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Dec 11, 2012

Pernix Buys Somaxon for $25M

  • Making its third acquisition in less than a month, Pernix Therapeutics is buying Somaxon Pharmaceuticals in a $25 million stock-for-stock deal, the companies said today.

    The deal follows Pernix’s up-to-$101 million planned acquisition of both Cypress Pharmaceuticals and Hawthorn Pharmaceuticals, announced Nov. 14 and set to close by year’s end. Pernix termed that deal “the most significant acquisition in the company’s history” because it would add clinical and regulatory expertise as well as broaden its portfolio of branded and generic drugs.

    “The acquisition of Somaxon is another important step in the growth strategy of Pernix, which is expected to continue to expand our product portfolio,” Cooper Collins, president and CEO of Pernix, said in a statement today.

    Pernix is especially interested in Somaxon’s sleep drug Silenor® (doxepin), which generated about $11.7 million in net sales in the year ending Sept. 30. Pernix said it expects approximately $10 million to $15 million in annual net sales from Silenor, as well as annual earnings before interest, taxes, depreciation, and amortization (EBITDA) in the range of $5 million to $10 million.

    “Somaxon’s product Silenor, which is a nonseasonal product, broadens our branded product line and may also have potential as an OTC product in the future,” Collins stated.

    Silenor alone could push Pernix well into the black. During the first three quarters of 2012, the company has lost $10,911, despite a 10% increase in net revenue over Q1-3 2011, to $43.1 million, when the company recorded a net income of $4.5 million.

    For Somaxon, the acquisition by Pernix ends a year largely spent seeking a buyer through strategic advisor Stifel Nicolaus Weisel. Pernix said it would lay off more than half of its San Diego headquarters staff in December 2011, following weaker-than-expected first-year sales of Silenor due to heavy competition.

    The boards of Pernix and Somaxon approved the deal, which is still subject to approval by Somaxon shareholders and other terms and conditions.

    Pernix makes a variety of pediatric drugs including Cedax®, an antibiotic for middle ear infections, Natroba™, a topical treatment for head lice marketed under an exclusive co-promotion agreement with ParaPRO, and the cough and cold treatments Brovex®, Aldex®, and Pediatex®.

    Pernix's branded products for gastroenterology include Omeclamox-Pak®, a 10-day treatment for H. pylori infection and duodenal ulcer disease, and Rezyst™, a probiotic blend to promote dietary management. The company is also developing a product candidate for the U.S. OTC market that will use cough-related intellectual property.

    “We believe that the combined entity, with its broad platform of branded, generic, and OTC products, represents long-term value for the benefit of all of our stockholders,” Richard W. Pascoe, Somaxon's president and CEO, said in a statement. 


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