Akorn, Inc. N a s d a q : A K R X

Transcription

1 Akorn, Inc. N a s d a q : A K R X Jefferies 2014 Global Healthcare Conference June 2014

2 DISCLAIMER This presentation includes certain forward-looking statements regarding our views with respect to our business, operations, current and future acquisitions, economic model, and our expected performance for future periods, as well as the pharmaceutical industry conditions. These statements are intended as forward-looking statements under the Private Securities Litigation Reform Act of Actual results may differ materially from our expectations due to the risks, uncertainties and other factors that affect our business. These factors include, among others, changing market conditions in the overall economy and the industry; the success of implementing our corporate strategies; the effects of federal, state and other governmental regulation on our business; current and future litigation; the success of new acquisitions and new product launches; our success in developing, manufacturing, acquiring and marketing new products; the success of our strategic partnerships for the development and marketing of new products; our ability to obtain and maintain regulatory approvals for our products; and the effects of competition from other generic pharmaceuticals and from other pharmaceutical companies; loss of key personnel; our ability to obtain additional funding or financing to operate and grow our business; our liquidity; and other factors detailed in our Annual Report on Form 10-K and our other reports filed from time to time with the Securities and Exchange Commission ( SEC ). These factors also include factors specific to our pending acquisition of Hi-Tech Pharmacal Co., Inc. ( Hi-Tech ), including the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with Hi-Tech; the failure to satisfy conditions to completion of the merger, including receipt of regulatory approvals; changes in the business or operating prospects of Hi-Tech; our ability to successfully integrate Hi-Tech businesses and its products; and other factors related to the acquisitions and integration of Hi-Tech. If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement you see or hear during the presentation reflects Akorn, Inc. s current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. For more complete information about Akorn, you should read the reports filed by Akorn with the SEC. You may get these documents for free through EDGAR on the SEC website at which you may also access through our website at You should also read the reports filed by Hi-Tech with the SEC which are similarly available through EDGAR and Hi-Tech s website at 2

3 COMPANY OVERVIEW Who We Are Fast growing niche pharmaceutical company with proven execution of strategic initiatives and focus on niche dosage forms Increasingly diverse product portfolio including injectables, ophthalmics, oral liquids, nasal sprays and topical creams and ointments Extensive line of OTC branded products and growing line of store-branded private label products 73 products on file with FDA representing an addressable market of over $6.8bn Over 1,500 employees Distribution to over 20 countries; global opportunity through Akorn India Top-Line Momentum Building $86 $137 $256 $318 $540-$560 $1 Billion E Goal Hospital / Injectables 33% Headquarters: Lake Forest, IL ~ 60% CAGR E R&D: Vernon Hills, IL Copiague, NY G U I D A N C E L O N G T E R M G O A L Diverse Manufacturing: Somerset, NJ Amityville, NY Decatur, IL Paonta Sahib, India Contract 4% 3

4 MARKET DYNAMICS & OPPORTUNITY Generic market opportunity remains strong (generics ~83% of Rx volume)* Commitment to R&D, recent acquisitions and focused growth strategy support Akorn s position as a key generics player Elevated scrutiny on both regulatory environment & approval process Over 100 drugs currently on FDA shortage list, majority are sterile injectables Globalization provides new opportunities in high growth emerging markets Focus on quality and robust R&D processes enables continued success and supports future growth Akorn produces over a dozen products that have appeared on the FDA shortage list; the approval of Akorn India will increase overall injectable capacities for the U.S. market Acquisition of manufacturing assets in India have positioned Akorn to pursue a global strategy over the long-term Pace of consolidation to continue in specialty pharma & generics *Data from IMS - YTD September 2013 Successful business transformation has positioned company well to be a key acquirer in the industry 4

5 3 5 YEAR GOALS TODAY STRATEGIC GOALS US Generic Ophthalmology Competitive Landscape US Generic Injectable Competitive Landscape # 3 in Sales and Molecules # 15 in Sales # 10 in Molecules IMS Data for 12 months ended 10/31/13. Some data may have been excluded based on company judgment of comparability. Be #1 in generic ophthalmics Be a top 5 player in generic injectables Increase market leadership position for niche, non-sterile dosage forms Expand sales reach to over 30 countries Become a $1 billion revenue company 5

