Week of January 16, 2017 | Vol. 6, Issue 1
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ProPhase Labs, Inc., a diversified natural health medical science company (the "Company"), announced today that it has signed an asset purchase agreement, pursuant to which the Company has agreed to sell its Cold-EEZE® cold remedy brand to a wholly owned subsidiary of Mylan N.V. ("Mylan") for $50 million before taking into account taxes, transaction costs and related deal expenses, restructuring costs and post-closing escrow requirements.
Under the terms of the asset purchase agreement, Mylan will purchase substantially all of the Company's assets and other rights relating to the Cold-EEZE® cold remedy brand. The closing of the proposed sale, which is currently expected to occur in the first quarter of 2017, is subject to approval of the stockholders of the Company and other customary conditions of closing. The Company is retaining ownership of its manufacturing facility and manufacturing business in Lebanon, Pennsylvania, and its headquarters in Doylestown, Pennsylvania, as well as its dietary supplements product lines which are currently under development. As part of the transaction, the Company, through its Pharmaloz subsidiary, will enter into a manufacturing and supply agreement with Mylan.
In connection with the execution of the asset purchase agreement, the Company's executive officers and directors executed voting agreements. The voting agreements provide, among other things, for the Company's executive officers and directors to vote all of the shares owned by them in favor of the adoption of the transaction. The shares subject to the voting agreements represent approximately 24.1% of the outstanding common stock of the Company.
The Company was assisted by Bourne Partners, a boutique investment bank focused on the consumer health and pharmaceutical industries, in this transaction and is represented by the Reed Smith LLP law firm
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Donald Trump Pressures Republicans to Repeal, Replace Health Law at Same Time
President-elect Donald Trump is increasing pressure on congressional Republicans to vote at the same time to both repeal and replace the Affordable Care Act, but party leaders haven't indicated any shift in strategy to make that happen.
Mr. Trump's push, combined with doubts from different factions of Republicans, could end up slowing down party leaders' efforts to rapidly overturn much of the law.
Mr. Trump, who backs simultaneously repealing and replacing the 2010 health-care law, is finding allies in the Senate, where a half-dozen Republicans are worried about repealing the law without having a replacement plan ready.
"I believe we should vote on replacement the same day we vote on repeal," Sen. Rand Paul (R., Ky.) said in an interview Monday. Mr. Trump called the senator on Friday night "to say he agrees completely," Mr. Paul said.
GOP leaders said Monday that while they would love to have a replacement written as soon as possible, they would move quickly on the first steps of a repeal measure while taking the time needed to get policy details right.
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Below are summaries and charts with the past week's transactions from the different healthcare sectors. For a detailed table showing data for each industry transaction click on any of the charts or use the download link above. Total transaction values are provided in USD millions.
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Pharma & Biotech
16 transactions totaling $7,877
million
Supplies, Equipment & Services
24 transactions totaling $1,311 million
Healthcare IT & Managed Care
5 transactions totaling $- million
Healthcare Facilities & Distributors
10 transactions totaling $13,266 million
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Pharma & Biotech
8 private placements totaling $157 million
Supplies, Equipment & Services
11 private placements totaling $88 million
Healthcare IT & Managed Care
5 private placements totaling $46 million
Healthcare Facilities & Distributors
0 private placements
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Pharma & Biotech
4 public offerings totaling $27 million
Supplies, Equipment & Services
3 public offerings totaling $4 million
Healthcare IT & Managed Care
0 public offerings
Healthcare Facilities & Distributors
0 public offerings
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 Each week, w
e provide updated trading
comps for leading comp
anies from numerous healthcare subsectors.
To the right you will see a high-level breakdown of median revenue and EBITDA multiples for each of the specific subsectors
For a complete trading comp analysis (including the individual equities that comprise the subsectors), click on the table to the right or use the download link from the top of this newsletter.
Note: data reflects prior week close.
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RECENT INDUSTRY HEADLINES
A Sampling of Relevant Industry Headlines from the Last Week
Below are snippets from relevant industry news articles from the past week presented in chronological order. For additional information or the article's complete text, click the headline link to view the original publication.
