Ergomed to acquire CRO PSR Group for €5.7M
Ergomed, a specialized pharmaceutical services and drug development company, announced the proposed acquisition of PSR Group, an international niche CRO specialized in orphan drug development. Ergomed has agreed to acquire 100% of the issued share capital of PSR Group for a total consideration of up to €5.7 million.
Dr. Dan Weng, Chief Executive Officer of Ergomed, said: “This acquisition aligns with the strategy laid out at IPO of seeking to grow our existing, profitable service business both organically and through strategic acquisitions, and specifically of becoming a leader in orphan drug development. We are looking forward to combining PSR’s specialist skills and Ergomed’s global infrastructure to rapidly develop this business based on our combined strengths. PSR has successfully demonstrated its leading capabilities in this area and its addition to the Group complements Ergomed’s existing highly-regarded orphan disease specialism. We welcome PSR’s team and are pleased to increase our capabilities in an under-served and growing area.”
Dr. Roger Legtenberg, Chief Executive Officer of PSR Group, added: “PSR welcomes the opportunity to expand its current services portfolio and geographical coverage by leveraging Ergomed’s international reach and complementary services. We will continue to make a significant contribution to the availability of new orphan drug treatments, improving the lives of patients and their families impacted by rare diseases. We look forward to joining the group and contributing to its growth and success.”
The Acquisition is consistent with Ergomed’s stated strategy to grow its existing, profitable services business both organically and through bolt on acquisitions. Ergomed has particular expertise in the development of orphan drugs as part of its profitable and fast growing CRO offering, which provides a full range of high quality contract research and trial management services across all phases of clinical development. PSR’s extensive expertise in orphan drug development will complement Ergomed’s services and will further strengthen Ergomed’s orphan drug development capability in addition to expanding its current services portfolio.
PSR, established in 1998, and based in the Netherlands, is a specialist orphan drug CRO and recognized as a leader in rare diseases. As part of the Acquisition, Ergomed will continue to grow PSR’s global orphan drug development business under the PSR brand and will remain focused on its two divisions: (1) PSR Orphan Experts, which is a leading expert in supporting biotech and pharma companies with their regulatory and clinical development of orphan drugs (c. 75% of revenues); and (2) PSR Pharma Resource, which complements PSR Orphan Experts as a niche staffing provider, focused on orphan drug specialised staff (c. 25% of revenues).
Orphan drug development is a specialist and growing field. Orphan diseases are severe, debilitating or even life-threatening conditions which affect fewer than 1 in 2000 people (EU definition) or fewer than 200,000 people in the US (US definition). Although patient numbers in individual indications are limited, there are a total of 30 million people worldwide suffering from rare diseases. The orphan drug market to target these diseases continues to grow and requires highly specialised providers due to the regulatory, logistical and operational complexities of conducting clinical trials in these indications. Due to their characteristics, combined with the rarity of the diseases, orphan drug clinical studies typically are complex and run in small patient cohorts with potentially faster market entry.
The Acquisition will bring together Ergomed’s global geographical footprint, including its presence in the MENA region, an area which is important for orphan drug development, and PSR’s significant expertise and strong brand. Ergomed believes the combination will have the scale and specialism to compete effectively in the global CRO market.
Ergomed has a track record of successful identification and integration of acquisitions and the Company continues to pursue opportunities to acquire services businesses which are consistent with its strategy of becoming the global leader in pharmacovigilance services, the leading CRO in orphan drug development and to strengthen its CRO network through geographic expansion and/or complementary service offerings.
The initial and contingent consideration will both be satisfied partly in cash and partly in new Ergomed ordinary shares. The initial share consideration will be satisfied through the issuance of 323,813 new Ordinary Shares in Ergomed at an issue price of 165 pence per share. The Initial Consideration Shares are subject to a 12 month hard lock-in and six month orderly market provision. Admission of the Initial Consideration Shares is expected to take place at 8.00 a.m. on 2 October 2017. The Acquisition is expected to be immediately accretive to Ergomed’s 2017 earnings per share.
The Acquisition is conditional only upon the placing agreement between the Company, Numis and N+1 Singer becoming unconditional and upon Admission. The Acquisition Agreement includes warranties and indemnities from certain of the sellers in favor of Ergomed. Claims by Ergomed against such sellers under the warranties and indemnities are subject to certain financial thresholds and caps and also, in the usual way, to matters disclosed by the sellers.