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With $100 Million Influx, MiddleBrook CEO Is Out
Edward Rudnic, who founded MiddleBrook, will leave his post.
(Kevin Clark - The Washington Post)
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"This is an alternative," McCamant said, "but not the alternative the street wanted."
MiddleBrook will sell 30.3 million common shares at $3.30 each to Equity Group and issue a five-year warrant to purchase 12.1 million shares at an exercise price of $3.90 each.
The company has also agreed to buy back its Keflex assets, an anti-infection drug sold last year to Deerfield Management, for about $11 million.
Two Equity Group managing directors, along with former Adams Respiratory Therapeutics senior executive John Thievon, will join MiddleBrook's current board, which will expand to nine members. Thievon replaces Rudnic as chief executive. David Becker, another former Adams executive, will replace Low as chief financial officer.
Equity Group's investment allows MiddleBrook to move forward with Moxatag and continue development of drugs using the same time-release technology, called Pulsys.
The new management, who will work to launch Moxatag into the marketplace early next year, puts a powerful sales and marketing team behind MiddleBrook. While with Adams, another recipient of Equity Group investment, Thievon launched the Mucinex brand and built the franchise -- best known for commercials featuring Mr. Mucus, an animated green ball of phlegm -- into more than $350 million in annual revenue.
"What the incoming management is looking to do is replicate the success they had previously at Adams," Bannon said.
Both Rudnic and Low have long-term consulting agreements to work with MiddleBrook.
"They'll continue to be very close with the company," Bannon said.
Still, the investment marks the beginning of the end of Rudnic's MiddleBrook drama.
Nine years ago, Rudnic, who had left a senior drug company job and the accompanying $3.5 million in stock options, sketched out the beginnings of MiddleBrook at a friend's dining room table.
In 2005, its Pulsys technology failed, forcing the company to lay off about half of its 100 or so employees, including senior executives. It also cost the company a partnership with big drug company Par Pharmaceutical.
The next year, another attempt narrowly failed. MiddleBrook had burned through cash to get its product through the final stage of development. It reduced its workforce again.
The company, which first sold shares to the public in 2003, has yet to post a profit.
And a future sale remains a possibility.
"I don't think this rules it out," Bannon said.
