Acquisition of PharmInvent

RNS Number : 3466Q

Ergomed plc

29 November 2016

 

PRESS RELEASE

FOR IMMEDIATE RELEASE

Ergomed strengthens PrimeVigilance with acquisition of European pharmacovigilance and regulatory services business, PharmInvent

Complements existing PrimeVigilance services, consolidating market leading position and boosting sources of future growth

Expected to be immediately accretive to earnings

London UK 29 November 2016:  Ergomed plc ("Ergomed" or the "Company", LSE: ERGO), a pharmaceutical services and drug development company, today announces the acquisition of European PharmInvent Services s.r.o. ("PharmInvent"), a leading European pharmacovigilance and regulatory services business.

Background to the acquisition

This acquisition is consistent with Ergomed's stated strategy to grow its existing, profitable services businesses both organically and through bolt-on acquisitions. The transaction will expand and complement its existing pharmacovigilance division, PrimeVigilance, which has grown with a CAGR of 40% over the last 4 years and is having a very successful 2016. PharmInvent is led by an experienced, ex-regulatory agency team that offers drug safety and regulatory consultancy expertise. They also have an extensive network of international pharmacovigilance experts that provide advice and support on both local product safety and offer integrated global support for pharma and generic companies' products.

Following the completion of the acquisition PharmInvent will continue to be led by its founders, Dr Jan Petracek and Dr Martin Votava. Dr Petracek was formerly a Head of the Risk Management Section at the European Medicines Agency (EMA), while Dr Votava represented the Czech Republic in The Committee for Medicinal Products for Human Use at the EMA.

Combining PharmInvent's proven expertise with PrimeVigilance creates one of the largest international specialist service providers in the highly regulated drug safety sector. The enlarged business will have a broad international client list offering significant opportunities to cross sell, as well as an expanded range of services to attract new customers. From this strong position Ergomed's strategy is to actively expand the pharmacovigilance and regulatory division, especially in the US, thereby underpinning Ergomed's planned growth of revenues and group profitability.

Commenting on the acquisition Miroslav Reljanovic MD, CEO of Ergomed, said:

"This synergistic acquisition of PharmInvent both complements and consolidates PrimeVigilance's market-leading position in outsourced pharmacovigilance services for clients developing or selling drug products across the world. Combining these companies offers an expert and complete solution for clients and is consistent with our strategy to accelerate further this strongly growing part of our service business that addresses an expanding, multi-billion dollar market. We are therefore confident that this earnings accretive deal will quickly translate into significant and sustainable shareholder value. We are delighted to be working with Jan and his team and welcome them to Ergomed."

Jan Petracek MD, CEO of PharmInvent, added:

"These are very exciting times for PharmInvent. We have spent the last six years building our business and reputation and now look forward to significantly leveraging our position working alongside PrimeVigilance. Together, our skills will allow us to seize significant new opportunities as well as expand our offering to our existing customer base. My team and I are delighted to be joining the Ergomed team."

Deal terms and PharmInvent trading history

Under the terms of the deal Ergomed is acquiring 100 per cent of the issued share capital of PharmInvent for an initial consideration of €4.8 million (£4.1 million), with contingent consideration based on the achievement of EBITDA targets for 2016, 2017 and 2018 of up to an aggregate further €3.2 million (£2.7 million). The initial and contingent consideration are both to be satisfied 80% in cash and 20% in new Ergomed ordinary shares. The initial share consideration will be satisfied through the issuance of 640,576 new Ordinary Shares in Ergomed at an issue price of 128.78 pence per share.  Admission of these new Ordinary Shares is expected to take place at 8.00 a.m. on 2 December 2016 ("Admission").  Following Admission, the total number of Ordinary Shares in the Company will be 40,504,806. The Company holds no treasury shares and therefore the total number of voting rights is 40,504,806. The deal is expected to be immediately accretive to Ergomed's 2017 earnings per share.

