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Spear Pharmaceuticals, a privately held generic dermatology drug maker, has mandated Moelis to explore strategic options including a sale, according to two sources briefed on the matter.
Randolph, New Jersey-based Spear manufactures and sells prescription topical skin treatments for conditions including acne and actinic keratosis that are bioequivalent to branded products.
The company generated approximately USD 250m in revenue in 2016, one of the sources said. Its EBITDA could not be learned.
The sale process is at an early stage, having kicked off last month, one of the sources said.
Because anti-aging and skin rejuvenation treatments are popular in developed countries, Spear could command a high valuation, perhaps as much as 4x revenue, one sector advisor said.
Another sector advisor said a platform such as Spear’s would typically sell for an EBITDA multiple of between 10x-14x, a relatively rich multiple reflecting demand for such products. For high-growth companies, the EBITDA multiple could be higher, the advisor said.
Among Spear’s products are Fluorouracil Cream for keratoses, or lesions that develop from sun exposure over years, which it says is the generic equivalent to Valeant Pharmaceuticals [NYSE:VRX] Efudex Cream.
It also sells Tretinoin gel, a retinoid derived from Vitamin A to treat acne, which is the generic equivalent to Retin-A Micro, a widely used skin treatment sold by Ortho-McNeil Pharmaceuticals, a unit of Johnson & Johnson [NYSE:JNJ].
Spear representatives could not be reached for comment. A Moelis representative declined to comment.
by Yiqin Shen, Deborah Balshem and Dane Hamilton
As seen in the mergermarket newsletter on 02/04/2017
