Vivus said today it agreed to acquire U.S. and Canadian rights to the marketed exocrine pancreatic insufficiency treatment Pancreaze® (pancrelipase) Delayed-Release Capsules from Janssen Pharmaceuticals for $135 million—in what the buyer said was the first in a series of drug acquisitions designed to bolster its finances by growing revenues.

Approved in 2010, Pancreaze is a pancreatic enzyme preparation indicated for the treatment of exocrine pancreatic insufficiency due to cystic fibrosis or other conditions. Pancreaze consists of pancrelipase, an extract derived from porcine pancreatic glands, as well as other enzyme classes, including porcine-derived lipases, proteases, and amylases.

The pancreatic enzymes in Pancreaze are designed to act like digestive enzymes physiologically secreted by the pancreas.

Janssen parent Johnson & Johnson has not disclosed a 2017 sales figure for Pancreaze.

“Pancreaze serves as our initial product acquisition, one that will allow us to participate and be a meaningful product company in the global gastrointestinal marketplace,” Kenneth Suh, president and CEO of what is now Vivus’ wholly owned subsidiary of Willow Biopharma.

That market, according to GBI Research, is projected to grow to $48 billion by 2022.

“Through our disciplined product evaluation process, we are hopeful to acquire additional products and, through product life cycle management, leverage the Pancreaze platform for further growth,” Suh added.

Debt Restructuring Enables Purchase

Vivus said its planned acquisition was facilitated by a debt restructuring the company also announced today. Vivus said it entered into a $120 million senior secured note purchase agreement with investment funds managed by Athyrium Capital Management, with most of the new capital earmarked toward the Pancreaze acquisition.

Of the $120 million in notes to be purchased, Vivus said, $110 million will be issued concurrent with the closing of the Pancreaze acquisition—expected to close in the second quarter—and subject to the satisfaction of other customary closing conditions that include Hart–Scott–Rodino review.

The remaining $10 million will be available for issue when the company meets financial thresholds or repurchases its convertible notes at certain prices, Vivus said.

Concurrently with the senior secured notes issuance, Vivus has agreed to repurchase the $60 million of Convertible Notes held by funds managed by Athyrium, at a discount to par. The senior secured notes are due in 2024, will bear interest at 10.375%, and will be interest-only for the first three years. 

“The acquisition, coupled with today’s announcement to restructure a portion of our convertible debt with Athyrium Capital Management, are demonstrations of our plan to create a stronger and more financially capable Vivus,” stated John Amos, whose appointment as the company’s new permanent CEO was announced yesterday.

“We hope that the combination of a new product for us to promote along with the strengthening of our balance sheet will serve as initial stepping stones in our value creating strategic vision,” Amos added.

Amos, 51, served as executive chairman of Willow Biopharma from May 2017 to April 2018, and was previously CEO of ORIX Healthcare Capital, a private equity and venture capital investment company, from October 2012 to April 2017. Amos succeeds Thomas B. King, who had been interim CEO since December 31, 2017, but will remain on Vivus’ board.

Amos’ appointment, including a seat on the company’s board, was one of three senior managerial appointments announced by Vivus yesterday. The others were those of Suh, and of Scott Oehrlein as COO, a newly created position. Oehrlein, 52, served as global COO of Willow Biopharma from November 2017 to April 2018.

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