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Exhibit 99.1
ASCENT PEDIATRICS AND ALPHARMA ANNOUNCE STRATEGIC ALLIANCE
ALPHARMA TO INVEST UP TO $40 MILLION AND HOLD OPTION TO ACQUIRE ASCENT
PEDIATRICS 2002
WILMINGTON, Mass., February 16, 1999 -- Ascent Pediatrics, Inc. and Alpharma,
Inc. announced today that they have entered into agreements creating a strategic
alliance. Under these agreements, Alpharma, through its subsidiary Alpharma
USPD, Inc., will provide up to $40 million in financing to Ascent through a 7.5%
convertible subordinated note due in 2004 and 2005. Up to $12 million of the
proceeds can be used for general corporate purposes, with $28 million reserved
for projects and acquisitions intended to enhance the growth of Ascent.
Under these agreements Alpharma will have the option during a specified period
during the first half of year 2002 to acquire the then outstanding shares of
Ascent for cash at a price to be determined by an earnings-based formula.
Consequently, Ascent has entered into a merger agreement with one of Ascent's
subsidiaries in which the subsidiary will merge with Ascent and each share of
Ascent common stock will be converted into one depositary receipt which will
become subject to Alpharma's purchase option. Ascent intends to apply to have
these depositary receipts quoted on the Nasdaq National Market under its current
symbol, ASCT.
The agreement and other related transactions, including the authorization of the
purchase option, are subject to the approval of Ascent's stockholders at a
meeting expected to be held in the second quarter of 1999. Certain Ascent
shareholders represented on the Board of Directors, holding approximately 43% of
the voting capital stock, have agreed to vote their shares in favor of these
agreements.
"We are excited about the prospects of this strategic alliance with Alpharma,"
commented Dr. Emmett Clemente, Founder and Chairman of Ascent. "We expect that
the resources made available by Alpharma will allow Ascent to pursue
opportunities for growth in an effort to offer additional improved pediatric
products in the future. Alpharma's significant product development and
manufacturing expertise in topical and liquid pharmaceuticals make them an
excellent partner for Ascent."
"We believe that the excellent track record and quality of our sales
organization strategically complements Alpharma's capabilities," commented Alan
Fox, President and Chief Executive Officer of Ascent. "As the only
pharmaceutical sales force dedicated exclusively to pediatricians, our
organization is an important resource to Alpharma. We believe that this
partnership will make it possible for Ascent's shareholders to receive a fair
value for their investment, should Alpharma exercise their purchase option in
2002."
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Thomas L. Anderson, President of Alpharma's U.S. Pharmaceutical Division, who
will be appointed as a member of Ascent's Board of Directors, commented, "We are
very pleased to announce this strategic alliance with Ascent Pediatrics, which
represents a key step in executing our strategy of complementing Alpharma's
specialty generic pharmaceuticals with higher margin branded products. As the
leading provider of liquid and topical pharmaceuticals, we believe our current
technologies have many pediatric applications." Mr. Anderson continued, "This
relationship could potentially provide access to Ascent's value-added
proprietary technologies, particularly in taste masking and extended release,
which could then be incorporated into Alpharma USPD's future product development
initiatives. Finally, Alpharma's capabilities in manufacturing and distribution
may enhance Ascent's efforts in the areas of cost competitiveness and customer
service."
Alpharma's option to acquire Ascent for cash in 2002 is at the higher of $140
million or a price equal to 12.2 times Ascent's 2001 pre-tax operating income,
adjusted to exclude any R&D expense in excess of $1.5 million and interest on
selected securities.
The financing from Alpharma will be in the form of 7.5% subordinated notes due
in 2004 and 2005. Alpharma has agreed to loan $4.0 million of the $40.0 million
to Ascent immediately upon the execution of the agreements. Alpharma's
obligation to loan the balance of the $40.0 million is subject to Ascent
stockholder approval of the merger and additional conditions. If Alpharma does
not exercise its 2002 purchase option, Ascent will be required to repay the debt
in installments from 2004 into 2005. Ascent will also have the right to
repurchase such debt following the expiration of the purchase option until
December 31, 2002 at 125% of outstanding principal on December 31, 2001 plus
accrued interest. If this right is not exercised, the debt becomes convertible
into shares of Ascent common stock at a conversion price of $7.125 per share.
In connection with the Alpharma-Ascent alliance, ING Furman Selz Investments and
BankBoston Venture Capital have agreed to amend certain terms and rights held by
them as a result of their 1998 investment in Ascent. In return, Ascent has
agreed to reduce the exercise price of approximately 2.1 million warrants held
by ING Furman Selz Investments and BankBoston Venture Capital to $3.00 from
$4.75 per share and issue an additional 300,000 shares at a price of $3.00 per
share. These investors have agreed to exercise all these warrants and purchase
the additional shares by surrendering approximately $7.2 million in Ascent notes
held by the investors. The reduction in the exercise price of the warrants and
the issuance of these shares are also subject to stockholder approval.
Ascent is the only company dedicated exclusively to selling pharmaceutical
products to the pediatric market, a market estimated to be over $4 billion in
1998. Ascent currently markets FeverAll(R) Acetaminophen Suppositories and
Pediamist(R) Nasal Mist. Ascent also expects to begin marketing in the second
half of 1999 two of its significant products: Primsol(R) solution, an antibiotic
for acute otitis media, and Orapred(R), an improved tasting formulation of
liquid prednisolone, in both cases
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subject to FDA approval. Ascent currently has 87 sales representatives calling
on pediatricians.
Ascent's strategy is to address the unmet medical needs of children through the
development of differentiated, proprietary products based on approved compounds
with well-known clinical profiles and to utilize its specialized sales force to
leverage products from other larger pharmaceutical companies who are not focused
on the pediatric market.
Alpharma Inc. is a multinational pharmaceutical company that develops,
manufactures and markets specialty human pharmaceutical and animal health
products.
Investors are cautioned that this press release contains forward-looking
statements that involve a number of risks and uncertainties. For this purpose,
any statements that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, the words
"believes", "anticipates", "expects", "intends", "will", and similar expressions
are intended to identify forward-looking statements. Information contained in
these forward-looking statements is inherently uncertain, and actual performance
and results may differ materially from those indicated by such forward-looking
statements due to numerous factors, including but not limited to the following:
the risk that the strategic alliance with Alpharma is not successful, the
conditions to any additional loans are not satisfied or Alpharma does not
exercise its purchase option; the Company's dependence on obtaining regulatory
approval to market products; the Company's ability to comply with Nasdaq
National Market listing requirements; and the Company's management of growth.
Certain of these factors, as well as a number of other important factors, are
more fully described in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Certain Factors
that May Effect Future Results", which description is incorporated herein by
this reference, and in its other SEC filings.