Sientra, Inc. (NASDAQ: SIEN), a medical aesthetics company
(“Sientra” or the “Company”), announced today the acquisition of
the dedicated FDA-approved silicone breast implant manufacturing
operation in Franklin, Wisconsin, from Lubrizol Life Science.
Lubrizol Life Science will turn over to Sientra
a turnkey, fully operational Class 3 breast implant manufacturing
operation that is now 19 months into commercial scale-up with
established capacity that continues a steady ramp to position the
Company to meet its near-term and long-term commercial
objectives. Importantly, this transaction culminates a
win-win commercial relationship between Sientra and Lubrizol Life
Science that began in 2016 with co-development to achieve the
validated manufacturing processes and specifications necessary to
gain FDA PMA supplement approval in April 2018.
Jeff Nugent, Chairman and Chief Executive
Officer of Sientra, said, “This acquisition advances our strategic
goal of becoming the leading provider of breast products in the
worldwide breast augmentation and reconstruction market. Over the
years we have considered several options to achieve vertical
integration for our breast implants and we believe that acquiring
this already established operation in a turnkey transaction is the
most intelligent way to achieve this goal with the best mix of
risk, reward, investment and speed.”
Mr. Nugent continued, “We want to thank Lubrizol
Life Science for their strong relationship these past four years
and for their steady efforts in building a world-class breast
implant operation that could be transferred over to us so
seamlessly. We are confident in the significant manufacturing
expertise within the Sientra organization and our ability to
successfully integrate the breast implant operation.”
“Lubrizol Life Science and Sientra have had a
long-standing relationship in design, development and scale-up of
several cosmetic implant products,” said Uwe Winzen, General
Manager of Lubrizol Life Science. “Sientra’s acquisition of this
product line helps it achieve its long-term strategic goal and
allows the Health business of Lubrizol Life Science to focus our
efforts on becoming the preferred design, development and
manufacturing partner for the medical device industry. I would like
to thank the entire Lubrizol team in Franklin, whose hard work and
dedication has made this co-development successful. Given Sientra’s
team, I am confident that the employees who transition to Sientra
will be excited to be part of its next stages of growth. We look
forward to working with Sientra to ensure a smooth and successful
transition for everyone involved, as well as our continued
relationship in this space. Lubrizol Life Science will continue to
manufacture Sientra’s tissue expanders in Victor, Montana and both
companies will continue to collaborate on bringing innovative new
products to the aesthetic market."
Mr. Nugent concluded, “With this acquisition,
Sientra is now positioned to pursue the attractive breast implant
market opportunity with direct control of its destiny, leveraging
our unique brand, safety advantages, physician relationships, and
strong product portfolio. We expect our newly acquired
manufacturing capability in Franklin to be a platform for product
supply as well as a valuable extension to our ongoing product
development and innovation initiatives at our R&D center of
excellence in Carpinteria. In sum, this important strategic
transaction furthers our ability to continue to achieve our market
share growth objectives while delivering significant value to
plastic surgeons, patients, and shareholders.”
Strategic Rationale
- Direct control of breast implant manufacturing and
product development. Provides Sientra strategic oversight
to optimize manufacturing processes and invest where
appropriate. Sientra’s Franklin Operation will be a dedicated
Class 3 facility with no shared resources or competing
priorities.
- Speed to market. Provides Sientra faster speed
to market with improved and innovative product offerings that
address unmet market needs. The acquisition complements
Sientra’s on-going innovation efforts at its R&D lab in
Carpinteria and aims to reduce time from concept feasibility to new
product introductions, seamlessly integrating development and
manufacturing.
- Gross margin opportunity. Allows Sientra to
realize the economic benefits of scale as production ramps. As
yields continue to improve and scale efficiencies take hold,
insourcing manufacturing allows the financial benefits of higher
fixed cost absorption and lower COGS to accrue directly to
Sientra.
- Expands international market opportunity.
Sientra is strategically evaluating international markets across a
number of factors related to growth, competitive dynamics,
profitability, regulatory environment and time-to-market. The
long-term pricing and margin advantages of this transaction
increase the number of international markets that Sientra can
profitably enter.
Transaction Details
The parties have agreed to total transaction
consideration of $20 million in cash and up to 607,442 shares of
Sientra stock for assets comprised of dedicated manufacturing
equipment, building improvements, in-process inventory, raw
materials and supplies and the transfer of the intellectual
property rights, processes and know-how necessary for Sientra to
manufacture its breast implants.
- $14 million is payable in cash at closing.
- The balance of the cash consideration will be paid in a $3
million cash payment in 2021 and a $3 million cash payment in
2023.
- Sientra will also issue up to 607,442 shares of stock to
Lubrizol Corporation if certain Sientra share price milestones are
achieved over a 48-month period.