6 AKORN S PROVEN ACQUISITION STRATEGY FOCUS ON OPHTHALMOLOGY Branded Ophthalmic Portfolio MANUFACTURING CAPACITY ACCESS TO OTHER GEOGRAPHIES LEVERAGE INFRASTRUCTURE EXPAND NICHE PORTFOLIO Brand portfolio Acquisition strategy is expected to contribute approximately $500 million in 2015 revenues 6 6

7 VERSAPHARM TRANSACTION TRANSACTION RATIONALE Entry into Dermatology & Further Product Diversification Establishes Akorn in the generic dermatology therapeutic category, given VersaPharm s pipeline focus on topical products Addition of over 20 marketed products Bolt on to Hi-Tech Acquisition Complimentary product portfolio Provides a ready pipeline of products that can be manufactured at Hi-Tech Ease of Integration VersaPharm s outsourced manufacturing strategy provides significant operational flexibility and facilitates a straightforward integration process Strong Financial Profile High double-digit growth and strong operating margins Expected revenue growth of over 50% in 2014 Operating margins of over 40% 7

8 KEY TRANSACTION TERMS Purchase price $440 million Cash / share mix All cash; debt financed Funding mix Fully-committed financing from JPMorgan Chase Bank, N.A. Accretion Closing conditions Transaction close Immediately accretive; $0.10 to $0.12 in full year earnings per share (excluding new pipeline launches, deal amortization and acquisition-related expenses) Subject to customary closing conditions and regulatory approval Expected by the end of 3Q

9 OVERVIEW OF VERSAPHARM OVERVIEW % OF 2013 REVENUE BY THERAPEUTIC AREA Over 20 generic pharmaceutical products marketed within the US and its territories Total of 45 employees in 3 locations Portfolio covers niche therapeutic categories and product formats Operates in markets which maintain a stable competitive environment Leading product runs through a REMS program R&D focus has been on complex formulations Long-standing relationships with an extensive network of CMOs Tuberculosis 14% Hemophilia 29% Other 9% Dermatology 48% 9

10 IMS Mkt Size (millions) VERSAPHARM R&D CAPABILITIES AND PIPELINE OVERVIEW VersaPharm has built a robust pipeline of over 20 products, including 11 ANDAs filed with the FDA Staff of 24 professionals based at the R&D center in Warminster, PA Majority of the 11 filed products can be manufactured at Hi-Tech Ability for filed products to be manufactured inhouse would leverage excess capacity Development efforts target dermatology and other niche market segments $800 $600 $400 $200 Number of ANDAs $0 PIPELINE STATS $250 Filed IMS Market Size* $450 Under Development $700 Total *IMS Market Size is based on IMS Health data for the 12 months ended Feb

11 STRATEGIC EXECUTION INTEGRATE Acquisitions DEVELOP New Products EXECUTE India Strategy BUILD Brand Platform PURSUE Strategic M&A Leverage scale and diversification Tap into nonsterile platform Capture synergies Continue R&D investment Strengthen Hi-Tech s R&D pipeline Maturing R&D pipeline Private label opportunity Obtain regulatory approvals in US and RoW Effectively manage approval timelines Leverage new manufacturing capacity Maximize value from recent acquisitions Leverage & expand existing ophthalmology sales infrastructure Strategic fit Revenue enhancing Accretive 11

12 HI-TECH INTEGRATION PLAN INTEGRATE Deal Close 6 months 12 months Consolidate corporate functions Implement Akorn Quality Policy Optimize capacity across sterile ophthalmic plants (2) Implement new R&D strategy Achieve annual synergy run-rate $15-20mm Opportunity for significant cost savings due to overlap with minimal risk or disruption to business operations 12

13 CONTINUED INVESTMENT IN R&D DEVELOP Long-term commitment to R&D to support growth AKORN R&D SPEND Capabilities Injectables Ophthalmics Topicals Nasal Sprays Oral Liquids 73 filings under review today with a total addressable IMS market value of $6.8bn $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 ($mm) % of Revenue 7.35% 8.1% 8.4% 6.2% 6.3% $39-$42 $19.9 $15.9 $11.6 $ % 8% 7% 6% 5% 4% 3% 2% 1% 0% Flexible R&D and pipeline strategy selectively targets Paragraph IV products 14 PIV Challenges NUMBER OF ANDAs FILED Hi-Tech Akorn Goal to increase filings to per year by Market value of filings per IMS Health 12 months ended March

