Essex Woodlands, 3i in $650m pharma exit

The sale of EUSA Pharma to Jazz Pharmaceuticals will generate $200m in proceeds for Essex Woodlands, says managing director Dr. Petri Vainio.

A group of private equity investors has sold pharmaceutical company EUSA Pharma to Jazz Pharmaceuticals for $650 million cash, according to a statement. 

The consortium of investors, which includes 3i, Advent Venture Partners and Essex Woodlands, would also receive an additional $50 million milestone payment if EUSA product Erwinaze, a treatment for acute lymphoblastic leukemia, meets its 2013 US sales target. 

Though it has been approved by the boards of both Jazz and EUSA, the deal remains subject to regulatory approval and is expected to close in June. 

Essex, which specialises in providing growth equity and venture capital to healthcare companies, is the largest stakeholder in EUSA with around 33 percent of the business, managing director Dr. Petri Vainio told Private Equity International. The firm helped launch EUSA alongside co-investor Goldman Sachs in 2006, later acquiring Goldman’s stake when the bank exited the company. 

“It’s obviously a wonderful exit for the firm. We’ll be generating $200 million in proceeds for the firm,” Vainio said. 

Vainio declined to discuss value multiples. 3i and Advent Venture Partners could not be reached for comment at press time. 

Other investors who held stakes in EUSA include NeoMed, NovaQuest, SV Life Sciences and TVM Capital. 

EUSA is a specialty pharmaceutical company that posted first quarter net sales totalling $46 million. The acquisition is expected to increase Jazz Pharmaceuticals’ annual EBITDA from $75 million to $85 million from 2012 to 2013. 

Earlier this year, Essex funded the spinout of medical device company Smith & Nephew’s biologics and clinical therapies division, forming new company Bioventures. 

The firm was founded in 1985 and manages $2.5 billion in assets. Essex’s last fund raised $900 million in 2009 and was generating a negative 10.9 percent internal rate of return and a 0.9x return multiple as of 30 September, according to California Public Employees’ Retirement System documents.