aceto corporation · genericized market ungenericized markets $-$1,000 $ ... – outsourced active...
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ACETO CorporationNASDAQ: ACET
Update
May 2018
2www.aceto.com
Disclosure
This presentation contains “forward-looking statements,” as defined by the Private Securities Litigation Reform Act
of 1995, that can be identified by words such as “believes”, “expects”, “anticipates”, “plans”, “projects”, “seeks” and
similar expressions and involve numerous risks and uncertainties. The Company’s actual results could differ
materially from those anticipated or implied in such forward-looking statements as a result of certain factors, as set
forth in the Company’s filings with the Securities and Exchange Commission.
3www.aceto.com
Company Overview
• Finished Dosage Form
Generics (Rising
Pharmaceuticals)
• Nutritionals
• Active Pharmaceutical
Ingredients
• Pharmaceutical Intermediates
• Specialty Chemicals
• Agricultural Protection
Products
Human Health Pharmaceutical Ingredients Performance Chemicals
4www.aceto.com
Transition To Human Health
2010 2014 2016
• Entered U.S. Finished Dosage
Generics business acquiring
Rising Pharmaceuticals
• Expanded the portfolio of
commercialized and pipeline
products through the acquisition
of PACK Pharmaceuticals and
ANDAs from PAR
Pharmaceuticals
• SIC and GICS codes changed
to reflect Healthcare Distribution
• Acquired certain products and
assets of Citron Pharma
• Acquired ownership of 29
ANDA’s
5www.aceto.com
Human Health
• Rising Pharmaceut icals
– Portfolio of 140 finished dosage form generic
prescription drugs and over-the-counter products
▪ Strong brand recognition within generic pharma industry
– Partnership model including supply contract with
Aurobindo for Citron products
• Nutr i t ionals
– Nutraceutical ingredients
0
5
10
15
20
25
30
35
40
2015 2016 2017
Source: Form 10-K for fiscal year ended June 30, 2017, as amended
Representat ive Customers
I n c o m e B e f o r e I n c o m e T a x e s ( $ / M )
6www.aceto.com
Rising Pharmaceuticals Portfolio
• Portfolio of nearly 140 products
• Mostly niche products with MIS sales between $50
million and $150 million
• Primarily oral tablets
• Diverse therapeutic treatments
• Launched 15 products year to date with additional
product launches planned for fourth quarter
April 15, 201837 15
April 15, 201854
Goal:
• Mix of more complex, higher margin opportunities
• Blend of oral, topical, and sterile finished dosage forms
Commercialized Generic Products Portfolio ANDAs Filed and
Approved Pending LaunchProducts Under Development (1)
(1) Excludes 4 pipeline products associated with $50 million potential earn-out under Citron transaction
ANDAs Filed Approved Pending Launch
7www.aceto.com
Rising Pharmaceuticals - 37 Filed ANDAs
0
2
4
6
8
10
12
14
16
18
0-12months
13-24months
25-36months
37+months
Num
be
r o
f F
iled
AN
DA
s
Months at FDA
Genericized Market Ungenericized Markets
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
0-12months
13-24months
25-36months
37+months
IMS
Va
lue
of F
iled
AN
DA
s
Months at FDA
Genericized Market Ungenericized Markets
$5,019
$251$639
$2,896
$197
$2,426
$332
1
3
2
9
4
4
14
(1) As of April 15, 2018
(2) Value is based on total market, including brand & generic where applicable, using recent IMS sales data
Aging (1) Addressable Market Value of $11.8 Billion (1) (2)
8www.aceto.com
Pharmaceutical Ingredients
• Selec t and source active pharmaceutical
ingredients (APIs) in partnership with brand and
generic drug manufacturers
• Products predominately sourced from Ind ia and
China
• Primarily sell to customers in the U.S. and Europe
Representat ive Customers
0
2
4
6
8
10
12
14
2015 2016 2017
Source: Form 10-K for fiscal year ended June 30, 2017, as amended
I n c o m e B e f o r e I n c o m e T a x e s ( $ / M )
9www.aceto.com
Performance Chemicals
• Spec ia l ty Chemica l Bus iness
– Sourcing and distribution operating model with regulatory
support
– Various end markets: coatings, plastics, food/beverage, ag