14 MATURING PIPELINE DEVELOP A growing number of products have been with the FDA for over 36 months. 14

15 INDIA REGULATORY APPROVALS EXECUTE INDIA Increased emphasis on quality in India to support approval timeline in US and RoW Incremental staffing Training initiatives Compliance management US FDA Filing Timeline First filing in Q1 14 tech transfer of existing NDA product Followed by three other filings in 2014 Begin manufacturing for US market in 2015 General Injectable (NDA product transfer) Cephalosporin (Tech transfer acquired ANDA product) Carbapenem (Develop ANDA product) Hormone (Develop ANDA product) US FDA TIMELINE Facility Inspections & Approvals Support expansion into higher growth geographies Development Initiated Exhibit Batch Produced Filing Submitted to FDA Approval Pursue WHO and PIC/S approvals 15

16 Capacity in million units LEVERAGE INDIA INFRASTRUCTURE EXECUTE EXPANDED CAPACITY FOR US/ROW MARKETS 18.7 X 1.4 X Akorn India s manufacturing capacity allows Akorn to become a significant player in the $27 billion addressable global injectable market US India Total Capacity 16

17 BRANDED OPHTHALMOLOGY PLATFORM BUILD Plan to utilize and expand sales team to reinvigorate revenues of five branded ophthalmic products recently acquired from Merck and Santen Leverages existing ophthalmic sales force and physician relationships Elevates Akorn s reputation with prescribers Creates a prescription branded ophthalmic strategy Broadens existing platform that includes TheraTears, Akten, and IC Green Platform supports future acquisitions and inlicensing of branded ophthalmic products Recent product acquisitions will add $54 - $59 million in revenues annually 17

18 AKORN S ACQUISITION STRATEGY PURSUE M&A STRATEGY Continue to seek companies and/or products that build upon our expertise Acquire companies &/or products within same or adjacent markets leverage pipeline, marketing, distribution channels, etc. Acquire companies that provide additional value to supply chain either through capacity or cost benefits HISTORY OF STRATEGIC ACQUISITIONS Expanded product portfolio and strengthened position in niche area of OTC ophthalmics Accelerated growth rate as a result of acquisition of branded injectable portfolio from Lundbeck Increased capacity for US FDA products and expanded international presence with acquisition of injectable manufacturing assets in India Acquisition of several branded products further expands Akorn s position as a leader in U.S. ophthalmology products Brings critical mass to generics business and diversifies product offering and areas of expertise with niche products Expands product portfolio in niche product offerings, including the highly attractive niche dermatology market 18

19 FINANCIAL PERFORMANCE 19

20 FINANCIAL MOMENTUM All Value millions, except EPS REVENUE ADJUSTED EBITDA ADJUSTED EPS $ $ $ $86 $137 $256 $318 G U I D A N C E $21 $45 $96 $111 G U I D A N C E $0.16 $0.35 $0.52 $0.55 G U I D A N C E % CAGR ( 10-13) 75% CAGR ( 10-13) 51% CAGR ( 10-13) Transformation has led to strong and consistent performance Note: Guidance excludes any financial impact of VersaPharm acquisition 20

21 STRONG BALANCE SHEET & FREE CASH FLOW Cash from Operations ($mm) Strong Financial Position Improving cash flow generation $70 $60 $50 $40 $57.3 Strong synergy opportunity with Hi-Tech integration Cash position > $50mm (as of Hi-Tech close in mid-april) $600 million Term Loan B; 3.8x leverage at Hi-Tech close $30 $20 $12.3 $19.7 $26.2 Total long-term leverage objective of x $150M ABL revolving credit facility available $10 $ Capital Priorities Invest in business and growth strategy Strategic M&A opportunities De-levering 21

22 INVESTMENT HIGHLIGHTS Attractive industry dynamics Injectable and ophthalmic products represent niche segments with limited competition and high barriers to entry Acquisitions of Hi-Tech and VersaPharm add over 70 products in attractive niche categories Generic market opportunity remains strong core business Generics make-up ~83% of all Rx volume Proven Execution Strong revenue growth and increasing margins, profitability and cash flow Strategic company and product M&A Investing in infrastructure improvements Increasing capacity and improving efficiency Upgrading to comply with ever-changing regulatory environment Clear strategy for sustained growth Robust product pipeline and R&D program Global expansion through Akorn India Acquisitions / In-licensing opportunities 22

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