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DISCLAIMER
• This presentation includes certain forward-looking statements regarding our views with respect to our business, operations, current and future acquisitions, economic model, and our expected performance for future periods, as well as the pharmaceutical industry conditions. These statements are intended as “forward-looking statements” under the Private Securities Litigation Reform Act of 1995.
• Actual results may differ materially from our expectations due to the risks, uncertainties and other factors that affect our business. These factors include, among others, changing market conditions in the overall economy and the industry; the success of implementing our corporate strategies; the effects of federal, state and other governmental regulation on our business; current and future litigation; the success of new acquisitions and new product launches; our success in developing, manufacturing, acquiring and marketing new products; the success of our strategic partnerships for the development and marketing of new products; our ability to obtain and maintain regulatory approvals for our products; and the effects of competition from other generic pharmaceuticals and from other pharmaceutical companies; loss of key personnel; our ability to obtain additional funding or financing to operate and grow our business; our liquidity; and other factors detailed in our Annual Report on Form 10-K and our other reports filed from time to time with the Securities and Exchange Commission (“SEC”).
• These factors also include factors specific to our pending acquisition of Hi-Tech Pharmacal Co., Inc. (“Hi-Tech”), including the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with Hi-Tech; the failure to satisfy conditions to completion of the merger, including receipt of regulatory approvals; changes in the business or operating prospects of Hi-Tech; our ability to successfully integrate Hi-Tech businesses and its products; and other factors related to the acquisitions and integration of Hi-Tech.
• If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement you see or hear during the presentation reflects Akorn, Inc.’s current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made.
• For more complete information about Akorn, you should read the reports filed by Akorn with the SEC. You may get these documents for free through EDGAR on the SEC website at www.sec.gov, which you may also access through our website at http://www.akorn.com.
• You should also read the reports filed by Hi-Tech with the SEC which are similarly available through EDGAR and Hi-Tech’s website at http://www.hitechpharm.com.
3
COMPANY OVERVIEW
Who We Are…
Fast growing niche pharmaceutical company
with proven execution of strategic initiatives
and focus on niche dosage forms
Increasingly diverse product portfolio including
injectables, ophthalmics, oral liquids, nasal
sprays and topical creams and ointments
Extensive line of OTC branded products and
growing line of store-branded private label
products
73 products on file with FDA representing an
addressable market of over $6.8bn
Over 1,500 employees
Distribution to over 20 countries; global
opportunity through Akorn India
Hospital / Injectables
33%
Contract 4%
$86 $137
$256 $318
$1 Billion
2010 2011 2012 2013 2014E Goal
$540-$560
G
U
I
D
A
N
C
E
Top-Line Momentum Building…
Headquarters: Lake Forest, IL
R&D: Vernon Hills, IL Copiague, NY
Diverse Manufacturing: Somerset, NJ Amityville, NY Decatur, IL Paonta Sahib, India
L
O
N
G
T
E
R
M
G
O
A
L
~ 60% CAGR 2010-2014E
4
Pace of consolidation to continue in specialty pharma & generics
Generic market opportunity remains strong (generics ~83% of Rx volume)*
Elevated scrutiny on both regulatory environment & approval process
Over 100 drugs currently on FDA shortage list, majority are sterile injectables
Globalization provides new opportunities in high growth emerging markets
Commitment to R&D, recent acquisitions and focused growth strategy support Akorn’s position as a key generics player
*Data from IMS - YTD September 2013
MARKET DYNAMICS & OPPORTUNITY
Focus on quality and robust R&D processes enables continued success and supports future growth
Akorn produces over a dozen products that have appeared on the FDA shortage list; the approval of Akorn India will increase overall injectable capacities for the U.S. market
Acquisition of manufacturing assets in India have positioned Akorn to pursue a global strategy over the long-term
Successful business transformation has positioned company well to be a key acquirer in the industry
5
Be #1 in generic ophthalmics
Be a top 5 player in generic injectables
Increase market leadership position for niche, non-sterile dosage forms
Expand sales reach to over 30 countries
Become a $1 billion revenue company
STRATEGIC GOALS
US Generic Ophthalmology Competitive Landscape
# 15 in Sales # 10 in Molecules
US Generic Injectable Competitive Landscape
IMS Data for 12 months ended 10/31/13. Some data may have been excluded based on company judgment of comparability.
