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Executive Summary

ROBERTS EXPANDS ORPHAN DRUG BUSINESS WITH ACQUISITION of Medical Marketing Specialties, Eatontown, N.J.-based Roberts Pharmaceutical announced July 19 that it has signed a letter of intent to acquire Boonton, N.J.-based MMS, a five-year-old privately held pharmaceutical business with a focus on orphan drugs. Two of MMS' orphan products are Elmiron (pentosan polysulfate sodium) for interstitial cystitis and cetiedil citrate for sickle cell disease crisis. Terms of the proposed acquisition were not disclosed, but the deal involves cash and stock as well as earn-out based on the "achievement of certain objectives." MMS' orphan products are a "direct strategic match with Roberts' interests, focus and expertise" in the fields of endocrinology, urology, oncology and hematology, Roberts said in a press release on the proposed acquisition. Proglycem (diazoxide), MMS' first product, is marketed to endocrinologists for treating excessive insulin secretion in children and adults. Roberts' LHRH agonist Somagard (deslorelin), a treatment for precocious puberty, is also detailed to endocrinologists. Somagard, which is currently in Phase III for that indication, has been available on a compassionate-use basis since last summer ("The Pink Sheet" July 31, 1989, T&G-5). Roberts charges for Somagard on a cost-recovery basis. The company estimates that there are about 250 patients currently receiving the product. The annual cost for Somagard therapy is$4,000, which translates into $1 mil. in revenues. Roberts and MMS have a potential marketing synergy in another medical area. Roberts' Amatine (midodrine HCl) urinary incontinence product is sold to urologists, the same market for MMS' Elmiron, which is available on a compassionate-use basis. About 500 patients receive Elmiron, but Roberts estimates the potential U.S. patient population at 40,000. Amatine is in Phase II for incontinence; an NDA is pending for idiopathic orthostatic hypotension, an orphan indication. The NDA for Elmiron is expected to be to be filed before the end of the year, Roberts said. MMS annual revenues exceed $1 mil. annually and the company is profitable. Roberts sales for the last reported fiscal year (ended June 30, 1989) were $5.5 mil, and earnings were $131,000. Through nine months of the fiscal year just ended, however, Roberts had a $3.3 mil. loss on sales of $972,500. The merger will provide MMS with a full-time sales and marketing staff of five people. MMS now uses part-time outside detail reps. The integrated outfit will continue to use subcontractors to manufacture their products. MMS' work on its sickle cell product will benefit from the merger. Cetiedil citrate is in "late Phase II development," Roberts said, and its own development work in hematology should help speed cetiedil's progress. Roberts has in preclinicals a treatment for iron overload conditions, the iron chelating agents hydroxypyridonate (Ferelim). Roberts, which went public earlier this year, has 1.7 mil. shares outstanding of common stock, which currently trades in the 5-3/4 range. Rosenkrantz Lyon & Ross, the underwriter for Roberts' initial public offering, is managing the MMS acquisition. The deal is expected to be completed before the end of August, subject to the signing of a definitive stock purchase agreement and board approval. MMS was established in mid-1985 by two ex-Schering-Plough execs, former VP Marvin Smolan and former Exec VP Joseph Ingolia, the firm's current co-chairmen ("The Pink Sheet" June 10, 1985, T&G-1). MMS' first product, Proglycem, was acquired from Schering, where it had been marketed since 1976 for the hypoglycemia indication. Under the letter of intent agreement, Smolan and Ingolia will remain as consultants to Roberts, with a focus on moving Elmiron through the FDA approval process. MMS acquired the exclusive U.S. marketing rights to Elmiron in late 1986 from Pharmacia.

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