The filing of the S-1 comes with a peek into the company’s revenue and earnings, which reveals that the company has seen 81% revenue growth in its most recent quarter compared the same quarter last year. Still, Patheon recorded a net loss of $6.1m for the three months ended January 31, compared to a net loss of $3.6m for the same quarter in 2014.
“We felt that given current market conditions and where we are, we felt it was prudent to make a filing now,” Patheon spokesman Tyler Gronbach told us.
The company intends to use an undisclosed portion of the net proceeds received from the IPO to repay all or a portion of its $550m aggregate principal amount of 8.75%/9.50% Senior Notes due May 1, 2020.
As far as client distribution, for the last fiscal year, Patheon’s top 10 customers accounted for 39% of its revenues, though no single customer accounted for more than 7% of the company’s revenue. And the company is also a distinctly global one, with about 45% of its revenues attributable to customers located outside the US.
The financials come as the company has, over the last decade, developed and manufactured 86 newly approved drugs, including 11 in 2014 and one already this year, which it says is more than twice the number of any other CDMO service provider.
As far as the potential market for Patheon, which merged with DSM last year as part of a $2.65bn deal, approximately $40bn in services is expected to be outsourced to CDMOs such as Patheon in 2015, according to Root Analysis. Currently, only 25% to 30% of pharma industry spending on formulation, development and manufacturing is outsourced, and in the future “it is expected that our customer base will expand the use of outsourcing to CDMOs because of changing industry dynamics, driving growth in our market,” Patheon says.
The company also notes that “industry sources” indicate that the CDMO industry’s annual growth rate is expected to be higher than the growth rate in the overall pharma industry, with overall CDMO growth in the mid- to high single digits, and higher for finished dosage formulation services, specialized technologies such as solubility solutions, and pharmaceuticals requiring sterile production such as biological drugs, which are all capabilities that Patheon has.
As part of the S-1, Patheon also offered a look into its restructuring plans aimed at improving profitability. In 2014, Patheon restructured its Puerto Rican operations as part of efforts to eliminate operating losses, closed a facility in Venlo, The Netherlands in July, 2014, and reduced its workforce at a facility in Swindon, UK.
The restructuring cost the company $53.5m in FY 2014, which was a major increase from FY 2013 when Patheon incurred $15.8m in repositioning expenses, of which $5.2m related to the closure of an Alberta, Canada-based facility that was acquired as part of the Banner acquisition.
In addition, the company noted in its filing that a number of other facilities are currently undergoing assessment, remediation or monitoring, including sites in Greenville, NC and Capua, Italy.
Patheon now employs about 8,700 worldwide, including 5,100 employees in North America, 3,525 in Europe and 75 in the Asia-Pacific region. The company will be listed as “PTHN” on either the NASDAQ or the New York Stock Exchange. J.P. Morgan, Morgan Stanley, Jefferies and UBS will act as joint book-running managers for the proposed offering.