Columbia Laboratories has acquired Molecular Profiles Ltd. for $16.7 million in cash and $8.3 million in Columbia common stock. The newly issued shares of Columbia stock are subject to a 12-month lock-up period, and Molecular Profiles’ chief executive officer and co-founder, Dr. Nikin Patel, will join Columbia’s board.

Molecular Profiles recorded approximately $9 million in revenues in its fiscal year ending July 31, 2013. The price represents 10 to 11 times MP’s projected EBITDA for the fiscal year ending July 31, 2014. MP has had a compound annual growth rate of 15% and 14% for revenue and EBITDA, respectively, over the past four fiscal years. Columbia expects to realize a double-digit impact to its EBITDA and operational synergies of as much as $400,000 annually.

“This transaction represents an exciting step in Columbia’s ongoing transformation, and has numerous strategic advantages,” said Frank Condella, Columbia’s president and chief executive officer. “Consistent with our stated strategy, we are deploying our capital to acquire a growing, cash-flow positive, and profitable company with a large customer base that strengthens and significantly diversifies Columbia’s revenue stream. We look forward to its continued growth as Molecular Profiles further penetrates the growing pharmaceutical outsourcing market for formulation development and manufacturing services.”

Dr. Patel added, “Our senior technical staff’s breadth of industrial and CRO experience spanning formulation, manufacturing, analytical and materials science should enable Columbia to realize significant efficiencies in its management of the Crinone manufacturing process. And, with Columbia’s headquarters in Boston, we look forward to being able to serve our U.S. customers much more effectively and have greater access to the U.S. market.” Crinone is a progesterone gel marketed throughout the world by Merck Serono; it is marketed in the U.S. by Watson Pharmaceuticals.

“We are broadening our technical expertise with a management team that is well-recognized in the field of pharmaceutical development and analytical services. This dovetails with Columbia’s historical expertise with drug development, and should enable us to enhance our level of technical service to our commercial partners. By transitioning Crinone quality management and technical support to Molecular Profiles, within close proximity of our Crinone manufacturing sites and supply chain management in Europe, we anticipate significant improvements in efficiencies and greater responsiveness to Merck Serono, our largest customer for Crinone,” said Mr. Condella.

This acquisition was unanimously approved by the boards of both companies and received the approval of Molecular Profiles’ shareholders. No further approvals are anticipated to be required.