In the year ended 31 December 2015, PharmInvent reported revenue of €3.0million and adjusted EBITDA of €0.7million and had net assets at 31 December 2015 of €1.1million. PharmInvent's revenue is expected to grow 35% to approximately €4.0 million (£3.4 million) for the year ending 31 December 2016. Adjusted EBITDA for the same period is expected to be approximately €0.8 million (£0.7 million).

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Enquiries:

Ergomed plc	Tel: [phone]
Miroslav Reljanovic (Chief Executive Officer)
Stephen Stamp (Chief Financial Officer)
Neil Clark (CEO - PrimeVigilance)
Numis Securities Limited	Tel: [phone]
Michael Meade / Freddie Barnfield (Nominated Adviser)
James Black (Joint Broker)
Stifel Nicolaus Europe Limited	Tel: [phone]
Jonathan Senior (Joint Broker)
FTI Consulting - for UK enquiries	Tel: [phone]
Simon Conway / Mo Noonan
MC Services AG - for Continental European enquiries	Tel: [phone]
Anne Hennecke

About Ergomed

Ergomed plc is a profitable UK-based business providing drug development services to the pharmaceutical industry and has a growing portfolio of co-development partnerships. It operates in over 50 countries.

Ergomed provides clinical development, trial management and pharmacovigilance services to over 100 clients ranging from top 10 pharmaceutical companies to small and mid-sized drug development companies. Ergomed successfully manages clinical development from Phase I through to late phase programmes.

Ergomed has a wide therapeutic focus, with a particular expertise in oncology, neurology and immunology and the development of orphan drugs. Ergomed believes its approach to clinical trials is differentiated from that of other providers by its innovative Study Site Management model and the use of Study Physician Teams, resulting in a close relationship between Ergomed and the physicians involved in clinical trials.

As well as providing high quality clinical development services, Ergomed is building a portfolio of co-development partnerships with pharma and biotech companies which share the risks and rewards of drug development. Ergomed leverages its expertise and services in return for carried interest in the drugs under development. Lastly, Ergomed recently acquired a pipeline of proprietary development products for haemostasis in surgical settings. For further information, visit: http://ergomedplc.com.

About European PharmInvent Services s.r.o.

Founded in 2010 by Dr Jan Petracek and Dr Martin Votava, in Prague, Czech Republic, PharmInvent offers a comprehensive range of pharmacovigilance and regulatory services to over 100 clients in the global pharmaceutical industry. Led by a team of highly experienced and qualified medical doctors and pharmacists, pharmacovigilance services include an outsourced global network of 95 Qualified Persons for Pharmacovigilance (QPPVs) in 50 countries, case management, risk management, audit, training and consulting services on the establishment and maintenance of pharmacovigilance systems. Regulatory services include strategic advice on regulatory strategy, clinical trial and protocol design and medical writing of regulatory submissions. PharmInvent's highly qualified workforce of 60 people includes 10 medical doctors, 28 pharmacists and 16 scientists with advanced degrees.

Following the acquisition PharmInvent will continue to be led by Dr Jan Petracek. Dr Petracek is the former Head of Risk Management Section at the European Medicines Agency, and the former Head of Pharmacovigilance, Strategy and Development at the State Institute for Drug Control in the Czech Republic. He studied Quality and Safety in Healthcare (MSc) at Imperial College London, and trained as a physician at Charles University in Prague (MD). He has written and/or contributed to multiple national and international guidelines, including ICH E2F, EMA Guideline on Safety and Efficacy Follow-up - Risk Management of Advanced Therapies, and parts of Volume 9A. Dr Petracek will also be joining the Board of PrimeVigilance.

Dr Martin Votava will continue as PharmInvent's Chief Medical Officer. Dr Votava represented the Czech Republic in The Committee for Medicinal Products for Human Use at EMA (2007-2010), while working as the Head of the Preclinical and Clinical Documentation Assessment Unit at the State Institute for Drug Control. He coordinated and provided assessment for centralized marketing authorization procedures and referrals as a rapporteur or a co-rapporteur for new active substances, biosimilar and generic medicinal products. He gained his education in pharmacology at Charles University in Prague (MD, PhD, Prof. Assoc.), where was Head of the Pharmacology Department at the 2nd Faculty of Medicine.

 

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