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January 12, 2017 -
Fierce Pharma
Johnson & Johnson and Actelion may have finally settled a key condition of their long-discussed transaction.
The pair has landed on a price for the deal, Bloomberg
reports
, although sources didn't tell the news service what that price was. Reuters
reported
earlier this month that J&J was considering a price in the $260-per-share range for Actelion's marketed meds, a figure that would bring the buy to more than $28 billion.
Now, word has it the companies are hammering out valuations for Actelion's R&D assets, which would reportedly be spun off into a new company as part of any acquisition. Which products specifically would go into that unit and how much ownership Actelion's investors would keep are both under negotiation, but sources say the companies could strike a pact as early as this month.
UnitedHealth's Optum to Acquire Surgical Care Affiliates for $2.3 Billion
January 9, 2017 -
Wall Street Journal
UnitedHealth Group Inc.'s Optum health-services arm has agreed to acquire
Surgical Care Affiliates
Inc. for about $2.3 billion, adding a major surgical company to its growing roster of doctor groups and clinics.
The deal, for a mixture of cash and stock, substantially expands the health-care provider footprint of UnitedHealth, which is already the parent of the biggest U.S. health insurer, UnitedHealthcare.
The acquisition represents a continued bet on physician services at a time when
Republicans' plans to unwind the Affordable Care Act
have created uncertainty for many health-care providers, particularly hospitals, which potentially stand to see a drop-off in insured, paying patients.
January 10, 2017 - Wall Street Journal
Valeant Pharmaceuticals
Inc. agreed to sell its Dendreon cancer business to Chinese conglomerate Sanpower for $820 million, part of an effort by the beleaguered drugmaker to unload assets and pare debt.
Selling the Dendreon business will help Valeant simplify and focus on core areas and innovating, according to a person familiar with the matter.
Valeant, under former Chief Executive Michael Pearson, bought Dendreon, known for prostate-cancer treatment Provenge, for about $500 million in a bankruptcy auction in 2015. The acquisition was Valeant's first big transaction after losing a hostile bid in 2014 for Botox maker
Allergan
,
which went instead to Actavis PLC for about $67 billion.
But Valeant wasn't a big player in cancer, and Provenge proved a disappointing fit. Provenge had $300 million in sales the year before the acquisition; it isn't clear what revenue has been more recently. Valeant, which reported $7.3 billion in total revenue during the first nine months of last year, doesn't break out Provenge sales.
January 13, 2017 -
Fierce Pharma
As much of the pharma industry waits to see what kind of approach the incoming presidential administration will take on drug pricing, New York Governor Andrew Cuomo has plans of his own. He's unveiled a first-of-a-kind proposal to curb "exorbitant" prescription prices in the Empire State.
New York will create a "review board" to determine the "fair price" for certain expensive drugs under the plan, Cuomo said, and then the state will mandate that Medicaid won't pay more than that amount for its purchases. When a company charges Medicaid more than the board's set price, it'll owe a "rebate for any amount" in excess, according to a
release.
But before New York is to take any action on pricing, the state's lawmakers would have to sign off on Cuomo's approach. Industry group PhRMA
told
the Buffalo News that the new announcement is "similar to previous proposals that were soundly rejected by the Legislature.''
The proposal would also impact private markets. If a pharma company sells into the state at a price higher than the board's set amount, that sale will be hit with a surcharge; the government will collect that money and reallocate it "back to the insurance providers to reduce the cost of insurance."
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As an international, healthcare-focused merchant bank and financial advisory firm, we provide world-class services and capital to middle-market healthcare companies around the globe. We aim to keep our clients well-informed of healthcare news and events. With this additional insight in mind, together, we can recognize trends and opportunities that benefit our clients. We hope that you will reach out to Bourne Partners to help execute your healthcare operational and transactional needs. To learn more about our firm, visit our website or utilize the links below to engage with us on social media.
Sincerely,
The Bourne Partners Team
Bourne Partners
550 South Caldwell Street
Suite 900
Charlotte, NC 28202
704-552-8407
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