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IMCERA BUILDING PEPTIDE SUPPLY BUSINESS WITH STAR BIOCHEMICAL

Executive Summary

IMCERA BUILDING PEPTIDE SUPPLY BUSINESS WITH STAR BIOCHEMICAL acquisition, IMCERA Group President Blake Ingle noted at the Dec. 3 Mabon Securities Research Conference in New York City. IMCERA announced Oct. 30 that its Mallinckrodt Specialty Chemicals division had acquired Star Biochemicals, a producer of both catalog and custom peptides headquartered in Torrance, Calif. Ingle remarked: "There are a great number of peptide pharmaceuticals that are now in development, some on the market. We intend to be an ingredient supplier to those markets." In announcing the Star acquisition, IMCERA estimated the U.S. market for bulk peptides and peptide building blocks at $ 75 mil., expected to double in five years. IMCERA, located in Northbrook, Ill., also pointed out that the acquisition will give it a facility "in the heart of the biotechnology community" to better access that market. Star President/founder Satish Joshi is Mallinckrodt Specialty Chemicals' director of peptide technology. Mallinckrodt Specialty Chemicals net sales for the first quarter of FY 1992 (ended Sept. 30) were $ 94.9 mil., a 15.4% decrease from the comparable period a year ago. Operating earnings dropped 40% to $ 6 mil. About a third of the unit's business is in pharmaceutical ingredients, with the remainder in food and beverage, industrial and laboratory chemicals. Ingle attributed part of the reason for the "soft" first quarter sales to a "weak" industrial segment but said initial second quarter figures show improvement. Mallinckrodt Specialty Chemicals comprises about 30% of IMCERA's business. Mallinckrodt Medical generates another 30% and the Pitman-Moore animal health unit about 40% ("The Pink Sheet" Oct. 21, T&G-2). Mallinckrodt Medical is anticipating FDA approval and product launch in 1992 for Albunex, which would be the first U.S.-marketed injectable contrast agent for ultrasound imaging. Mallinckrodt has exclusive North and South American distribution rights for the product under a license from Molecular Biosystems. A premarket approval application for Albunex for use in echocardiography was filed in September 1990. Albunex has initial annual sales potential of at least $ 100 mil., Mallinckrodt Medical President & Chief Executive Officer Ray Holman told Mabon. Holman predicted Albunex will be "without competition" for at least two to three years. One of the anchors of Mallinckrodt Medical's business is its X-ray contrast media product line: Optiray, a nonionic low osmolar medium for X-rays launched in 1989; Hexabrix, an ionic low osmolar medium; and Conray, a conventional contrast medium marketed for almost 30 years. In 1991, Mallinckrodt Medical began offering the media in its Ultraject disposable prefilled syringe. Holman said sales of Ultraject filled syringes "are roughly about 15% of our total contrast media sales at this time." While sales "are growing, we cannot reach all of that market because there are so many dosage sizes and variable doses," Holman commented. "So our objective is to reach a large part of the market with [Ultraject]. As far as competition, there is none today. We have the product patented so I don't think anyone can come out with a prefilled syringe" for X-ray media. First quarter 1992 net sales for Mallinkrodt Medical were $ 134.8 mil., up 21% from first quarter FY 1991, while operating earnings were $ 27.9 mil., a 74.4% increase. For IMCERA overall, Ingle reported that first quarter net sales were $ 381.3 mil., up 1.5%, operating earnings were $ 44.8 mil., up 27.6%, and net earnings were $ 25.7 mil., up 42.8%.

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