Emergent BioSolutions to Acquire Cangene Corporation
- Solidifies leadership position in growing biodefense market with 3 additional US government procured therapeutics
- Advances Biosciences Division toward profitability through significant commercial product and service revenue
- Broadens manufacturing capabilities with revenue generating fill/finish business
- Expected to be accretive in 2014, exclusive of transaction-related costs
- Plan to fund acquisition through existing cash resources and new bank facility
Conference Call phone number for U.S./
The corrected release reads:
EMERGENT BIOSOLUTIONS TO ACQUIRE CANGENE CORPORATION
- Solidifies leadership position in growing biodefense market with 3 additional US government procured therapeutics
- Advances Biosciences Division toward profitability through significant commercial product and service revenue
- Broadens manufacturing capabilities with revenue generating fill/finish business
- Expected to be accretive in 2014, exclusive of transaction-related costs
- Plan to fund acquisition through existing cash resources and new bank facility
The Boards of Directors of both companies have approved the transaction.
Agreements are in place with shareholders who collectively control,
directly or indirectly, approximately 61% of the outstanding common
shares of
“The acquisition of
“This transaction represents an exciting and very promising opportunity
for
Benefits of the Transaction
Emergent expects that the transaction will provide the following benefits:
1. Solidifies leadership position in growing biodefense market with 3 additional US government procured therapeutics
-
Cangene’s biodefense business consists of three medical
countermeasures targeting botulinum, smallpox and anthrax, and each
with an existing multi-year US government contract.
-
BAT® (Botulism Antitoxin (Equine) Heptavalent) — the
only
FDA -licensed therapeutic for the treatment of symptomatic botulism following suspected or documented exposure to the botulinum neurotoxin serotypes A, B, C, D, E, F or G. -
VIGIV® (Vaccinia Immune Globulin Intravenous (Human)) —
an
FDA -licensed therapeutic for the treatment of complications due to smallpox vaccination, including eczema vaccinatum, progressive vaccinia, severe generalized vaccinia, vaccinia infections in individuals who have skin conditions, and aberrant infections induced by vaccinia virus, except in cases of isolated keratitis. - AIGIV (Anthrax Immune Globulin Intravenous) — an investigational therapeutic designed for the treatment of toxemia associated with symptomatic inhalational anthrax.
-
BAT® (Botulism Antitoxin (Equine) Heptavalent) — the
only
-
Cangene’s biodefense revenue for its fiscal year ended
July 31, 2013 was approximately$50 million .
2. Advances Biosciences Division towards profitability through significant commercial product and service revenue
-
Cangene’s commercial product portfolio consists of four
FDA -licensed, hospital-based specialty therapeutics targeting infectious diseases, hematology and transplantation and sold worldwide through an established commercial infrastructure.- WinRho® SDF (Rho(D) Immune Globulin Intravenous (Human)) — a therapeutic for the treatment of immune thrombocytopenia purpura (ITP) in Rho(D)-positive patients and for the suppression of Rh isoimmunization in non-sensitized Rho(D)-negative patients, otherwise known as hemolytic disease of the newborn (HDN).
- HepaGam B® (Hepatitis B Immune Globulin (Human) Injection) — an immune globulin for the prevention of Hepatitis B recurrence following liver transplant in HBsAg-positive liver transplant patients and post-exposure prophylaxis in the following settings: acute exposure to HBsAg-positive blood, plasma, or serum, perinatal exposure of infants born to HBsAg-positive mothers, sexual exposure to HBsAg-positive persons, and household exposure to persons with acute HBV infection.
- VARIZIG® (Varicella Zoster Immune Globulin (Human)) — a post-exposure prophylaxis of varicella in high-risk individuals intended to reduce the severity of chickenpox infections.
- episil® — a medical device for the management and relief of pain associated with oral lesions of various etiologies, including oral mucositis/stomatitis, which may be caused by chemotherapy or radiotherapy.
-
Cangene’s commercial product revenue for its fiscal year ended
July 31, 2013 was approximately$44 million .
3. Broadens manufacturing capabilities with revenue generating fill/finish business
- Cangene’s contract manufacturing operations provide fill/finish services supporting over 20 approved products sold worldwide.
