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Salix Pharmaceuticals to Combine with Cosmo Technologies to Form Salix Pharmaceuticals, plc

Wed, 07/09/2014 - 8:57am

Salix Pharmaceuticals, Ltd. and Cosmo Pharmaceuticals S.p.A. today announced a definitive merger agreement under which Salix will combine with Cosmo Technologies Limited (“Cosmo Tech”), a subsidiary of Cosmo. Under the terms of the agreement, Salix will become a wholly-owned subsidiary of Irish domiciled Cosmo Tech, which will change its name to Salix Pharmaceuticals, plc and is expected to have its ordinary shares listed and traded on the NASDAQ Global Select Market. The transaction is expected to be modestly accretive to Salix’s earnings per share in 2016 and increasingly accretive thereafter.

Salix Pharmaceuticals, plc will own Cosmo’s U.S. patents for rifamycin MMX®, methylene blue MMX® and Uceris®, and have specified rights of negotiation with respect to all products Cosmo or its affiliates seek to develop or commercialize in the U.S. In addition, Salix Pharmaceuticals, plc will acquire Cosmo’s patents for rifamycin MMX in Canada, specified Latin American countries, India, China, Japan and the rest of the Far East, excluding Australia and New Zealand, and Cosmo’s patents for Uceris in Japan.

Cosmo, the parent company of Cosmo Tech, is a publicly-traded, specialty pharmaceutical company headquartered in Lainate, Italy. Cosmo’s proprietary clinical development pipeline specifically addresses innovative treatments for the gastro-intestinal tract such as inflammatory bowel disease, colon infections and diagnostics for the colon. Cosmo is the inventor and developer of Lialda® and Uceris.

Transaction Rationale

The transaction enhances Salix’s position as a leader in developing and marketing products in the U.S. to treat gastrointestinal disease and disorders and establishes a corporate structure that enhances Salix’s acquisition strategy and organic growth. The transaction:
•Adds highly complementary product opportunities to Salix’s portfolio
•Provides substantial opportunities with rifamycin MMX for conditions of the colon, including diverticulitis, a large and unsatisfied market
•Adds methylene blue MMX to aid in the detection of colon cancer
•Eliminates Uceris royalties and milestones and modifies the Uceris supply agreement which substantially improves Uceris’ profitability, allowing Salix to capture full value of the existing indication as well as potential future indications
•Establishes tax efficient corporate structure and increases Salix’s competitive positioning for future M&A and product licensing efforts

Carolyn Logan, President and CEO of Salix stated, “Cosmo is an excellent company which we have known for years, so we are very pleased to announce this transaction. Combining with Cosmo Tech makes tremendous strategic and financial sense for us as it further strengthens and consolidates our position as a leader in acquiring, developing and marketing products to treat gastrointestinal disease and disorders. Uceris is an important product in our portfolio and this transaction will improve its profitability as well as that of Salix as a whole. The new corporate structure greatly enhances our ability to compete for licensing deals and acquisitions, and improves the economics of future business development opportunities for Salix. Further, by adding multiple new and complementary product opportunities, to which we will be able to bring our proven expertise in development and commercialization, we expect these new pipeline additions to diversify and grow our future revenue base. We view this transaction as an evolutionary step that should create value and higher returns for our shareholders by bolstering our competitive position in the marketplace, all within an efficient corporate structure that should increase our profitability and accelerate our long term growth.”

Alessandro Della Chá, CEO of Cosmo stated, “It was our strategic objective to find the best possible partner to market our products in the U.S., and to have a substantial financial interest in this. This transaction allows two companies that are already leaders in GI to join their different but complementary competencies to create new products that satisfy unmet needs of patients and provide additional value for shareholders.”

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