Pernix Therapeutics Holdings, Inc.
) recently announced that it has completed the acquisition of
Cypress Pharmaceuticals, Inc. and Hawthorn
Both the companies are privately owned. While Cypress Pharma
is a generic pharmaceutical company, Hawthorn Pharma is a branded
The acquisitions were announced on November 14, 2012 but the
terms of the payment were modified on December 28,
As per the amended agreement, Pernix will pay up to $102
million which includes an up-front payment of $52.0 million in
cash and $34.0 million in equity on closing while $11 million
will be paid in December 2013 along with an additional milestone
payment of $5 million.
Previously, Pernix was supposed to pay up to $101 million
which included an up-front payment of $68.5 million in cash and
$12.5 million in equity on closing coupled with $11 million
payable in December 2013 and an additional $5 million in a
Pernix undertook a $42 million credit facility to finance the
acquisitions. Both Cypress Pharma and Hawthorn Pharma are
expected to generate sales of approximately $50 million in 2012
consisting of approximately 54% generic products and 46% branded
products. On a consolidated basis, Pernix now expects to generate
approximately $135-$145 million of sales in 2013.
Cypress Pharma offers generic products targeting the fields of
cough and cold, nutritional supplements, analgesics, urinary
tract, women's health, pre-natal vitamins and dental health.
Meanwhile, Hawthorn Pharma offers branded pharmaceutical products
for allergy, respiratory, iron deficiency, nephrology and pain
Hence, the acquisitions will widen Pernix's portfolio in the
respective arenas. Pernix currently markets generic products
through its wholly-owned subsidiary, Macoven
Pernix has been active on the acquisition front with the
acquisition of Great Southern Laboratories in July 2012 and the
merger agreement to acquire
Somaxon Pharmaceuticals, Inc.
) for $25 million in December 2012.
We currently have a Neutral recommendation on Pernix, which
carries a Zacks #3 Rank (Hold). Pharma stocks which
currently look attractive are
) with a Zacks #2 Rank (Buy).
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