-
Cangene’s contract manufacturing revenue for its fiscal year ended
July 31, 2013 was approximately$33 million .
4. Attractive financial profile of combined company
-
Pro forma total revenues of approximately
$436 million and operating income of approximately$55 million , calculated based on Cangene’s FY 2013 results and the trailing twelve month period ofSeptember 30, 2013 for Emergent. - Diversified revenues in both the Biosciences and Biodefense Divisions with attractive gross margins.
Financing
In connection with the transaction, Emergent has secured committed debt
financing from
Transaction Structure and Approvals
The transaction is structured as a Canadian court-approved plan of
arrangement. Completion of the transaction is subject to approval by 66
2/3% of the votes cast by
Guidance
Taking into account the expected closing date of Q1 2014, the company is
reaffirming its full year 2013 GAAP guidance for total revenues of
The company expects that the transaction will be accretive for 2014 and beyond, assuming a Q1 2014 close. The company anticipates:
-
revenue contribution of
$90 to $100 million for the partial year period of 2014 with a compound annual growth rate of 4% to 6% over the following three year period (2015-2018); and - pre-tax operating margin contribution of 4% to 6%, exclusive of transaction-related costs, for the partial year period of 2014, improving to a target of 15% over the following three year period (2015-2018).
Non-GAAP Financial Measures
This press release contains a financial measure, adjusted net income,
which is considered a “non-GAAP” financial measure under applicable
The determination of the amounts that are excluded from this non-GAAP financial measure is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts. The company is likely to exclude the following items from its non-GAAP adjusted net income in the future, the effect of which is uncertain but may be significant in amount:
- Expenses related to completed and future acquisitions of other businesses, including amortization of acquired intangible and tangible assets, and transaction costs;
- Expenses associated with any potential restructuring activities, including but not limited to, asset impairments, accelerated depreciation, severance costs and lease abandonment charges; and
- Other one-time or non-recurring charges.
Because non-GAAP financial measures exclude the effect of items that will increase or decrease the company’s reported results of operations, management strongly encourages investors to review the company’s consolidated financial statements and publicly filed reports in their entirety. A reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure is included in the following table.
| (in millions) |
Financial Guidance for the Year Ended December 31, 2013 |
||||||
| GAAP Net Income |
$25 to $30 |
||||||
| Adjustments: | |||||||
|
-- Cangene transaction-related costs |
3.4 | ||||||
|
-- HPPD transaction-related costs |
0.8 | ||||||
|
-- UK restructuring expense |
2.8 | ||||||
|
-- Adjusted income tax expense |
(2.1) | ||||||
| Non-GAAP Adjusted Net Income |
$30 to $35 |
||||||
Advisors
For Emergent,
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IMPORTANT SAFETY INFORMATION
Important Information about BAT® -- Botulism Antitoxin (Equine), Heptavalent (A, B, C, D, E, F, G) (See full prescribing information)
The effectiveness of BAT is based solely on efficacy studies conducted in animal models of botulism.
Animal reproduction studies have not been conducted with BAT. It is not known whether BAT can cause fetal harm when administered to a pregnant woman or can affect reproductive capacity. BAT should only be given to pregnant women if the benefits outweigh the risks.
The effectiveness of BAT has not been established in pediatric patients. Limited pediatric safety data are available. Dosing in pediatric patients is based on Salisbury Rule.
Product Insert: http://www.fda.gov/downloads/BiologicsBloodVaccines/BloodBloodProducts/ApprovedProducts/LicensedProductsBLAs/FractionatedPlasmaProducts/UCM345147.pdf
Important Information about VIGIV® -- CNJ-016, Vaccinia Immune Globulin IntravenousTM (Human), (See full prescribing information for complete boxed warning)
WARNING: INTERACTIONS WITH GLUCOSE MONITORING SYSTEMS
Blood glucose measurement in patients receiving Vaccinia Immune Globulin Intravenous (Human) (VIGIV) must be done with a glucose-specific method (monitor and test strips) to avoid interference by maltose contained in VIGIV. Maltose in IGIV products may give falsely high blood glucose levels in certain types of blood glucose testing systems (for example those based on the GDH-PQQ or glucose-dye-oxidoreductase methods) resulting in inappropriate administration of insulin and life-threatening hypoglycemia. Cases of true hypoglycemia may go untreated if the hypoglycemic state is masked by falsely elevated glucose readings.
