API shipment as EU GMP compliant.  There is also the issue of manufacturer’s in other countries without EU-GMP certificates that may not be able to receive written confirmation from their regulatory bodies. In these cases, EU based pharmaceutical companies may be forced to look at alternative suppliers.

Importantly, these provisions do not apply to investigational products. For more on this issue, I recommend this webinar, presented by Rx-360.

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