TOD
AY
3
– 5
YEA
R G
OA
LS
# 3 in Sales and Molecules
6 6
MANUFACTURING
CAPACITY
LEVERAGE
INFRASTRUCTURE
FOCUS ON OPHTHALMOLOGY
EXPAND NICHE
PORTFOLIO
ACCESS TO OTHER
GEOGRAPHIES
AKORN’S PROVEN ACQUISITION STRATEGY
2011 2012 2013 2014
Acquisition strategy is expected to contribute approximately $500 million in 2015 revenues
Brand portfolio
Branded Ophthalmic Portfolio
7
VERSAPHARM TRANSACTION
Entry into Dermatology & Further Product Diversification
Establishes Akorn in the generic dermatology therapeutic category, given VersaPharm’s pipeline focus on topical products
Addition of over 20 marketed products
Bolt on to Hi-Tech Acquisition
Ease of Integration
Strong Financial Profile
Complimentary product portfolio Provides a ready pipeline of products that can be manufactured at Hi-Tech
VersaPharm’s outsourced manufacturing strategy provides significant operational flexibility and facilitates a straightforward integration process
High double-digit growth and strong operating margins Expected revenue growth of over 50% in 2014 Operating margins of over 40%
TRANSACTION RATIONALE
8
KEY TRANSACTION TERMS
Purchase price • $440 million
Cash / share mix • All cash; debt financed
Funding mix • Fully-committed financing from JPMorgan Chase Bank, N.A.
Accretion • Immediately accretive; $0.10 to $0.12 in full year earnings per share
(excluding new pipeline launches, deal amortization and acquisition-related expenses)
Closing conditions
• Subject to customary closing conditions and regulatory approval
Transaction close
• Expected by the end of 3Q 2014
9
OVERVIEW % OF 2013 REVENUE BY THERAPEUTIC AREA
Over 20 generic pharmaceutical products marketed within the US and its territories
Total of 45 employees in 3 locations Portfolio covers niche therapeutic categories
and product formats Operates in markets which maintain a stable
competitive environment Leading product runs through a REMS
program R&D focus has been on complex
formulations Long-standing relationships with an
extensive network of CMOs
Other 9%
Hemophilia
29%
Dermatology
48%
Tuberculosis
14%
OVERVIEW OF VERSAPHARM
10
VERSAPHARM R&D CAPABILITIES AND PIPELINE
PIPELINE STATS OVERVIEW
• VersaPharm has built a robust pipeline of over
20 products, including 11 ANDAs filed with the
FDA
• Staff of 24 professionals based at the R&D
center in Warminster, PA
• Majority of the 11 filed products can be
manufactured at Hi-Tech
• Ability for filed products to be manufactured in-
house would leverage excess capacity
• Development efforts target dermatology and
other niche market segments
$250
$450
$700
$0
$200
$400
$600
$800
Filed UnderDevelopment
Total
IMS
Mkt
Siz
e (m
illio
ns)
IMS Market Size*
11 9+ 20+ Number of
ANDAs
*IMS Market Size is based on IMS Health data for the 12 months ended Feb 2014
11
INTEGRATE Acquisitions
• Leverage scale and diversification
• Tap into non-sterile platform
• Capture synergies
DEVELOP New
Products
• Continue R&D investment
• Strengthen Hi-Tech’s R&D pipeline
• Maturing R&D pipeline
• Private label opportunity
PURSUE Strategic
M&A
• Strategic fit
• Revenue enhancing
• Accretive
BUILD Brand
Platform
• Maximize value from recent acquisitions
• Leverage & expand existing ophthalmology sales infrastructure
EXECUTE India
Strategy
• Obtain regulatory approvals in US and RoW
• Effectively manage approval timelines
• Leverage new manufacturing capacity
STRATEGIC EXECUTION
12
HI-TECH INTEGRATION PLAN
Deal Close 6 months 12 months
Consolidate corporate functions
Implement Akorn Quality Policy
Optimize capacity across sterile ophthalmic plants (2)
Implement new R&D strategy
Achieve annual synergy
run-rate $15 - 20mm
INTEGRATE
Opportunity for significant cost savings due to overlap with minimal risk or disruption to business operations
13
3 6
2 3 1
22 25
12
2010 2011 2012 2013
Hi-Tech
Akorn
$7.0
$11.6
$15.9
$19.9
$39-$42 8.1% 8.4% 6.2% 6.3%
7.35%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
2010 2011 2012 2013 2014
($mm) % of Revenue
Long-term commitment to R&D to support growth
Capabilities
– Injectables – Ophthalmics – Topicals – Nasal Sprays – Oral Liquids
73 filings under review today with a total
addressable IMS market value of $6.8bn
Flexible R&D and pipeline strategy selectively targets Paragraph IV products
– 14 PIV Challenges
Goal to increase filings to 35-40 per year by 2015
AKORN R&D SPEND
DEVELOP
NUMBER OF ANDAs FILED
CONTINUED INVESTMENT IN R&D
Market value of filings per IMS Health 12 months ended March 2014.
14
A growing number of products have been with the FDA for over 36 months.
