Bausch Health Companies is acquiring basically all of Synergy Pharmaceuticals’ assets, including all rights to Trulance (plecanatide), dolcanatide and related intellectual property.
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Bausch Health Companies is acquiring basically all of Synergy Pharmaceuticals’ assets, including all rights to Trulance (plecanatide), dolcanatide and related intellectual property.
This is essentially a “Stalking Horse” deal, where Bausch is setting a baseline bid, but other companies may or may not make offers as well. The Bausch offer is for approximately $200 million in cash.
In order to ease the sale and deal with its debt obligations, Synergy voluntarily filed for Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. It plans to continue operating the business while it works on the sale through the Chapter 11 proceedings.
As part of the debt issue, Synergy has created a binding term sheet with its existing first lien lenders for debtor-in-possession (DIP) financing for an aggregate principal amount of $155 million, made up of $110 million of roll up pre-petition loan obligations and $45 million in new money loans. This is designed to support business activities during the Chapter 11 and sale process.
Under the “stalking horse” agreement, Bausch Health through an affiliate is buying most of Synergy’s assets, including intellectual property, customer and vendor contracts, accounts receivable and goodwill, free and clear of liabilities except certain expressly assumed liabilities. Bausch has also agreed to make employment deals to some of the sales and commercial employees.
If successful, Bausch Health would close on the deal in the first quarter of 2019.
Bausch Health Companies was formerly known as Valeant Pharmaceuticals International, and is based out of Laval, Quebec. It has three broad core areas: eye health, under its Bausch & Lomb division; gastrointestinal diseases, under Salix Pharmaceuticals; and dermatology, under Ortho Dermatologics.
Synergy Pharmaceuticals focuses on gastrointestinal diseases. Trulance is used to treat irritable bowel syndrome with constipation (IBS-C) and chronic idiopathic constipation (CIC).
Joseph C. Papa, chairman and chief executive officer of Bausch Health, stated, “The acquisition of the assets of Synergy will enhance our Salix Pharmaceuticals business. We believe Trulance is a natural complement to Xifaxan (rifaximin), and with the scale and strength of our sales footprint in GI and primary care, our Salix team will be able to offer physicians and patients multiple treatment options that span the types of irritable bowel syndrome.”
Papa went on to say that adding Synergy’s pipeline drug, dolcanatide, to Bausch’s pipeline will “provide an incremental peptide with established proof-of-concept studies in multiple GI conditions. As part of our transformation strategy, we will continue to seek strategic bolt-on opportunities that we believe will help drive long-term growth in our core businesses and for the company.”
Synergy shares plunged 55 percent in premarket trading today after the new of the Chapter 11 was filed.
“We have worked diligently to serve our patients, health care professionals and other stakeholders by bringing Trulance to market and developing other GI therapies to address previously unmet needs,” stated Troy Hamilton, Synergy’s chief executive officer. “Unfortunately, we have now reached a point where our financial challenges are preventing us from taking this important work to the next level.”
