TopGum Industries, a manufacturer specializing in gummy nutraceuticals, signed a binding letter of intent to acquire U.S. operations engaged in the manufacture of pharmaceutical products and dietary supplements in the gummy dosage form.

The to-be-acquired businesses are the first in the world to achieve operational manufacturing capabilities for pharmaceutical-grade gummies containing active pharmaceutical ingredients, and its acquisiiton represents TopGum’s first foray into pharmaceuticals. The acquired business had several pharmaceutical gummy products planned to launch in 2026, and has an agreement with a major pharmaceutical company to develop a gummy version of an existing drug with an estimated target market of $1.5 billion per year, TopGum reported.

The seller is a U.S. company that produces generic pharmaceuticals and provides development and manufacturing services in the health products sector, TopGum reports. It has a U.S. manufacturing facility with active production lines, a laboratory trials line, and infrastructure for expansion. The facility is FDA-compliant and, after certification, is also expected to meet the requirements of Australia’s Therapeutic Goods Administration (TGA).

The acquisition will include a $12 million cash payment at the time of closing, and the seller will receive $13 million of TopGum’s shares. The parties agreed to long-term collaboration to commercialize TopGum’s supplement and pharmaceutical gummies portfolio, as part of the letter of intent. TopGum committed to act toward the appointment of one director to its board, to be nominated by the seller.

“This is a significant milestone for TopGum, which facilitates our entry into the pharmaceutical domain with proven manufacturing capabilities and an advanced development pipeline,” said Eyal Shohat, CEO of TopGum. “The collaboration with a U.S. leader positions TopGum at an excellent starting point for continued accelerated growth. I would like to thank our outgoing chairman, Hagai Stadler, for his significant contribution to advancing and completing this transaction as part of his key role in transforming TopGum into a global leader.”

“This transaction represents a strategic leap forward and a new chapter in the company’s life,” said Stadler. “Establishing a manufacturing foothold in the United States generates unparalleled value and positions TopGum at the forefront of the global industry. I thank the company’s management and board of directors for this significant milestone.”