Amryt Pharma’s early shareholders have tripled their investment after Italian company Chiesi Pharma agreed to buy the orphan drug maker at a massive premium.
The group of about 10 Raglan Capital investors, who invested an average of €150,000 in the company at inception, are each guaranteed €425,000 back plus an additional €100,000 if certain milestones are reached, according to Raglan Managing Director and Amryt founder Cathal Friel to be reached .
The $1.48 billion deal, which closed at a 107 percent premium to the company’s stock price, will also result in investors in Amryt’s Nasdaq IPO getting their money double after just two and a half years.
Amryt raised €20 million at $8 per share in July 2020. These shareholders will be paid out at a selling price of $14.50 plus $2.50 in contingent value if the company meets performance targets set by Chiesi.
The sale will result in early exit from Raglan investors including Mr. Friel, co-founder and CEO Dr. Joe Wiley, CFO Rory Nealon and Chairman Ray Stafford.
The transaction suggests that retail buyers in the life sciences sector are willing to pay for the right assets, despite negative market trends that have pushed valuations lower.
“Hedge funds and other large investors would not have sold without such a high premium,” said Friel. “It’s something you see more often in biotechnology, where the stock price doesn’t even come close to reflecting the true value of the company.”
Amryt shares have traded below their IPO price for most of this year, partly due to the generally poor sentiment towards stocks and partly because investors disregarded the company’s $200 million debt burden.
With Amryt’s debt at about five times the company’s earnings guidance as of early 2022, the market needed convincing that the company was worth a higher share price.
The company refinanced $95 million of its debt with an $85 million term loan and $40 million revolving credit facility early last year, but won even with a healthy amount of cash on the balance sheet the stocks are not picking up speed again.
But as is often the case in biotech and pharmaceuticals, the buyer wanted assets that the seller owned.
Chiesi is understood to have been an underbidder when Amryt bought Aegerion out of bankruptcy in 2019, acquiring two regulatory-approved drugs that were already generating revenue in Europe and the US.
“A take-out was always the exit plan,” said Mr. Friel. “They use public markets to borrow assets and issue paper. People assume big pharma will take you out, just like in the oil and gas industry.”
Amryt was formed in 2016 as a reverse takeover wrapper to acquire Fastnet, the publicly traded oil and gas explorer chaired by Mr. Friel.
Mr. Friel’s reasoning in the face of a catastrophic drop in oil prices was that pharmaceutical companies operated on similar risk-reward principles as exploration companies.
“Either you find an amazing molecule, or you buy ailing, underperforming assets and develop them further. We did that,” he said.
These original early investors took the punt by funding a convertible bond that gave them an option on shares at a 30 percent discount off the IPO price when the company listed on Euronext Dublin and AIM.
The move to Nasdaq unlocked a lot of value, ultimately making it a destination for a motivated buyer — a trick Mr. Friel is now trying to repeat with Raglan-backed Poolbeg Pharma and Hvivo.
https://www.independent.ie/business/investors-in-amryt-secure-lucrative-return-as-chiesi-pharma-agrees-148bn-deal-42273446.html Investors in Amryt secure a lucrative return as Chiesi Pharma agrees $1.48 billion deal
