INVAMED ACQUISITION WOULD MOVE DURAMED BACK INTO OTCs WITH 20 NEW OTC PRODUCTS; PROPOSED MERGER WOULD ALSO ADD NINE APPROVED AND 11 PENDING ANDAs
Duramed's proposed acquisition of Invamed will move the generic drug manufacturer back into OTC formulations -- where Duramed started in 1982. Cincinnati-based Duramed announced the merger agreement, at the letter-of-intent stage, in a March 24 press release. Invamed currently manufactures and markets a line of "approximately 20 over-the-counter products including ibuprofen tablets from a 16,000 sq. ft. leased facility in Fairfield, N.J.," Duramed noted. At its inception, Duramed had manufactured primarily OTC formulations at a 10,000 sq. ft. facility on Long Island. The company moved to Cincinnati in 1985. The Invamed acquisition also would expand Duramed's prescription product line with approved ANDAs covering nine products, including: metoclopramide tabs; procainamide HCl sustained release tabs; methyldopa/hydrochlorothiazide tabs; amantadine caps; and ibuprofen tabs. Invamed has 10 ANDAs pending at the FDA and "has developed formulations for an additional 11 ANDAs which are expected to be filed in the future." Outlining the terms of the proposed deal, the Duramed release notes that "it is contemplated that the stockholders of Invamed will receive $600,000 in cash and Duramed common stock." Invamed stockholders also will be paid "up to $3 mil. in royalty considerations on future Duramed product sales." In addition, Invamed stockholders will also receive options to purchase 100,000 shares of Duramed stock at a price of $10 per share "exercisable until the later of June 30, 1990 or the date when the full acquisition price is paid," the release states. Duramed's stock is trading at about half that level now. Duramed noted that following completion of the purchase, Invamed operations would be consolidated with Duramed in Cincinnati "as soon as necessary FDA approvals are obtained." A merger with Invamed would give Duramed an important shot in the arm after a very difficult 1987. Manufacturing compliance problems with FDA, including an Oct. 23 recall of 92 mil. conjugated estrogen tabs, combined with a one-year hiatus in new product approvals put Duramed on the brink of Chapter 11. At a March 24 meeting for securities analysts sponsored by Swergold, Chefitz and Sinsabaugh in New York, Duramed President and CEO Thomas Arington, who was hired in October at the company's nadir, noted, "We looked at our financial alternatives and . . . we had a lot of interest in Duramed." Last year, Arington acknowledged "was a year of a number of problems for Duramed, highlighted by a recall on conjugated estrogens that cost us $1.5 mil." to compensate customers. "Actually, we had a residual impact as far as replacing this material -- it impacted on the sales of other products in the line." However, Arington noted that Duramed's bank gave it "very strong support." In addition, the company exercised an option agreement with an R&D partnership established in 1984 that provided the company with a needed $1.3 mil. cash injection, Arington said. Summarizing the recall, Arington explained: "We found the problem; we reported it to the FDA; we corrected the problem; and now we are shipping, and this product is growing steadily at this point. The problem, as it turned out, was a packaging problem. So it seems like a very severe lesson to learn."
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