Precision Dermatology is an independent company which spun out of our original portfolio company Collegium Pharmaceuticals in 2010. Our initial investment in Collegium was able to provide two significant companies for our investors doubling the exit value of the investment. As described in our Collegium Case Summary, we sourced the assets and business plan for Precision from a close relationship with a previously successful entrepreneur. Jane Hirsch and her husband are pharmacologists and understood the dermatology sector well and areas of investment opportunity. As business operators, they called BMP to provide the first funding for their new company. In addition to investment capital, BMP provided a variety of strategic advice to Jane and her team.
Precision develops and markets high quality dermatology products for the treatment of acne, atopic dermatitis and aging skin. Two years after BMP’s growth stage investment round, we invited another growth equity fund we knew well to invest in the company. With this new capital, Precision completed a transformational acquisition of Triax, Inc., which had complementary dermatology products that expanded the product line and substantially increased Precision’s revenues. It was a challenging transaction given that there were debt and equity holders who were unlikely to achieve a positive outcome on their own previous investment into Triax. The Precision management did a superb job negotiating and completing this transaction with the many parties involved. BMP supported the company with much of the additional capital needed to complete the acquisition.
The BMP “buy and build” approach continued at Precision with the acquisition of Clindagel which followed shortly thereafter. BMP and management had planned to continue acquiring more add on companies to Precision however, as the company achieved sufficient scale, a number of strategic acquirers began calling to invest or acquire the company. In February 2014, Valeant Pharmaceuticals (NYSE: VRX) announced it would buy Precision for $475,000,000 in a cash transaction that provided a 350% return to BMP’s Limited Partners.
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