U.S. company buys BioVectra

Dave Stewart
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California-based Questcor purchases Charlottetown pharmaceutical manufacturer

BioVectra

A Charlottetown pharmaceutical manufacturer has been sold to a California-based company in a deal that could end up being worth $100 million.

Questcor Pharmaceuticals is in the process of finalizing a deal to purchase BioVectra, which will be worth $50 million when the papers are signed.

The other half is contingent on BioVectra's growth projections.

Ron Keefe, CEO of BioVectra, said Questcor is currently acquiring shares from the Charlottetown company.

"It's a good thing for our company at BioVectra. One of the things we've found over the years is we really need to access to capital if we are to continue to grow," Keefe said Thursday.

"In the past number of years we've probably invested close to $40-50 million in assets and that's basically been funded by shareholders and primarily internal cash flow.''

Keefe says whatever BioVectra has been able to generate in the past has been sunk into the business and bank financing.

He's confident they'll be able to grow enough to make the deal worth the full $100 million.

"We're expecting to grow by about 40 per cent in terms of revenue this year and we've increased our employment numbers."

BioVectra completed an $18 million expansion last year of its pharmaceutical manufacturing facilities and has grown from 140 employees to 185 workers in the past six to eight months. Plans are to add another 20 employees.

"We're growing very rapidly and, as you grow, one of the things you need is continued access to capital. This transaction really allows us to access capital that we would not otherwise be able to obtain other than through continued bank financing.''

Keefe said the sale does not affect the day-to-day operations at BioVectra.

"We maintain independence in terms of our operations. (We will have the) same management team, same employee group and that's extremely important to the purchaser and extremely important to us.''

Questcor wants to see the company grow on P.E.I. as well, Keefe adds.

"They'll pay us more if we do grow so it kind of works out very, very well for us and for the economy of P.E.I., quite frankly.''

dstewart@theguardian.pe.ca

Twitter.com/DveStewart

Organizations: Questcor Pharmaceuticals

Geographic location: California, Charlottetown, U.S. P.E.I.

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Recent comments

  • Dave
    February 13, 2013 - 06:08

    Dear Readers, Questcor is a wonderful company to be associated with, both, for moral reasons, as well as, an investment. I shall try and provide some clarity to previous posts that I have read here. Questcor has been a victim of whats called a short attack. Investors spreading misinformation or not providing all information to manipulate the stock price down to make money. First, they said that Insurers were not going to reimburse or cover the cost of medication for Questcor's leading product. Without making this extremely long, all insurance providers provide policies for doctors to follow for reimbursement. In alot of cases, health plans will state that they do not cover a drugs reimbursement without medical review. This is common, but doesn't mean they will not cover when Drs deem it necessary for their patients, The insurers will pay or they can be subject to lawsuits themselves. As far as the california lawsuit against Questcor, there is one investor, not a SEC problem, who is suing because he lost money by this attack. Lawsuits are common among stocks that fall in price. Most cases settled out of court with only the law firms making money. It's sad that their are law firms that will chase ambulances for the sake of revenue, even if no wrongdoing has occurred its less expensive to settle at times. I will mention that there were a slew of Attorneys looking for one investor to file a claim. Only one filed. Also the investigation into the marketing practice is just that, an investigation and no charges have yet or may ever be filed. It is the Southeastern District of Pennsylvania FDA doing the investigation. This is also common and normally nothing happens. There has been a recent ruling by the Supreme court to stop the FDA from investigating rumors of bad marketing by individual salesman. We shall see how that works out. In any case, Questcor, which has no debt, generates over 186 million dollars in free cash flow currently. They continue to increase revenues and profit to the tune of 150% growth. The product Acthar is manufactured by BioVectra. Since part of the trade secret is built into the manufacturing process, Questcor needed to buy them to make sure the process stays exclusively for them. In the USA, Acthar has a orphan status, which gives them exclusivity for 7 years, or until 2017. There are 19 on label indications for Acthar which are FDA approved. They have only marketed 4 indications up to now. Questcor wants to fund more research into this product and expand its use into other areas. The product is a last resort after all else have failed or if a person is known not to respond to first or even second line medications. It has saved lives. The company presently trades with a PEG ratio of .25. That means it is currently trading at 1/4 of its true value compared to others in the industry. The stock is extremely undervalued fundamentally. Technically it has currently showing strength and investors are bullish. With this reversal new institutional investors are just piling into the stock. I highly recommend investors taking a look. If you are interested in more information, I suggest going to Yahoo Finance and read the posts on the message board. Very Interesting. Good things will come to BioVectra with this sale. The employees should feel comfortable and secure with Questcor. They have lots of research to do with them and the money to make it happen.

