Richmond pharma company Kaléo acquired

Marathon Asset Management to acquire company by end of year

Published November 29, 2021 by Katherine Schulte

New York-based Marathon Asset Management LP announced Monday it has entered into a definitive agreement to acquire Richmond-based privately held pharmaceutical company Kaléo Inc., which is known for making injectors to treat allergic anaphylaxis and opioids overdoses.

The total base purchase price is approximately $310 million in cash, less certain adjustments and includes potential net revenue-based milestone payments of up to approximately $70 million in cash for the 2022 and 2023 fiscal years, in a transaction that will provide liquidity for Kaléo shareholders upon closing, according to a news release from Marathon.

“The sales trajectory of Kaléo has been impressive, and we view the company as a platform for growth,” Dr. Evan Bedil, Marathon’s head of healthcare, said in a statement. “We plan to leverage the company’s strong portfolio of intellectual property, its leading reputation among allergists and its experienced management team to pursue multiple avenues of growth in the coming years.”

The company’s headquarters will remain in Richmond.

Additionally, Richmond-based plastic films and aluminum extrusions manufacturer Tredegar Corp. is selling its 18% ownership stake in Kaléo, which is about 3.3 million shares, the company announced Monday. Tredegar is a 1989 spinoff of Ethyl Crop., which now operates as NewMarket Corp.

Twin brothers Dr. Eric Edwards and Evan Edwards founded Kaléo in 2005 and left in 2019. Eric Edwards co-founded Phlow Corp., another Richmond-based company developing new ways to manufacture essential medicines.

Phlow has plans to open a $125 million plant in Petersburg. In May 2020, Phlow was awarded a $354 million, four-year federal contract from the U.S. Biomedical Advanced Research and Development Authority (BARDA) to produce the essential medications using advanced manufacturing processes from the Medicines for All Institute based at Virginia Commonwealth University’s College of Engineering.

Kaléo, which has more than 200 issued patents, developed the patented Aerio Auto-Injection Platform for treating allergic anaphylaxis and opioids overdoses. It also developed Evzio, a prescription medicine used to treat opioid emergencies like overdoses, which it has since discontinued. The company commercialized the AUVI-Q epinephrine injector, which distributes 0.15 mg and 0.3 mg doses, and the AUVI-q, which injects 0.1 mg of epinephrine and is designed for infants and toddlers.

In 2020, Kaléo started offering its auto-injector under the name Allerject in Canada.

“Kaléo’s executive management team enthusiastically looks forward to joining forces with Marathon, which has been a strong ally of Kaléo as a lender for many years,” Kaléo President and CEO Ronald Gunn said in a statement. “With its vast resources and well-established capital base, we have found the strongest possible partner to help us commercialize our significant intellectual property and write the next chapter in Kaléo’s story.”

The Kaléo Board of Directors and shareholders have unanimously approved the transaction, which is expected to close on or before Dec. 31.

Formed in 1998, Marathon Asset Management manages $23 billion in assets. Its health care team buys pharmaceutical royalties in addition to providing capital.

Under a settlement agreement, Kaléo was ordered by the U.S. Department of Justice to pay $12.7 million to resolve a lawsuit filed under the False Claims Act alleging that the company “submitted or caused the submission of false claims for payment to the Medicare Program…for Ezvio,” by pharmacies.

The company earned national attention when the price of Evzio jumped. In fall 2020, Kaleo discontinued Evzio and its generic equivalent.

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