MEDEVA BOOSTS U.S. RESPIRATORY BUSINESS WITH ACQUISITION OF ARMSTRONG

MEDEVA BOOSTS U.S. RESPIRATORY BUSINESS WITH ACQUISITION OF ARMSTRONG Pharmaceuticals under a definitive merger agreement announced Oct. 14. The $54 mil. stock swap will leave the New Canaan, Conn.-based metered-dose inhaler company Armstrong intact as a division of London-based Medeva plc. "The acquisition underscores Medeva's commitment to be a major player in the U.S. respiratory field," Medeva said. Armstrong will be the fourth recent U.S. pharmaceutical purchase for Medeva. The company entered the U.S. respiratory market with the purchase of Fort Worth, Texas-based Adams Labs in October 1991 ("The Pink Sheet" Oct. 14, 1991, T&G-5). Medeva also acquired two California-based companies: M.D. Pharmaceutical in 1991 and International Medical Systems in July of this year ("The Pink Sheet" July 6, T&G-12). Armstrong (formerly known as ATI Pharmaceuticals) produces metered-dose inhaler delivery systems for such products as Rhone- Poulenc Rorer's Nasacort and Azmacort and Schering-Plough's Proventil. The firm is also developing proprietary MDI versions of off-patent products. Armstrong's sales for the year ended Sept. 28, 1991 were $13.9 mil. Earnings were $1.6 mil. Through the first nine months of 1992, sales were down 2% to $9.9 mil., while net income increased 21% to $1 mil. "The attraction of Armstrong to Medeva lies both in its exciting profit potential and also in the cross-benefits with Medeva's existing U.S. operations," Medeva said. "In particular, Armstrong's sales and profits are expected to benefit significantly from the marketing of its product range by Adams Laboratories' extensive respiratory sales force." Adams' lead products are two branded generic respiratory drugs: Humibid and Deconsal. The Adams unit has a sales force numbering over 150; Armstrong does not have a detailing staff. In announcing the merger, Medeva highlighted Armstrong's pursuit of a generic albuterol MDI. FDA has been working to establish bioequivalence guidelines for such products. Medeva predicted that Armstrong's albuterol MDI "could be available in the U.S. in the next 12 to 18 months." Armstrong said it had been seeking a strategic partner to market its upcoming proprietary products for over a year. Medeva approached the company this spring and the two firms negotiated the merger agreement. The definitive merger agreement calls for Medeva to issue 16.2 mil. shares, currently valued at $54 mil., in exchange for all outstanding shares of the Armstrong. Each Armstrong share will be exchanged for 1.055 Medeva shares. The deal is subject to adjustment if the value of Medeva stock changes such that the deal is valued at more than $63.8 mil. or less than $52.5 mil. Armstrong shareholders are expected to vote on the merger in December, with the deal expected to close in January. Shareholders controlling approximately 40% of the company's voting securities have committed to the merger, Armstrong noted. Armstrong's current management, led by Chairman H.R. Shepherd, will stay in place, Medeva said. In a separate deal announced the same day, Ivax will acquire "almost all of [Medeva's] basic generic products" marketed by its Evans-Kerfoot subsidiary in the U.K. for $40 mil. to be paid over the next 12 months. Medeva described the deal as a "withdrawal" from the U.K. generic market and a "refocusing...on higher margin generics, [and] specialty and branded pharmaceuticals." The "U.K. generics market has been extremely competitive for some time and this transaction will sharply reduce Medeva's exposure to it," the company said. Medeva indicated at a securities analysts meeting in May that it wanted to focus on higher-margin operations ("The Pink Sheet" May 18, T&G-16). Ivax' Norton Healthcare subsidiary will acquire "most of Medeva's existing inventory of generic products; a manufacturing plant and office building consisting of approximately 81,000 square feet of space on 29 acres near London; certain product licenses; an antibiotics business; and future rights to the 'Kerfoot' name and trademarks, which name has been used in the U.K. pharmaceutical industry for over 140 years," Ivax said. Evans-Kerfoot also has entered into a 24-month contract manufacturing agreement with Norton. Ivax will pay Medeva (British Pound) 11.5 mil. (approximately $19.7 mil.) upon closure of the deal, which is expected Nov. 3, for purchase of the products. In exchange for the manufacturing facility, Ivax will pay (British Pound) 12 mil. ($20.5 mil.) in monthly installments over the next year.