MARSAM's NEW PRODUCTION FACILITY WILL BE FINANCED WITH $ 5- $ 7 MIL
MARSAM's NEW PRODUCTION FACILITY WILL BE FINANCED WITH $ 5- $ 7 MIL. of the approximately $ 14.3 mil. in net proceeds the generic injectable manufacturer expects to raise through a public offering. In a Sept. 12 prepricing prospectus, Marsam Pharmaceuticals said it will allocate $ 5- $ 7 mil. of the offering's net proceeds to construct and equip a new facility in its Cherry Hill, N.J. base to manufacture non-penicillin, non-cephalosporin products. Smith Barney, Harris Upham is underwriting the offering of 1.3 mil shares of common, at an estimated price of $ 15.50 per share. Additionally, the company expects to spend $ 2- $ 3 mil. to develop new products for the facility and to cover costs incurred in seeking FDA approval for those products. All but one of the company's non-penicillin, non-cephalosporin products are currently manufactured by Squibb in New Brunswick, N.J. under a 1985 joint operating agreement. A Marsam plant for those products would "significantly lower costs," the prospectus notes. The initial term of Marsam's agreement with Squibb expires Dec. 31, 1991. In addition, Squibb's recently announced plan to merge with Bristol-Myers has heightened interest by other firms in developing a similar joint operating arrangement with Marsam. The company is in "preliminary" discussions with other corporations, the prospectus notes. As Marsam has emerged this year from development stage, it also is considering building its own sales force and distribution force. Revenues for the six months ended June 30 reached nearly $ 2 mil., the prospectus notes. Marsam began selling products in January. The revenue total includes sales to Squibb of $ 1.4 mil., distributorship fees of $ 255,000 from the Squibb-Marsam joint operation, and contract sales to third parties of $ 349,000. Marsam has "29 FDA applications covering 50 package and dosage configurations for 19 of these drug products and intends to file for FDA approval of approximately 34 additional package and dosage configurations," the prospectus states. The company currently manufactures 15 generics in 45 package and dosage configurations. The most recent Marsam ANDA approval, Aug. 9 FDA for tobramycin sulfate injection, was the first generic version of Lilly's Nebcin aminoglycoside antibiotic for serious infections. However, Marsam says it may not have been the first company to file with FDA for the generic. The drug's patent expired Sept. 12. On Sept. 1, Lilly licensee Alcon Labs was denied an application to extend the patent by order of the Commissioner of Patents and Trademarks. The decision may be appealed, the prospectus notes. The new facility will join the two existing customized plants already operating in Cherry Hill. Marsam got the FDA go-ahead for its penicillin-production facility in January 1988 and its cephalosporin plant was certified for production this past July. Marsam is manufacturing five products at its dedicated penicillin facility and is awaiting agency approval to begin production of two products at the cephalosporin plant. Marsam anticipates a 24-30 month period for building the new plant and receiving FDA Current Good Manufacturing Practice clearance. The remaining $ 4.3 - $ 7.3 mil. will be used for working capital and general corporate purposes, the prospectus says. Following the offering, the company will have 5.98 mil. shares of common stock outstanding, of which Squibb will beneficially own 8.1%.
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