Mallinckrodt reached a $250m (€226m) fee with H.I.G Capital, a private equity investment firm, for the purchase of BioVectra, a contract development and manufacturing organization (CDMO) subsidiary.
Mark Trudeau, CEO of Mallinckrodt, said, “While we recognize the longer-term growth potential for BioVectra, we believe that the structure of this deal enables us to participate in the future success of the business, and therefore we see this sale as the best option for both Mallinckrodt and BioVectra moving forward.”
The ties to the ‘future success’ of the CDMO are contingent payments of up to $75m that were agreed as part of the financial package for BioVectra, in addition to the base fee of $250m.
BioVectra provides a range of services for the pharmaceutical market, including working with highly-potent active pharmaceutical ingredients (HPAPIs), biologics, microbial fermentation, drug development, and process & analytical development.
Its facilities based in Prince Edward Island and Nova Scotia, Canada, are both expected to be included in the deal. In total, the company possesses 50,000L of chemical reactor space and 64,000L of fermentation bioreactor capacity.
In March 2019, the CDMO announced a five-year plan, CAD $144m (€99m) expansion project for both of its locations aimed at improving API production capacity, at the Prince Edward Island site, and adding biologic capability, including a mammalian cell culture facility, at its site in Nova Scotia.
Mallinckrodt stated that the CDMO will continue to supply an API for its specialty brands business ‘under a long-term agreement’.
Employees of the CDMO will transition to the new ownership.
The deal is expected to close in the fourth quarter of 2019.
The sales arrives the following week after Mallinckrodt agreed to pay two separate cash settlements regarding its role in the opioid crisis.