Hello everyone, and thank you for joining today's call. I'm Gasper Virant from DNB Carnegie, and I'll be moderating this session. Today we are pleased to have Navamedic with us to present their agreement to acquire the business of dne Pharma, which was announced yesterday. We'll begin with a presentation from CEO Kathrine Gamborg Andreassen and CFO Lars Hjarrand. After that, we set aside enough time to answer your questions. Just as a reminder, please type in your questions directly into the chat, and we'll address them at the end of the presentation. With that, I'll hand it over to the CEO, Kathrine Gamborg Andreassen.
Thank you, Gasper. I'm really happy to share the news about the acquisition of the business of dne Pharma. The financial first is a total consideration of NOK 225 million, whereof NOK 185 million is payable at closing, and the rest is payable when the product, the Ventisol, has reached certain revenue milestones. dne Pharma is a Norwegian company focused on addiction treatment pharmaceuticals. Please mind, we are not buying the entire company. We are buying the business. The business includes the product portfolio, key employees, all the contracts, the intellectual property, all the licenses, the distribution agreements, and so on. The product portfolio includes two tender products, Methadone and Levomethadone for opioid substitution therapy, and the specialty pharma product, very unique, Ventisol, which is an intranasal naloxone spray for opioid overdose reversal. Two different areas.
Okay, thank you, Kathrine. Now I'm going to talk about the transaction a little bit more. The total consideration is up to NOK 225 million, out of which NOK 185 million are payable upon closing, and the remaining NOK 40 million are based on two different charges, subject to achievement of certain sales volumes for Ventisol. Those two charges are not likely to be paid out very soon, or at least not related to the closing of the transaction, but they will come in the future. Hopefully for us, as soon as possible per se, since they are based on volumes, but they will not be due on day one. The acquisition will be financed through a combination of debt and equity.
There will be a main loan of NOK 110 million, and a rights issue in the range of NOK 110-130 million, out of which the NOK 110 million is underwritten by Navamedic's largest shareholder, Histofoss AS. In order to close the transaction at the proposed time on July 15th, there will be a bridge loan, a loan to equity, which then will be paid back when we complete the rights issue. We have yesterday also sent a notice for an extraordinary general meeting to be held on July 14th, and of course, subject to approval of the transaction in that EGM, the closing is then expected to occur the day after on July 15th. Looking at the timetable for this, the closing then will be on the 15th. Up until the 15th, the Navamedic shares will be traded as usual.
From the 16th date, there will be subscription rights that will last up to then the rights issue, estimated at this point in time around 22nd of September, and then to close on October 6th. Those dates are to be confirmed. Looking at the financial impact this will have on the Navamedic business. Based on 2024 numbers, the business that we are acquiring generated revenues of NOK 62 million, and thereby, it'll be a very important or a good contributor to Navamedic's both top line and also bottom line, to lead to us making up for the strategy going forward. Kathrine will come back to this a little bit more in the later slides, but it's very much in line with the Navamedic strategy of increasing our product ownership.
We have made some other acquisitions, as you know, in the last few years, to move into higher rate of ownership of the products. The product portfolio will then also be accretive to Navamedic's both gross margin and the EBITDA. After we complete the integration, and it should not be a very complex one per se, but there are always some things that need to happen. When we integrate this, we expect synergies to be realized, and we anticipate an EBITDA contribution of annualized NOK 25 million based on the 2024 net sales.
Thank you, Lars. As Lars said, we think this is a really good fit with our strategy. It's a new area for us, but addiction treatment is, unfortunately, a growing therapeutic area. This business also aligns very well with our mission to deliver high-quality products where they are most needed. We also see synergies with our existing business, logistics, warehousing, etc., and not at least, our market expansion strategy. First, a bit about the business that we are about to acquire. dne Pharma is actually built on the remaining business from a very old Norwegian pharma company called Den norske Eterfabrikk , and dne Pharma is a market leader within opioid substitution treatment. The products are well known across the Nordics, and the product Ventisol, the new one, is also available in some EU countries through distributors. The two products, Methadone and Levomethadone, are Rx tender products.
The naloxone product, Ventisol, is also an Rx product, but in some markets, it's switched, partially switched to OTC to improve access for the products. When you look at the recent financials, the only revenue seen here is the only thing that is relevant from their financials, is that we could see a growth in the product portfolio from NOK 47 million in 2022 and to NOK 62 million in 2024. If we go into the different products, Methadone, as they have on the market today, is single-dose liquid, and they also have available Methadone tablets, where we have, or they have, marketing authorization in Norway and in Finland. The strategy will be to continue to be in the Nordics, with Methadone.
