EXTON, Pa., Aug. 13, 2021 (GLOBE NEWSWIRE) — Recro Pharma, Inc. (NASDAQ: REPH), a contract development and manufacturing organization (CDMO) dedicated to solving complex formulation and manufacturing challenges for companies developing oral solid dose drug products, today announced its acquisition of IRISYS, a San Diego-based CDMO that possesses capabilities that complement and expand those of Recro. Recro acquired IRISYS for approximately $50 million in a combination of cash, shares of Recro common stock and a seller promissory note. With its acquisition of IRISYS, Recro has transformed itself into a full service CDMO with operations on both the East and West Coast of the U.S. capable of offering its now expanded global client base access to services spanning from pre-Investigational New Drug (IND) development to commercial manufacturing and packaging for wide range of dosage forms.
“Today’s acquisition of IRISYS is truly a transformative transaction for Recro. The joining of these two companies creates an organization that is ideally positioned to achieve Recro’s previously disclosed four-pronged strategy for growth, which includes strengthening the organization’s leadership and talent, expanding and diversifying our client base, fortifying our financial position, and enhancing our capabilities and competencies,” said David Enloe, president and chief executive officer of Recro. “Adding the personnel, facilities, capabilities and global customer base of IRISYS advances each of these goals and positions Recro for sustainable, profitable growth moving forward. We welcome the members of the IRISYS team to the Recro family and are eager to begin implementing the integration of the companies.”
IRISYS is a full service CDMO based in San Diego, CA with capabilities that range from formulation development to commercial manufacturing for various dosage forms including oral liquids, sterile injectables, tablets, topicals, liquid/powder filled capsules, ophthalmic droppers, liposomes and nano/microparticles. IRISYS serves a diverse, global client base within the biopharmaceutical industry with its nearly 40 clients located in six different countries around the world. This includes manufacturing support for four commercial and near-commercial products. Importantly, IRISYS recently added automated, aseptic fill/finish and lyophilization capabilities to its existing facility, offering a new key avenue for significant near-term growth. IRISYS expects to generate $15.4 million in revenue for full year 2021 and has approximately $23 million spanning its contracted backlog and vetted sales pipeline.
Strategic Rationale
Recro’s acquisition of IRISYS was driven by a number of compelling factors covering the four prongs of the company’s ongoing growth strategy.
Enhances Capabilities and Competencies:
- Expands technical focus beyond oral solid dose to include sterile injectables oral liquids, tablets, topicals, liquid/powder filled capsules, ophthalmic droppers, liposomes and nano/microparticles;
- Adds new capabilities in the areas of aseptic fill/finish and lyophilization; and
- Establishes bi-coastal footprint from which to better serve clients within the U.S., as well as globally.
Expands and Diversifies Client Base:
- Adds more than three dozen clients spanning six countries, reducing Recro’s customer dependency risk;
- Provides greater balance between our clinical and commercial project mix; and
- Diversifies portfolio from exclusively oral solid dose to a balance of multiple advanced dosage forms and oral solid dose.
Strengthens Leadership and Talent:
- Supplements Recro’s seasoned leadership team with strong scientific talent credited with driving success at IRISYS; and
- Provides access to West Coast human capital hotbed.
Fortifies Financial Position:
- Adds profitable business with IRISYS full year 2021 estimated revenues of $15.4 million, net income of $2.1 million and EBITDA* of $2.8 million; the corresponding anticipated improvement in Recro’s EBITDA will be beneficial to Recro’s debt covenants under its credit agreement. Recro intends to provide updated financial guidance when it releases third quarter 2021 earnings;
- Offers significant revenue diversification, reducing financial reliance on any particular client or service offering;
- Becomes accretive by the fourth quarter of 2021, excluding integration costs; and
- Enables transaction-related paydown of credit facility and an extension of the due date, leading to improved cash flow.
In addition to the advancement of the company’s four-pronged growth strategy, the acquisition was also driven by key synergies between Recro and IRISYS within business development, clinical development and commercial scale-up, as well as a strong cultural alignment and fit between the companies.
*EBITDA is a non-GAAP financial measure (see Non-GAAP Financial Measures in this release).
About Recro
Recro (NASDAQ: REPH) is a contract development and manufacturing organization (CDMO) with capabilities from early feasibility to commercial manufacturing. With an expertise in solving complex manufacturing problems, Recro is a CDMO providing oral solid dosage form development, end-to-end regulatory support, clinical and commercial manufacturing, and packaging and logistics services to the global pharmaceutical market.
In addition to our experience in handling DEA controlled substances and developing and manufacturing modified release oral solid dosage forms, Recro has the expertise to deliver on our clients’ pharmaceutical development and manufacturing projects, regardless of complexity level. We do all of this in our best-in-class facilities, which total 120,000 square feet, in Gainesville, Georgia.
For more information about Recro’s CDMO solutions, visit recrocdmo.com.