DEVELOP
MATURING PIPELINE
15
Increased emphasis on quality in India to support approval timeline in US and RoW
• Incremental staffing
• Training initiatives
• Compliance management
US FDA Filing Timeline
• First filing in Q1’14 – tech transfer of existing NDA product
• Followed by three other filings in 2014
• Begin manufacturing for US market in 2015
Support expansion into higher growth geographies
• Pursue WHO and PIC/S approvals
US FDA TIMELINE
Development Initiated
Exhibit Batch Produced
Filing Submitted to FDA
Approval
General Injectable
2013 2014 2015 2016
Cephalosporin
Carbapenem
Hormone
(NDA product transfer)
Facility Inspections
& Approvals
(Tech transfer acquired ANDA product)
(Develop ANDA product)
(Develop ANDA product)
INDIA
INDIA REGULATORY APPROVALS EXECUTE
16
14 37
68
225
300
14
262
368
0
50
100
150
200
250
300
350
400
2009 2012 2015
Cap
acit
y in
mil
lion
un
its
US India Total Capacity
2009 2012 2015
18.7 X 1.4 X
EXPANDED CAPACITY FOR US/ROW MARKETS
Akorn India’s manufacturing capacity
allows Akorn to become a significant player in the
$27 billion addressable global injectable market
EXECUTE
LEVERAGE INDIA INFRASTRUCTURE
17
BUILD
BRANDED OPHTHALMOLOGY PLATFORM
Plan to utilize and expand sales team to reinvigorate revenues of five branded ophthalmic products recently acquired from Merck and Santen
– Leverages existing ophthalmic sales force and physician relationships
– Elevates Akorn’s reputation with prescribers
– Creates a prescription branded ophthalmic strategy
– Broadens existing platform that includes TheraTears, Akten, and IC Green
Platform supports future acquisitions and in-licensing of branded ophthalmic products
Recent product acquisitions will add $54 - $59 million in revenues annually
18
AKORN’S ACQUISITION STRATEGY
HISTORY OF STRATEGIC ACQUISITIONS
• Increased capacity for US FDA products and expanded international presence with acquisition of injectable manufacturing assets in India
• Expanded product portfolio and strengthened position in niche area of OTC ophthalmics
• Acquisition of several branded products further expands Akorn’s position as a leader in U.S. ophthalmology products
• Accelerated growth rate as a result of acquisition of branded injectable portfolio from Lundbeck
2011
2012
2013
2014
• Brings critical mass to generics business and diversifies product offering and areas of expertise with niche products
• Expands product portfolio in niche product offerings, including the highly attractive niche dermatology market
M&A STRATEGY Continue to seek companies and/or products that build upon our expertise Acquire companies &/or products within same or adjacent markets – leverage pipeline, marketing, distribution channels, etc. Acquire companies that provide additional value to supply chain either through capacity or cost benefits
PURSUE
20
FINANCIAL MOMENTUM
REVENUE ADJUSTED EBITDA ADJUSTED EPS
54% CAGR (’10-’13) 75% CAGR (’10-’13) 51% CAGR (’10-’13)
Transformation has led to strong and consistent performance
$86 $137
$256 $318
2010 2011 2012 2013 2014
$540-560
G
U
I
D
A
N
C
E
$21
$45
$96 $111
2010 2011 2012 2013 2014
$183-188
G
U
I
D
A
N
C
E
$0.16
$0.35
$0.52 $0.55
2010 2011 2012 2013 2014
$0.79-0.82
G
U
I
D
A
N
C
E
All Value millions, except EPS
Note: Guidance excludes any financial impact of VersaPharm acquisition
21
STRONG BALANCE SHEET & FREE CASH FLOW
$12.3
$19.7
$26.2
$57.3
$0
$10
$20
$30
$40
$50
$60
$70
2010 2011 2012 2013
Improving cash flow generation
Strong synergy opportunity with Hi-Tech integration
Cash position > $50mm (as of Hi-Tech close in mid-April)
$600 million Term Loan B; 3.8x leverage at Hi-Tech close
– Total long-term leverage objective of 2.0-2.5x
$150M ABL revolving credit facility available
Strong Financial Position
Capital Priorities
Invest in business and growth strategy
Strategic M&A opportunities
De-levering
Cash from Operations ($mm)
22
Attractive industry dynamics
Injectable and ophthalmic products represent niche segments
with limited competition and high barriers to entry Acquisitions of Hi-Tech and VersaPharm add over 70 products in
attractive niche categories
Generic market opportunity remains strong core business – Generics make-up ~83% of all Rx volume
Proven Execution
Investing in infrastructure improvements
Clear strategy for sustained growth
Strong revenue growth and increasing margins, profitability and
cash flow
Strategic company and product M&A
Increasing capacity and improving efficiency
Upgrading to comply with ever-changing regulatory environment
Robust product pipeline and R&D program
Global expansion through Akorn India
Acquisitions / In-licensing opportunities
INVESTMENT HIGHLIGHTS