If we move to Levomethadone, it's also single-dose liquid and tablets, and here we actually see a potential to expand to other markets as the market itself is moving a bit from the traditional Methadone and to Levomethadone. Levomethadone is currently launched in the Nordics and has also an MA in Estonia, and Levomethadone tablets are available in the autumn for the Nordics. Ventisol is a naloxone intranasal spray, and it's been approved in 12 countries in Europe, and it has a potential also outside the European market. If we look at the right side of the page, we see the revenue split for 2024, and we see that Methadone, Levomethadone, and Ventisol have almost the same revenue, a bit higher for Methadone, but we see that Levomethadone and Ventisol are actually growing more.
When we look at the geographical presence, we see that Norway is the country with the highest revenue, 37% in 2024, Sweden number two, and then Finland. We are also happy to see really good proof points for the expansion of Ventisol, because the revenue that you see of 13% in the U.K. is the revenue only for Ventisol. That is good. If we look at Ventisol, it is currently approved MA in the Nordics, U.K., and also France, and it has been launched in France, but the sales are still early days and not that high yet. It will be launched in other European countries, where we see opportunity to launch and see fit, either through distributors or our own setup where relevant. When it comes to Levomethadone, it is already on the market. It is increasing. It is increasing also slightly on behalf of Methadone.
What we see is a bit different in the different countries is actually the penetration of this product. We see in some countries, the target group, we see relevant treatment at a very high level for the target group, while in some countries, even Sweden, we still see that it's an untapped potential for the treatment of the core target group. Probably, potential growth for both Methadone and Levomethadone in some countries, while in those countries with a high penetration, mostly Levomethadone will be the growing one of those two. A bit more about Ventisol, which is really the unique product with a global potential. It's here, if you see my screen. It's a needle-free solution, designed to provide first responders with an easy-to-use and potential life-saving dose.
It's really user-friendly, with a design that protects the nasal spray devices, and it's easy sort of to both for the target group itself and for the surroundings sort of to carry on. The design is protected in Norway, EU, U.S., and Canada, and of course, the trademark is also protected, and I've also mentioned that the MA is granted in 12 EU countries. The benefits, and next slide please, Lars. The benefits of this are many, and it's really crucial because what we see is a tendence of heroin decreasing a bit, and stronger drug products are coming to the market, like fentanyl. That really means that not only the hospital and the ambulances and the health personnel should be aware of the critical situations. This product really fits because it's relevant for a much broader target group, not only limited to healthcare personnel.
Of course, many advantages compared to existing treatments. As I said, it's needle-free, it's easy to use for bystanders, others, and it's safe, no risk of abuse. It is risk-free both for the one helping and from the user group itself, and it's also very easy to use and convenient to carry. The acquisition that we are about to close, of the dne Pharma business, really fits with Navamedic's long-term strategy, both to own products that we can control in our own markets, having more of the profit by ourself and not always share with a partner. We expect that this will be an important contributor to the growth going forward. It fits very well to our current business, to our current portfolio and also setup.
Of course, in the existing market with regards to logistics, warehousing, tender management, etc., and, not at least also regarding our geographical market expansion plans. It strengthens our presence within specialty pharma products, where we know that the profitability and the gross margin are higher than the tender business, the generic business. On the more maybe soft side, we are pleased that it contributes to addressing our mission of being a proud contributor of public health. As Lars said, it's accretive, and we anticipate an EBITDA contribution on an annual basis of approximately NOK 25 million based on the 2024 net sales. I think I'll be open for questions now.
Okay, great. Thank you for the presentation, Kathrine and Lars. Now let's jump into the Q&A session section of this presentation or this session. Starting with the first question, you distinguished between buying the company and buying the business. How are those different?
We are not buying dne Pharma. We are buying the business of dne Pharma, the people and the assets, but not the company itself.
Okay.
And Lars.
Yeah, I mean, we're not buying the shares in the company. We're not buying the shares of a company. We're buying the assets and most of the, or the business within.
Thank you. Let's move to the second question. Is the three products within the business distribution products self-developed or in licensed? I understand this question as whether the products have been developed in-house or bought by someone else, from someone else.
Both, all three products, is owned and partially developed by dne Pharma itself. When it comes to the tablet within Levomethadone and Methadone, it's in license from a third party where we will take over the in-licensing agreement.
Okay. Third question. Could you elaborate on the nature of the synergies you envision for this acquisition? In which areas are these manifested and how?
