The research services business will be sold to a group led by the current management team of Pharma Medica. Consideration will consist of a cash payment of $14 million on closing, a deferred payment of $4 million (payable over five years), and payment, prior to closing, of a special dividend of $1.1 million from Pharma Medica to Cipher. Pharma Medica will also retain all of its existing debt.
Closing of the transaction, which is subject to customary conditions and regulatory approvals, is anticipated on or before February 28, 2005.
“This transaction will enable us to focus entirely on opportunities to create value in our core drug development business,” said Dr John Mull, CEO of Cipher. “In addition, this further strengthens Cipher’s balance sheet, providing significant additional cash resources and eliminating all debt.”
The transaction will not impact the expected development time or costs related to Cipher’s drug portfolio. Cipher has historically contracted its phase I and biopharmaceutical work to Pharma Medica and will continue to use the services of Pharma Medica and other contract research organizations, as appropriate.
At the end of its fiscal 2004 fourth quarter (September 30, 2004), Cipher had cash and cash equivalents of $20.1 million.