intermediates
– Predominately sourced in China
– Consultative sales approach
• Agr icu l tu ra l Pro tec t ion Produc ts
– IP ownership through technical and end use registration
with EPA
– Warehouse and distribute finished product under the Aceto
label
– Product categories include fungicides, insecticides and
inhibitors
– Outsourced Active Ingredient manufacturing predominately
in China
Representat ive Customers
0
2
4
6
8
10
12
14
16
18
20
2015 2016 2017
Source: Form 10-K for fiscal year ended June 30, 2017, as amended
I n c o m e B e f o r e I n c o m e T a x e s ( $ / M )
10www.aceto.com
Worldwide Presence
USACorporate HQ
New York
NETHERLANDS
FRANCE
GERMANY
CHINA
SINGAPORE
INDIA
JAPAN
UNITED KINGDOM
PHILIPPINES
11www.aceto.com
Near Term Operational Initiatives
~125 ,000square foot facility in Somerset, NJ
January – March 2018 : in-bound freight arrived
March – Augus t 2018 : 3PL inventory draw down
September 2018 : fully functional
Internal Warehouse Expansion ERP update
Currently 3 R is ing Bus iness Un i t s with disparate
ERP systems
• Acetris Health (formerly Citron’s Lucid
government business)
• Rising Health (formerly Citron business)
• Rising Pharma (legacy Rising business)
Phased-in approach
• March 2018 : Acetris Health go live completed
• May 2018 : Rising Pharma and Rising Health
simultaneously go live with point of sale gross to
net application
12www.aceto.com
Longer Term Whiteboard of Opportunity “Rising” up the generic pharma operating model value chain: Strategic vertical integration leveraging Pharma Ingredients’
expertise/global footprint
Key Take Aways
• Minimal integration with Pharma Ingredients
• Significant profit share splits with partner
• Reliance on multiple partners to perform
• IP often shared
Key Take Aways
• Bifurcated model – partner with best in class
• Margin enhancement
• Leverage global Pharma Ingredients footprint and expertise
• Reduce complexity/increase operational control
• Enterprise wide value creation
Formulation
Expertise
Current State Potent ial Future State
Asset Light
Partnership
Model
Pharma
Ingredients Pharma
Ingredients
Manufacturing
IP
ANDAs /
DMFs
Asset Light
Partnership
Model
13www.aceto.com
Balance Sheet and Cash Flow Highlights
Balance Sheet at March 31, 2018:
• Cash, cash equivalents and short-term investments of $65.1 million
• Working capital, excluding current portion of long-term debt, of $243.2 million
• Reclassified $176.3M of bank debt from long term to short term
• Convertible debt of $126.3 million, net of discount
• Bank debt of $193.1 million
• Deferred purchase note of $50 million
Cash Flow for the Nine Months Ended March 31, 2018:
• Cash provided by operating activities of $56.4 million
• Free cash flow of $50.0 million(1)
• Cash used for debt repayments of $39.4 million
(1) Free cash flow is defined as cash provided by operating activities less investing activities.
14www.aceto.com
Income Statement Highlights
228.0
315.4
201.7
301.4
0
50
100
150
200
250
300
350
FY 2016 FY 2017 YTD Q32017
YTD Q32018
Revenue
77.9 78.1
56.4 57.1
0
20
40
60
80
100
FY 2016 FY 2017 YTD Q32017
YTD Q32018
Gross Profit
161.0 157.4
121.3 113.4
0
50
100
150
200
FY 2016 FY 2017 YTD Q32017
YTD Q32018
Revenue
28.825.5
19.917.3
0
5
10
15
20
25
30
35
FY 2016 FY 2017 YTD Q32017
YTD Q32018
Gross Profit
169.5 166.5
120.8 127.7
0
50
100
150
200
FY 2016 FY 2017 YTD Q32017
YTD Q32018
Revenue
36.2 37.2
27.7 27.3
05
10152025303540
FY 2016 FY 2017 YTD Q32017
YTD Q32018
Gross Profit
($/M) ($/M) ($/M)
Human Health Pharmaceutical Ingredients Performance Chemicals
($/M) ($/M) ($/M)
15www.aceto.com
NASDAQ:ACET
International company engaged in in the marketing, sale and distribution of
Human Health products, Pharmaceutical Ingredients
and Performance Chemicals
For additional information please contact:
Jody Burfening
LHA Investor Relations
800 3rd Avenue, 17th Fl.
New York, NY 10022
Tel: 212-838-3777
Social Media:
Linkedin.com/company/aceto-corporation
Aceto Headquarters:
4 Tri Harbor Court
Port Washington, New York 11050