Sientra will employ the majority of Lubrizol
Life Science’s employees that are currently dedicated to the
Sientra implant manufacturing operation in Franklin. The parties
have also agreed to a transition services agreement and a long-term
lease agreement of existing and expansion space in Lubrizol’s
Franklin facility. Sientra’s tissue expanders will continue to be
manufactured by Lubrizol Life Science in Victor, Montana and both
companies will continue to collaborate on bringing innovative new
products to the aesthetic market.
Conference Call
Sientra will hold a conference call today,
November 7, 2019 at 5:00 p.m. ET to discuss third quarter 2019
financial results and the acquisition. The dial-in numbers are
844-464-3933 for domestic callers and 765-507-2612 for
international callers. The conference ID is 9194103. A live webcast
of the conference call will be available on the Investor Relations
section of the Company's website at www.sientra.com. The webcast
will be archived on the website following the completion of the
call.
About Sientra
Headquartered in Santa Barbara, California,
Sientra is a diversified global medical aesthetics company and a
leading partner to aesthetic physicians. The Company offers a suite
of products designed to make a difference in patients' lives by
enhancing their body image, growing their self-esteem, and
restoring their confidence. Sientra has developed a broad portfolio
of products with technologically differentiated characteristics,
supported by independent laboratory testing and strong clinical
trial outcomes. The Company’s Breast Products Segment includes its
OPUS® breast implants, the first fifth generation breast implants
approved by the FDA for sale in the United States, its
ground-breaking Allox2® breast tissue expander with patented
dual-port and integral drain technology, and BIOCORNEUM® the #1
performing, preferred and recommended scar gel of plastic
surgeons(*). The Company’s miraDry Segment, comprises its miraDry®
system, which is approved for sale in over 40 international
markets, and is the only non-surgical FDA-cleared device for the
permanent reduction of underarm sweat, odor and hair of all
colors.
(*) Data on file
About The Lubrizol Corporation
The Lubrizol Corporation, a Berkshire Hathaway
company, is a market-driven global company that combines complex,
specialty chemicals to optimize the quality, performance and value
of customers' products while reducing their environmental impact.
It is a leader at combining market insights with chemistry and
application capabilities to deliver valuable solutions to customers
in the global transportation, industrial and consumer markets.
Lubrizol improves lives by acting as an essential partner in our
customers' success, delivering efficiency, reliability or wellness
to their end users. Technologies include lubricant additives for
engine oils, driveline and other transportation-related fluids,
industrial lubricants, as well as additives for gasoline and diesel
fuel. In addition, Lubrizol makes ingredients and additives for
home care, personal care and skin care products and specialty
materials encompassing polymer and coatings technologies, along
with polymer-based pharmaceutical and medical device solutions.
With headquarters in Wickliffe, Ohio, Lubrizol
owns and operates manufacturing facilities in 17 countries, as well
as sales and technical offices around the world. Founded in 1928,
Lubrizol has approximately 8,700 employees worldwide. Revenues for
2018 were $6.8 billion. For more information, visit
Lubrizol.com.
Forward-Looking Statements
This press release contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, based on management’s current assumptions and
expectations of future events and trends, which affect or may
affect the Company’s business, strategy, operations or financial
performance, and actual results may differ materially from those
expressed or implied in such statements due to numerous risks and
uncertainties. Forward-looking statements include, but are
not limited to, statements regarding the Company’s ability to meet
is near-term and long-term objectives, the Company’s ability to
successfully integrate the breast implant operation, the Company’s
ability to leverage the breast implant operations to support
product development, innovation initiatives and market share
growth, the Company’s ability to optimize manufacturing processes
and improve results, the Company’s ability to obtain faster speed
to market with improved and innovative product offerings, the
Company’s ability to realize the economic benefits of vertical
integration, and the Company’s ability to expand into international
markets. Such statements are subject to risks and uncertainties,
including the Company’s ability to successfully integrate the
breast implant operations, the Company’s ability to leverage the
breast implant operations for product development and innovation
efforts, and the Company’s ability to obtain economic benefits from
the breast implant operations. Additional factors that could
cause actual results to differ materially from those contemplated
in this press release can be found in the Risk Factors section of
Sientra’s public filings with the Securities and Exchange
Commission. All statements other than statements of
historical fact are forward-looking statements. The words
‘‘believe,’’ ‘‘may,’’ ‘‘might,’’ ‘‘could,’’ ‘‘will,’’ ‘‘aim,’’
‘‘estimate,’’ ‘‘continue, ‘‘anticipate,’’ ‘‘intend,’’ ‘‘expect,’’
‘‘plan,’’ ‘‘position,” or the negative of those terms, and similar
expressions that convey uncertainty of future events or outcomes
are intended to identify estimates, projections and other
forward-looking statements. You are cautioned not to place undue
reliance on these forward-looking statements, and such estimates,
projections and other forward-looking statements speak only as of
the date they were made, and, except to the extent required by law,
the Company undertakes no obligation to update or review any
estimate, projection or forward-looking statement. Actual
results may differ from those set forth in this press release due
to the risks and uncertainties inherent in the Company’s
business.
Investor Relations
805-679-8885
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