IDT completes capital raise to fund expansion

Company News

Melbourne-based manufacturing and drug development company IDT Australia (ASX:IDT) has raised $6 million in a private placement to institutional and sophisticated investors priced at $0.35 per share.

The company said a further $2 million will be raised in a Share Purchase Plan, with equivalent pricing to the placement, to existing shareholders.

IDT said the placement was three times oversubscribed and that capital raised will be used to enhance and expand its drug manufacturing operations at its headquarters in the Melbourne suburb of Boronia, to meet expected near term global demand for
its generic pharmaceutical products.

The capital raise follows the company's US$18 million acquisition of an extensive generic drug product portfolio in 2014, including products to treat Parkinson’s disease, depression, infections, hypertension and cancer.

The addressable US market for IDT’s generic portfolio is approximately USD800 million (IMS data). At the time of the acquisition, IDT conservatively estimated US market penetration rates at less than 10 per cent but has since appointed key distribution partners for a majority of its product range and upgraded projected revenues.

Mayne Pharma (ASX:MYX) will distribute IDT’s generic version of the oral chemotherapy drug temozolomide in the US market, with commercial launch expected late CY2016/early 2017.

A second distribution partner, ANI Pharmaceuticals (NASDAQ: ANIP), has been
appointed to distribute 18 other products in IDT’s US generic portfolio.

These products are expected to start re-entering the US market through the second half of CY2016.

IDT Managing Director Dr Paul MacLeman said the company had now upgraded its US market share expectations, based on these partners’ performances with their existing portfolios.

“ANI Pharma has stated that it is achieving 20-30% market penetration and Mayne is achieving significantly more than 10% for its US products,” he said.

“As a result, IDT product volumes and revenues (post product launches) are likely to be higher than initially planned for.

"Upgrading our manufacturing capability will ensure we are positioned to meet market
requirements in the short to medium term.”

Dr MacLeman said IDT was further evaluating the possibility of engaging third parties in North America to manufacture selected products within its drug portfolio.

“More specifically, we will consider outsourcing the manufacture of those products that are not synergistic with the Boronia manufacturing facility and where the cost of goods will not be adversely impacted,” he said.

“IDT’s specialist manufacturing facilities are designed for high potency and high containment products. Some products within our portfolio do not align with this capability.

“Production of these drugs could be better accommodated elsewhere and we are considering this option as part of our ongoing commercial strategy.”

Dr MacLeman said more products were likely to reach market earlier, “as there will be two plants working on validation processes across multiple products”.

Dr MacLeman added: “As a result of this continued growth in the traditional business, together with new revenues from IDT’s own drug portfolio, the Company expects strong future growth. This fund raising will support and where possible, bring forward those revenues.”