It's several ways. If we look at the internal synergies, it's the same setup, with regards to distribution, wholesalers, warehousing, etc. The tender part of this business, even if it's two different tenders, this is a large tender, it's the same mechanisms, and we will, of course, benefit on all the work that we have been doing in Navamedic regarding traceability, sustainability, safety stock, forecasting, systems, etc. The last one will be very important to sort of, kind of professionalize the forecasting system towards Pharma Production. The remaining part of the dne Pharma business, the daughter company, Pharma Production, where we will have a CMO agreement with.
Of course, when we have more products within the tender area, it's also beneficial because then we have better control, we could overlook things, think different, and share sort of competence and the way of working with all the areas within that business. Most synergies lie in the expansion of the business. We are working with market expansion of some of the products that we own, for instance, antibiotics, and we are also working with expanding some of our business in other territories through distribution partners. There are synergies in running a business towards the distributors in the country, instead of just one single product.
Okay. To the next one. Could you talk about the competition and generics for each product? A sub-question is, for the sellers, will they only have their CMO business named Pharma Production to focus on?
I think, to answer the first one, the last one first, all questions regarding the remaining business of the seller must be addressed to the sellers. We don't have the mandate to answer any of those questions. When it comes to competition, it's three different products, and the situation regarding the competition is different for the three of them. If, based on official data, IQVIA data, there is one competitor to Methadone in our core territory today, and there are no competitors in our core territory, the Nordics, for Levomethadone today. When we look at the situation for Levomethadone in Europe, there are some countries with some competition for Levomethadone, but even some of the larger countries in Europe have, there is no presence for Levomethadone yet.
When we look at Ventisol, it's one competitor, Mundipharma, that is present in a very wide geographic area, and they are present in the territories where Ventisol also is present. It's different market shares between those two in the different countries. We will be able to share more of the details after we have closed the business and when we update to the market, 14th of August.
Great. Then we have a question, which says, how long is the licensing agreement? Perhaps, Kathrine, you can, you can emphasize that this is basically an acquisition and not just licensing, right? Perhaps you can talk a little bit about that. The question is, how long is the licensing agreement?
There are actually, we have acquired all the assets from dne Pharma, so they are ours, for, yeah, forever. When it comes to the other contracts, we have a five-year CMO contract with Pharma Production for them to be able, an exclusive right to produce the product on our behalf.
Okay. Who owns the MA rights for each product in the rest of the world? Is it dne Pharma?
All the MAs that have been owned by dne Pharma will be transferred to Navamedic all over the world. They have no MA registered outside the European Union and Norway now. They are not allowed to enter into a competing business either.
Okay. I think that we have time for one last final question. And this one is regarding Ventisol. Do you see the nasal naloxone market moving to an OTC market in Europe as it has done in the US?
Yes. We see that some authorities in Europe have already decided and actually already implemented OTC status, alongside the Rx status for the product. This has been a wish from the authorities in order to expand the presence and make the product even more available. We see a challenge, though, that is not solved yet. It's who is going to pay for the product. Even if the pharmacies sell the product and make the product available, who is going to pay for it? That is not yet solved in the territories where we have OTC or they have OTC granted for the product. If you look outside the Nordics and Europe and go to Australia, we see that they have been able to distribute the products through the pharmacies, and the authorities have still been able to create a system where the authorities are paying for the product.
We know that it's a debate going on, and we know also that they are trying to, the authorities in Europe are looking to solve this, country by country, and hopefully they will talk to each other to have some good ideas as well.
Okay. Now I see that we have like two more minutes, so I thought that the last question will take a bit longer, so perhaps we can take in one last if you agree, Kathrine.
Absolutely.
Okay. What was the standalone EBITDA for dne Pharma last year, and what is the timeframe of reaching the NOK 25 million EBITDA ambition? I've repeated.
I think that's the answer on that question to you, Lars.
Yeah. If I remember correctly, the standalone EBITDA for dne Pharma for 2024 was around NOK 13 million, I think. Essentially, when we talk about the synergies, in addition to the synergies that Kathrine mentioned, there will obviously be some synergies on the cost side as well. Hence, we foresee that we will be able to realize an EBITDA of about NOK 25 million off of the same comparable NOK 62 million in revenues. As far as when we anticipate this will happen, throughout 2025, and most of them will come fairly early, at least on the cost side, in the sense that when you run the company, if you look at dne Pharma, it has overhead, it has management, and a lot of other types of costs like that, that we will not be taking on.
A lot of the cost synergies will be realized pretty much from day one, but then some of the other synergies that Kathrine mentioned will take a little bit longer to realize.
Okay. Thank you. With that, we conclude the Q&A session. Thank you.
Yeah. Thank you to all the attendees and all the questions. And thank you to you, Gasper and, Monacate.
Thank you.
Bye.