Recro Pharma, Inc. [NASDAQ: REPH] disclosed it has bought IRISYS, a San Diego-based CDMO that holds capabilities that add and develop the capabilities of Recro. Recro purchased IRISYS for nearly $50 million in a combination of cash, shares of Recro common stock, and a seller promissory note.
With its purchase of IRISYS, Recro has changed itself into a full-service CDMO with operations on both the East and West Coast of the U.S. It will now be able to offer its now extended global client base access to services. This buying of IRISYS is truly a landmark business deal for Recro. The collaboration of these two firms creates an organization that is ideally placed to attain Recro’s earlier announced four-pronged strategy for growth.
The acquisition of IRISYS will grow technical focus outside the oral solid dose to include sterile injectables oral liquids, tablets, topicals, liquid/powder-filled capsules, ophthalmic droppers, liposomes, and nano/microparticles. Moreover, it will add new functionality in the areas of aseptic fill/finish and lyophilization.
Furthermore, as per the agreement, Recro has purchased 100% of the equity interests of IRISYS in exchange for payment having an aggregate value of nearly $49.850 million. The buying price was reimbursed through $25.5 million of cash at closing, 9,302,718 shares of common stock of Recro to be issued in six months, and a seller promissory note of $6.1 million.
The seller’s note has a three 3-year maturity date from the date of closing. The seller notes assume interest at a rate of 6% yearly. The seller’s note is explicitly subordinated and unsecured in right of payment and importance to Recro’s existing debt with Athyrium Capital Management.