Collegium (Nasdaq: COLL) and Ironshore Therapeutics Inc. today announced a definitive agreement pursuant to which Collegium will acquire Ironshore for $525 million in cash with the potential for an additional $25 million commercial milestone payment.
Ironshore is a privately held, pharmaceutical company that markets and distributes Jornay PM (methylphenidate HCl), a central nervous system (CNS) stimulant prescription medicine for the treatment of attention deficit hyperactivity disorder (ADHD) in people six years of age and older and the only stimulant medication that is dosed in the evening. The acquisition of Ironshore will represent a significant milestone in advancing Collegium’s mission of building a leading, diversified specialty pharmaceutical company by expanding the Company’s business beyond pain management and establishing a commercial presence in a new and growing market.
“The Ironshore acquisition is a unique opportunity to deliver a transaction that is immediately accretive to Collegium while meeting all of our strategic objectives through the addition of a growing commercial asset that diversifies our portfolio, has significant revenue potential and exclusivity into the 2030s,” said Michael Heffernan, Chairman and Interim President and Chief Executive Officer of Collegium. “The addition of Jornay PM will establish a new presence for Collegium in ADHD, a large and growing market, where we can leverage our core commercial competencies and proven commercial execution capabilities to maximize the brand’s potential. Our healthy balance sheet and strong financial position enabled us to secure attractive financing for the transaction with terms that reduce our cost of capital and enhance our flexibility in the management of our debt.”
“We are pleased to announce this transaction with Collegium, which recognizes the value of Jornay PM and the success of Ironshore’s talented team in the delivery of an important and differentiated treatment option for patients with ADHD and their caregivers,” said Stephanie Read, Chief Executive Officer of Ironshore. “Our team has worked tirelessly to bring Jornay PM to the ADHD community and we are excited that Collegium recognizes Jornay PM’s long-term potential and is committed to supporting its continued growth.”
Transaction Rationale
- Strategically aligns with Collegium’s mission of building a leading, diversified specialty pharmaceutical company by broadening the commercial portfolio beyond pain management and establishing a commercial presence in neurology via the large and growing ADHD market.
- Jornay PM is poised to become Collegium’s leading growth driver. Net revenue for Jornay PM is expected to be in excess of $100 million in 2024. In the first half of 2024, Jornay PM prescriptions grew 32% year-over-year. For the full-year 2023, the product generated approximately 490,000 prescriptions, a 58% increase compared to 2022. Jornay PM is a highly differentiated treatment for ADHD due to its evening dosing, smooth therapeutic effect and dose-dependent duration.
- Jornay PM is supported by 16 Orange Book-listed patents, with expiries in 2032.
- Further strengthens Collegium’s financial position through an increased revenue base, expected immediate accretion to adjusted EBITDA and accelerated cash flow generation.
Additional Transaction Details
- Under the terms of the agreement, Collegium will acquire all the outstanding shares of Ironshore for $525 million in cash at closing. Collegium will also pay Ironshore shareholders $25 million in additional consideration if Jornay PM net revenue exceeds a defined threshold in 2025.
- The all-cash consideration will be funded by a combination of Collegium’s existing cash on hand and a $646 million secured financing from funds managed by Pharmakon Advisors, LP (Pharmakon). The new five-year term loan will replace the existing Collegium term loan from Pharmakon and reduce the interest rate by 300 basis points.
- At year-end 2024, Collegium expects net leverage to be less than two times based on estimated 2024 pro forma combined adjusted EBITDA.
- Collegium expects this transaction to be immediately accretive to adjusted EBITDA, excluding transaction costs.
Timing to Close
The transaction, which has been unanimously approved by the boards of directors of both companies, is expected to close in the third quarter of 2024, subject to customary closing conditions, including receipt of required regulatory approvals.
Advisors
Lazard is acting as the exclusive financial advisor to Collegium. Centerview Partners is acting as the exclusive financial advisor to Ironshore. Hogan Lovells is serving as M&A legal counsel to Collegium. Goodwin Procter LLP is serving as M&A legal counsel to Ironshore. Cleary Gottlieb Steen and Hamilton LLP is serving as legal counsel to Ironshore shareholders.
