Recro Announces Entry Into Letter of Intent for Acquisition of a Full Service CDMO

Recro Pharma

EXTON, PA — Recro Pharma, Inc. (NASDAQ: REPH) this week announced that it has signed a non-binding letter of intent for its acquisition of a full-service CDMO with capabilities that range from formulation development to commercial manufacturing for various dosage forms including oral liquids, sterile injectables, tablets, topicals, liquid/powder filled capsules, ophthalmic droppers, liposomes and nano/microparticles.

Pursuant to the LOI, Recro agreed to acquire 100% of the equity interests of the Target in exchange for consideration having an aggregate value of approximately $49.850 million, assuming a cash free, debt free balance sheet and that the Target has, at closing, an adequate level of working capital (excluding cash) to support the operations of its business post-closing. The purchase price will be paid through: (i) $25.5 million of cash at closing; (ii) 9,302,718 shares of common stock of Recro to be issued to Target in six months; and (iii) seller notes of $6.1 million. The seller notes will have a three (3) year maturity date from the date of closing and bear interest at a rate of 6% annually. The seller notes will be expressly subordinated and unsecured in right of payment and priority to Recro’s existing debt with Athyrium Capital Management.

“We are excited about this potential transaction and look forward to closing and sharing more details in the near term,” said David Enloe, president and chief executive officer of Recro.

Completion of the transaction is subject to finalization of due diligence investigations by the relevant parties, the negotiation and execution of definitive transaction agreements and other customary closing conditions. There can be no assurance that a definitive agreement will be entered into or that the proposed transaction will be consummated. Further, readers are cautioned that those portions of the LOI that describe the proposed transaction, including the consideration to be issued therein, are non-binding.

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