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This article was published 3/10/2017 (1446 days ago), so information in it may no longer be current.
This summer — after about three years of complicated option and loan deals — Medicure Inc., the Winnipeg-based specialty pharmaceutical company, completed the acquisition of the New Jersey-based drug component manufacturer, Apicore Inc.
Then on Tuesday, Medicure sold the company to an unnamed multinational pharmaceutical company at a substantial profit.
The selling price was US$105 million, with additional earn-out payments to Medicure expected over the next 18 months.
Because of the nature of the transactions that led to Medicure’s ownership of Apicore, its only financial consideration had been a $60-million loan. Medicure did not dilute its shareholders or use its own cash to acquire Apicore.
Albert Friesen, the founder, CEO and chairman of Medicure, said the transaction was one of the rare ones where all the parties benefit.
"When there are many players there are many players to please," Friesen said. "We structured these transactions so that everybody wins. That is what we try to do."
Friesen said the buyer is so big that the US$105-million transaction is insignificant for them.
Friesen said the sale will eventually leave Medicure with between $70 million and $80 million in cash on its balance sheet to acquire other drugs that have already gone through the commercialization process.
"This was a good return," Friesen said. "It gives us a nice balance sheet and we continue our focus to become a significant specialty pharmaceutical company in the cardio vascular space in the U.S."
After Medicure’s own novel heart drug failed in its Phase III clinical trials in 2007, wiping out about $100 million of investment, the company reinvented itself by doubling down on efforts to sell Aggrastat, a heart drug to which it had the U.S. rights.
Since then sales of the blood-thinner, orphaned by Merck some years ago but now used for more critical applications in terms of heart-attack patients, has grown substantially. Through the first six months of 2017, sales of Aggrastat were $15 million, compared to $13.8 million during the same period last year.
The company also has three generic heart drugs in development.
"Medicure got a great return on its investment and now has a war chest to grow," PI Financial analyst Robert Gibson said in a report to his clients. "Unfortunately, it will not benefit from the pipeline of profit-sharing ANDAs (abbreviated new drug applications or generic drugs) that Apicore was developing, which we believe had huge upside."
The sale will decrease expected revenue and operating profit. Gibson has dropped his 12-month target price to $13.25 from $17.40.
On Tuesday, Medicure shares closed down 45 cents, to $8.25.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.