CORRADO CASTELLUCCI, HEAD OF RECORDATI RARE DISEASE
FEDERICA DE MEDICI, INVESTOR RELATIONS AND CORPORATE
OPERATOR: Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Recordati to Acquire of EUSA Pharma Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions.
At this time, I would like to turn the conference over to Ms. Federica De Medici, Investor Relations and Corporate Communications. Please go ahead, madam.
FEDERICA DE MEDICI: Thank you, Gavit [ph]. Good afternoon or good morning, everyone, and thank you for attending the conference call today. I am pleased to be here with our new Chairman, Andrea Recordati, our new CEO, Rob Koremans, Luigi La Corte, our CFO, and Gabriele Finzi, Head of Business Development and Corrado Castellucci, Head of Recordati Rare Disease.
With a short presentation, we will provide more color on the strategic rationale and present the transaction in more detail. A set of slide is available on our website under the Investor Section. At the end of the presentation, we will answer any questions you may have.
And now I leave the floor to Andrea.
ANDREA RECORDATI: Good afternoon, and morning, everyone. Thank you for attending our conference call today, where we are pleased to give you some more color around the transaction that we just announced this morning. A transaction that we feel offers great growth opportunity and also enhances our opportunity to further build scale and a new for us and very attractive and unreserved for typical [ph] area and therefore a further diversification for our Rare Disease business.
In line with our strategy of complementing organic growth with value- accretive M&A, we see the acquisition of EUSA Pharma as an excellent opportunity to further expand, like I said, and reinforce our Rare Disease franchise. And building on top of a business which have already benefited solid organic growth being clearly metabolic and endocrinology, as we communicated in our Q3 2021 results. The acquisition broadens Recordati Rare Diseases therapeutic focus with the entry to the rare and niche oncology area and is another step in fulfilling our mission to improve the lives of patients by delivering treatments that address serious unmet medical needs.
We are acquiring not only one single product, but a well diversified portfolio of products, adding in-market assets [ph] with a growing trajectory, a portfolio which is expected to generate over €150 million of revenue by 2023, and with expected peak sales of around €250 million.
Just a few words on the main products of the portfolio. Qarziba is an anti- GD2 monoclonal antibody, it's the first product approved in Europe, indicated for high-risk neuroblastoma approved for both new and refractory patients in EU and other countries with a potential future expansion in the US and China. Sylvant, an anti-IL-6 monoclonal antibody, also has a strong potential since it's the first and only one approved for Idiopathic Multicentric Castleman's disease, iMCD in the US and the EU. This product has the US as the main current market, but we expect a global growth potential for such products. Fotivda is an oral highly selective small molecule tyrosine kinase inhibitor, approved for first-line treatment of advanced renal cell carcinoma. And Caphosol is a global medical device for oral mucositis due to the chemo and radio therapy, a niche product sold globally.
With the acquisition, we are also going to complement our existing global footprint and expertise with new capabilities which will provide a platform for future expansion and future and future and further expansion in these areas. This transaction is clearly very coherent with our strategy of growth acquiring assets, able to create long-term value, and we expect EUSA to contribute approximately €50 million of EBITDA level in 2023, and with EBITDA margins in line with the Rare Disease segment.
You could turn to the next page, please. So this slide aims to provide you with bit more color around the company that we are acquiring. EUSA is a world-class, biopharmaceutical company with its current main reference market being EMEA, which represents almost 70% of sales, but with huge future growth potential also in the US, which is currently at 20% of sales. The pie chart shows a breakdown of the last 12 months, net sales at the 30th of June of 2021, which are approximately €130 million. It has a global commercial presence through direct operations mainly in the US and…in EU and in the US and also some presence in other countries globally, and complemented also with strategic partnerships where they don't have a direct presence.
The company has a profitable cash generating business, and a unique and diversified portfolio of 4 rare and niche oncology products, as I said, with a growing trajectory. Company overall employs more than 200 people, with a strong patient-centric culture and a deep disease area expertise which is surely to be complementary to Recordati's knowhow.
As we are adding a new specialty Rare and niche oncology to our product portfolio, we want to focus on maintaining skills, knowledge, business knowhow, customer relations and interactions, and consider delivering crucial therapy options to patients and obviously the healthcare providers. Qarziba and Sylvant combined represent more than 80% of EUSA
revenues. We are protected, these 2 products are protected by long-lasting patent protection and market exclusivity, as you can see at the bottom part of the slide, but are also biological products with complex manufacturing processes, which makes…which we feel gives them further protection versus potential generic entry of also post patent expiry.
This portfolio [indiscernible] unique assets is managed through a highly efficient and commercial infrastructure like I mentioned before, with globally market access to direct present selective partnerships, which obviously offers Recordati a platform for future expansion in this area.
Moving on to the next slide, financial snapshot. So here we want to give you a bit more details clearly around you know the transaction, the actual transaction details. As mentioned, we expect this acquisition to consider [ph] €150 million of sales in 2023 with peak sales of €250 million, and EBITDA level that we expect to be around €50 million by 2023 with ongoing margin in line with the average of the Rare Disease segment.
Some non-recurring costs in 2022 and 2023 will come from ongoing manufacturing tech transfers and also the acquisition integration expenses, which are estimated to be around €35 million and clearly are also subject to the timing of the closing. The value of the transaction, i.e. the enterprise value is of €750 million, and the payment of a consideration would be funded by existing liquidity and bridge financing fully underwritten by JP Morgan and Mediobanca. It's a healthy cash generating business, I would like to stress with net debt of €26 million at the 30th of June of this year.
We expect our leverage after the transactions to be below 2.5 times closing and to return below 2 times by 2023. The transaction does not change our dividend policy, which is confirmed to be about 60% of
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Recordati S.p.A. published this content on 07 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 December 2021 10:01:07 UTC.