Patheon, a Durham contract manufacturing company that went private last year, is planning to go public once again.
“Given the current market conditions and where we are as a company, we thought it prudent to file our intentions to take the company public,” said company spokesman Tyler Gronbach.
Patheon, which generated $1.7 billion in revenue in the fiscal year that ended in October, filed its plans for an initial public offering on Monday. The company has 8,700 employees worldwide, including 170 in Durham and 950 in Greenville.
The filing states that Patheon is looking to raise up to $100 million in the IPO, but doesn't specify how many shares it expects to sell or how much of the business will be owned by the public -- which is typical for this stage of the process.
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However, the filing hints that the company anticipates upping the ante by noting that the proceeds of the offering will be used to "repay all or a portion" of the $550 million in notes issued by a subsidiary last month.
Bolstered in part by acquisitions, the company’s revenue rose from $698 million in fiscal 2011 to $1.7 billion in fiscal 2014.
Since CEO Jim Mullen took the company’s helm in early 2011, the company states in its filing, “we have transformed our business into a global, end-to-end integrated service provider, and significantly enhanced our operating performance and growth potential.”
But it has consistently operated at a loss, including a $119.2 million loss last fiscal year, versus a $35.9 million loss the year before.
In the most recent quarter it generated $488.8 million in revenue, up 86 percent from a year ago. Its net loss totaled $6.1 million, versus $3.6 million a year earlier.
The company is incorporated in The Netherlands but its operational headquarters and its U.S. headquarters are in Durham, Gronbach said.
Patheon expects that its stock will be traded on a U.S. stock exchange, either the NASDAQ or the New York Stock Exchange, Gronbach said. Its proposed ticker symbol is “PTHN.”
Patheon, which moved its headquarters to the Triangle in 2008, went private last year when it merged with DSM Pharmaceutical Products, creating a significantly larger business, as part of a complex three-way deal.
When that deal was completed, JLL Partners, a New York-based private equity firm, owned 51 percent of the business; and Royal DSM, a Netherlands vitamin company whose pharmaceutical products business was rolled into the combined company, owned 49 percent.
Heavy debt load
Patheon generates a majority of its revenue from manufacturing and packaging prescription and over-the-counter drugs for its clients. It also provides service such as developing formulations of experimental medicines and synthesizing chemicals for a broad range of industries.
Patheon provides development and manufacturing services for more than 800 drugs and produces 24 billion pills and soft gelcaps annually.
Patheon anticipates that the market for outsourced drug manufacturing will grow faster than the industry as a whole as pharmaceutical companies seek to reduce their fixed costs and focus on “core activities” such as research and development and sales and marketing.
Mullen, the company’s CEO, was president and CEO of biotechnology giant Biogen Idec Inc. from 2003 to 2010. His compensation package totaled $22.2 million last year, including $934,615 in salary and more than $20 million in stock options.
Not all of the funds generated by selling IPO stock will go to Patheon. The company’s existing shareholders also plan to sell an unspecified number of shares.
Among the “risk factors” cited in the filing, a section that is required by regulators, is the company’s “significant amount of debt.” The company’s long-term debt totaled nearly $2 billion as of Jan. 31, which doesn’t include the $550 million in notes issued in May.
The proceeds from that May offering was used to pay a $539.1 million dividend to existing shareholders.
Gronbach said he couldn’t speculate on the future timetable for Patheon going public.