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Akela plans CMO buys after exiting development project

By Nick Taylor+, 10-Aug-2011

Related topics: APIs (active pharmaceutical ingredients), Ingredients, Mergers and acquisitions

Akela Pharma is focusing on its CMO and expanding it through acquisitions after its partner exited their drug development programme.

Termination of Fentanyl Taifun development by Akela’s Japanese partner, Teikoku Seiyaku, leaves the company solely focused on its contract manufacturing unit, PharmaForm. To grow the business Akela is expanding capacity, moving into commercial-scale production, and planning acquisitions.

Through the acquisition of complementary niche manufacturing businesses, Akela and PharmaForm have an opportunity to become a significant force within the specialty contract manufacturing space”, Greg McKee, president and CEO of Akela, said.

Akela is pursuing takeover targets with niche formulation capabilities and revenues of $5-10m (€3-7m), McKee told Outsourcing-Pharma. Takeover targets must also be EBITDA (earnings before interest, taxes, depreciation, and amortization) neutral or better.

Buying a company with these financials would markedly increase sales at PharmaForm. In fiscal 2010 PharmaForm generated revenue of $12m and a net income of $1m, McKee said.

Expansion of existing assets is also underway. PharmaForm has a 50,000 sq ft production site in Austin, Texas where it is adding hot-melt extrusion (HME) capabilities and a Leistritz 27mm twin screw extruder. The site employs 62 people.

Installation of the equipment will support Phase III and commercial scale production. PharmaForm is the primary commercial manufacturer for Corcept Therapeutics, a company waiting for the US Food and Drug Administration (FDA) to approve its sole late-stage product, Corlux (mifepristone).

Exiting development

The focus on PharmaForm follows Teikoku’s decision to exit Fentanyl Taifun development. Teikoku had the product rights for Fentanyl Taifun in Japan but, after looking at market potential, chose to return the project to Akela.

Akela has no plans to invest in Fentanyl Taifun development and is actively seeking buyers for the programme. The decision leaves Akela without a development pipeline. “At this time we have no other proprietary development assets, however, that may change in the future”, McKee said.

Along with ending development Akela is filing for bankruptcy at its Finnish subsidiary, which has no physical assets or employees. Akela gained a Finnish subsidiary in the 2004 acquisition of Focus Inhalation. Closure of the subsidiary will allow Akela to focus on 2007 takeover PharmaForm.

"The discontinuation of the Fentanyl Taifun programme enables Akela to fully deploy its management and capital resources on the profitable PharmaForm subsidiary which is a logical transformation following our successful turnaround of Akela over the past 24 months”, McKee said.