  • Yun
    January 14, 2013 - 07:40

    Hope they will not fire our employee.

  • curious
    January 04, 2013 - 13:46

    Any envoirnment or air quality issues to be made aware of?

  • In the know
    January 04, 2013 - 09:02

    I can only imagine why they are coming here to PEI. Looks like the SEC has interest in them..... A federal lawsuit was filed recently in the U.S. District Court representing Central California by an investor against Questcor Pharmaceuticals, a company which manufactures a variety of drugs that have been prescribed for conditions such as infantile spasms, multiple sclerosis and the kidney disorder known as nephrotic syndrome. The lawsuit was filed on behalf of all investors and entities that purchased shares in Questcor Pharmaceuticals between April 26, 2011 and September 21, 2012, and accuses the management of Questcor Pharmaceuticals of violating federal securities laws by making untrue and deceptive statements about the effectiveness of its pharmaceutical offerings, most notably the drug Acthar, an injectable gel which was marketed for the treatment of both nephrotic syndrome and multiple sclerosis. According to documents filed with the Securities and Exchange Commission by Questcor on September 24, 2012, the company is now being investigated by the federal government on issues centering around Questcor’s questionable promotional practices. These promotional practices are also one of the central complaints presented by the plaintiffs in the federal lawsuit which alleges that Questcor Pharmaceuticals led investors to believe that they had clinical evidence supporting the effectiveness of the injectible drug Acthar for treating multiple sclerosis and nephrotic syndrome, when in fact the drug has only been proven clinically effective to treat infantile spasms. While shares of Questcor Pharmaceutical were introduced at $3.50 a share in 2009 and have traded at more than $55 per share as recently as July of 2012, recent setbacks have sent the stock price plummeting to a price of just over $18.00 a share in September of 2012. Questcor Pharmaceuticals stock was also negatively impacted by the announcement made by Aetna Inc. that it was limiting the coverage available for the drug Acthar for treatments of conditions it has not been proven to be medically effective for.

  • Just How Much
    January 04, 2013 - 08:46

    Just how much of that $18 million was taxpayers money ? Some of the stories I've heard from trademen that worked on it , no private company spending their own money would have done it the way they did . I was told there was a money pit with no bottom .

    • read before you speak
      January 04, 2013 - 11:13

      How do you get taxpayer money questions from Mr Keefe's statement copied below? "In the past number of years we've probably invested close to $40-50 million in assets and that's basically been funded by shareholders and primarily internal cash flow.'' Seems pretty obvious to me where the money os coming from. As far as your tradesmen stories, how would the tradesman know where the money is coming from at any jobsite? Curious to find out how many contractors know or care once their checks are cut where the money was originally coming from.

  • kevin
    January 04, 2013 - 07:29

    well Joe Blow, thisay be wishful thinking, ---this business has over the years recieved plenty from the taxpayers, I would guess that most of assets were furnished by us. , no different from almost every company on PEI, = on the back of you and me, --- but hey jobs.jobs,jobs as the Premier's campaigned on

  • Joe Blow
    January 03, 2013 - 20:58

    This sounds like a sound business venture. Nice to see something like this happen to a PEI business without the Ghiz government getting involved and finding a way to lose money on it and cost taxpayers more money somehow.

    • jon
      January 04, 2013 - 00:39

      wish all of you the best be aware obama is rewarding companies who bring work home though, this has hit ontario hard.