Acquisition will add product sales from HPPD’s marketed chemical countermeasure, RSDL (Reactive Skin Decontamination Lotion). The acquisition offers Emergent an opportunity to leverage its core capabilities in manufacturing, government contracting, government sales, and product distribution as it looks to substantially expand sales of RSDL in the attractive and growing chemical countermeasure market.
“This acquisition directly supports our ongoing growth plan, which includes acquiring revenue generating, profitable products and businesses that address the needs of U.S. and allied foreign governments across the CBRN spectrum,” stated Daniel J. Abdun-Nabi, president and chief executive officer of Emergent BioSolutions. “Our relationships, combined with those of HPPD, with the U.S. Government and foreign ministries of defense, as well as worldwide distributor relationships addressing first responder markets, should enable us to grow revenues from RSDL and to expand and enhance Emergent’s leadership position as a premier supplier of CBRN countermeasures.”
The Canadian Department of National Defence and the U.S. Department of the Army have both played a central role in the development and licensing of RSDL, which has been cleared by the U.S. Food and Drug Administration (FDA), Health Canada, the European Union’s Medicines and Healthcare products Regulatory Agency and Australia’s Therapeutics Goods Administration for the removal or neutralization of chemical warfare agents from the skin, including nerve agents, mustard gas, and toxins.
After closing of the transaction, Emergent will assume responsibility for an existing 5-year (2012-2017) procurement contract with the U.S. Department of Defense (DoD) to provide RSDL to active military personnel, as well as a supply agreement with NATO that allows NATO countries to purchase RSDL through the NATO Support Agency through 2015, with up to two additional option years. Emergent intends to pursue various potential growth opportunities for RSDL, including expanding sales to additional U.S. government agencies and domestic and foreign first responders, as well as new foreign ministries of defense.
Emergent plans to retain HPPD’s current staff of 16 employees who will be integrated into Emergent’s Biodefense Division. HPPD’s operations will continue to be located in Princeton, New Jersey and Hattiesburg, Mississippi.
The acquisition of HPPD, which is subject to customary closing conditions including the receipt of certain third party consents and regulatory approvals, is expected to close in the third quarter of 2013.
Emergent expects the acquisition to contribute to revenue and net income, exclusive of transaction costs, beginning in 2013. After giving effect to this acquisition, Emergent is reaffirming its annual 2013 guidance of $290 to $310 million in total revenues and $20 to $30 million in net income. The company also reaffirms its first quarter revenue guidance of $40 to $50 million. Actual first quarter 2013 financial results will be announced on May 2, 2013.