Apax Partners

ESP Pharma is a specialty pharmaceutical company focused on the acute care hospital setting. ESP Pharma actively pursues its Buy and Build, Search and Develop growth strategy of identifying, selectively acquiring and enhancing the potential of novel, commercially available therapeutics and late-stage development specialty drugs.

ESP Pharma’s goal is to identify unmet or under served markets and find therapeutic and pipeline compounds that will capture these markets using its world-class expertise in business development, sales and marketing and medical professionals. The opportunities for ESP to acquire and in-license products are the result of industry consolidation and approved and development-stage drugs that do not meet the revenue criteria for large pharmaceutical companies. Through the acquisition and revitalization via promotion of approved specialty medicines and expediting the late-stage clinical development of new drugs, ESP Pharma is able to improve the availability of important therapeutics to physicians, hospitals, and most importantly, for the acute-care patients.

The company was founded in 2002 with the acquisition of 4 products from Wyeth. Because Apax Partners has such a deep understanding of this sector, we were able to complete due diligence very effectively, but on an accelerated timeline. It was also an advantage that we had previously worked with other investors involved in the deal and therefore had strong relationships with people who would be sitting at the board table with us.

Apax Partners’ Funds, Domain and NEA funded the equity portion of this acquisition by raising $28 million. In the spring of 2003, Thoma Cressey led a $20 million equity investment for potential acquisitions.

We were initially attracted to the deal because of the CEO, John Spitznagel. John was an experienced specialty pharma executive that had turned Roberts Pharmaceuticals around, quadrupling its market cap under his leadership and ultimately sold the business to Shire for $1.2 billion. John had assembled one of the strongest teams in the emerging specialty pharma area and had a proven track record of success.

The company performed well and exceeded all expectations, consistently exceeding budget year on year. Sales of lead product Cardene ramped from ~$6 million, at the time of acquisition, to $50 million in less than 3 years. The company’s net sales in 2004 exceeded $90 million.

In early 2005, Protein Design Labs, Inc. (PDL), a leading developer of humanized monoclonal antibodies, acquired ESP Pharma for $500 million. The fundamental rationale behind the merger for PDL was to acquire a successful sales force infrastructure and to create a fully integrated biopharmaceutical company.

“Apax Partners’ industry expertise has allowed us to gain an in-depth understanding of our respective sectors and the emerging opportunities within each. Apax Partners quickly recognized the potential that John Spitznagel and his team brought to ESP and the positive trends in the specialty pharma marketplace that eventually led to ESP’s tremendous success,” said Adele Oliva, Partner, Apax Partners.