Emergent BioSolutions Acquires Maker of Narcan Nasal Spray

Emergent BioSolutions has entered into an agreement to acquire Adapt Pharma and its flagship product Narcan (naloxone HCl) Nasal Spray, the first and only needle-free formulation of naloxone approved by the U.S. Food and Drug Administration (FDA) and Health Canada, for the emergency treatment of known or suspected opioid overdose as manifested by respiratory and/or central nervous system depression. Total consideration for the transaction is up to $735 million consisting of an upfront payment of $635 million and up to $100 million in cash for potential sales-based milestones through 2022. The upfront payment of $635 million consists of $575 million in cash and $60 million in Emergent common stock, all of which are subject to certain adjustments under the terms of the agreement.

Upon the closing of the transaction, Emergent will acquire the Narcan Nasal Spray product and a development pipeline of new treatment and delivery options to address opioid overdose, and bring on approximately 50 employees, located in the U.S., Canada, and Ireland, including those responsible for supply chain management, research and development, government affairs, and commercial operations.

"The acquisition of Adapt Pharma, and with it the NARCAN Nasal Spray, the leading community use emergency treatment for opioid overdose, is directly in line with our mission – to protect and enhance life. Adding this important life-saving product to our portfolio of preparedness solutions allows us to apply our experience gained from two decades of partnering with the U.S. government to safeguard public health against biological and chemical threats to address the devastating increase in deaths due to opioid overdoses, one of the most serious public health threats facing the nation today," Daniel J. Abdun-Nabi, CEO of Emergent BioSolutions, said.

"I am delighted that this transaction will bring Adapt and Emergent together to focus on the opioid crisis - the leading public health issue of our time. With a shared mission of protecting lives from public health threats, I am confident that our combined expertise and resources will accelerate access to Narcan Nasal Spray through investments in public awareness and manufacturing capacity while maintaining a responsible pricing approach. It will also allow us to progress Adapt’s R&D pipeline of additional opioid overdose and addiction treatment options," said Seamus Mulligan, chairman and chief executive officer of Adapt. "To maintain the outstanding momentum our team has generated, Adapt will continue to focus on the opioid crisis as part of Emergent’s devices business unit and all employees and facilities will be retained."

The acquisition of Adapt Pharma adds Narcan Nasal Spray to Emergent’s portfolio of only-in-class products with applications in both government and commercial markets as well as commercial operations targeting these markets, including a focus on state and local government purchasers, first responder groups, retail pharmacies, and opioid addiction treatment centers as key sales channels. Narcan Nasal Spray became commercially available in early 2016 after receiving FDA approval in November 2015. It also received approval from Health Canada in October 2016. Adapt Pharma is also developing new treatment and delivery options to address opioid overdoses.

In April 2018, the U.S. Surgeon General released a public health advisory to urge more Americans to carry naloxone, a potentially life-saving medication that can reverse the effects of an opioid overdose. As a result, the Narcan Nasal Spray is carried by many first responders including police officers, firefighters, and emergency medical teams. The Surgeon General has recommended that more individuals, including family, friends and those who are personally at risk for an opioid overdose, keep the drug on hand. Additionally, laws have been passed in all 50 states and the District of Columbia to increase public access to naloxone. Standing orders in states allow trained personnel such as pharmacists or staff of a community health center to distribute naloxone without an individual prescription from a doctor.

From a financial perspective, the company expects the incremental revenue contribution in 2019 from the acquisition to be between $200 million and $220 million. The company also anticipates that the transaction will be accretive to adjusted net income and EBITDA in 2019.

The company further expects that, with the completion of this acquisition and the recently announced acquisition of PaxVax, it will achieve or exceed its growth plan goal of $1 billion in revenue in 2020.

To fund the cash portion of the acquisition, Emergent will use a combination of cash-on-hand, its existing $200 million credit facility, and borrowings pursuant to a new $600 million debt financing commitment provided by Wells Fargo Bank, National Association. The transaction, which is subject to customary closing conditions, including antitrust regulatory approval, is expected to close in the fourth quarter of 2018.

Covington & Burling acted as legal counsel and Morgan Stanley & Co. acted as financial advisor to Emergent. Mayer Brown LLP acted as legal counsel and BofA Merrill Lynch acted as financial advisor to Adapt Pharma.

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