Carefully review the product information of the blood glucose testing system, including that of the test strips, to determine if the system is appropriate for use with maltose-containing parenteral products [see WARNINGS AND PRECAUTIONS (5.3)].
VIGIV is not indicated for isolated vaccinia keratitis or postvaccinial encephalitis.
Animal reproduction studies have not been conducted with VIGIV; therefore, it is not known whether VIGIV can cause fetal harm when administered to a pregnant woman or whether it can affect reproduction capacity. The risk/benefit of VIGIV administration should be assessed for each individual case.
Use VIGIV with caution in patients with pre-existing renal insufficiency and in patients at increased risk of developing renal insufficiency.
Product Insert: http://www.fda.gov/downloads/BiologicsBloodVaccines/BloodBloodProducts/ApprovedProducts/LicensedProductsBLAs/FractionatedPlasmaProducts/UCM199477.pdf
Important Information about WinRho® SDF [Rho(D) Immune Globulin Intravenous (Human)] (See full prescribing information for complete boxed warning.)
WARNING: INTRAVASCULAR HEMOLYSIS (IVH)
This warning does not apply to Rho(D)-negative patients treated for the suppression of Rh isoimmunization.
Intravascular hemolysis (IVH) leading to death has been reported in patients treated with WinRho® SDF for immune thrombocytopenic purpura (ITP).
IVH can lead to clinically compromising anemia and multi-system organ failure including acute respiratory distress syndrome (ARDS).
Serious complications including severe anemia, acute renal insufficiency, renal failure and disseminated intravascular coagulation (DIC) have also been reported.
Closely monitor patients treated with WinRho® SDF for ITP in a healthcare setting for at least eight hours after administration. A dipstick urinalysis to monitor for hematuria and hemoglobinuria is to be performed at baseline and then after administration at 2 hours, 4 hours and prior to the end of the monitoring period. Alert patients and monitor the signs and symptoms of IVH including back pain, shaking chills, fever, and discolored urine or hemoglobinuria. Absence of these signs and/or symptoms of IVH within eight hours do not indicate IVH cannot occur subsequently. If signs and/or symptoms of IVH are present or suspected after WinRho® SDF administration, post-treatment laboratory tests should be performed including plasma hemoglobin, haptoglobin, LDH, and plasma bilirubin (direct and indirect).
The safety and efficacy of WinRho® SDF have not been evaluated in clinical trials for patients with non-ITP causes of thrombocytopenia or in previously splenectomized patients or in patients who are Rho(D)-negative.
WinRho® SDF is not indicated for use as immunoglobulin replacement therapy for immune globulin deficiency syndromes.
Animal reproduction studies have not been conducted with WinRho® SDF. It is also not known whether WinRho® SDF can cause fetal harm when administered to a pregnant woman or can affect reproductive capacity. WinRho® SDF should be given to a pregnant woman only if clearly needed.
Product Insert: http://www.winrho.com/pi.pdf
Website: http://www.winrho.com/
Important Information about HepaGam B® [Hepatitis B Immune Globulin Intravenous (Human)] (See full prescribing information)
Animal reproduction studies have not been conducted with HepaGam B. It is also not known whether HepaGam B can cause fetal harm when administered to a pregnant woman or can affect reproductive capacity. HepaGam B should be given to a pregnant woman only if clearly indicated.
It is not known whether HepaGam B is excreted in human milk. Because many drugs are excreted in human milk, caution should be exercised when HepaGam B is administered to a nursing mother.
Product Insert: http://www.hepagamb.com/pdf/HepaGamBPI.pdf
Website: http://www.hepagamb.com/
Important Information about VARIZIG® [Varicella Zoster Immune Globulin (Human)] (See full prescribing information)
VARIZIG is indicated for post-exposure prophylaxis of varicella in high risk individuals. High risk groups include: immunocompromised children and adults, newborns of mothers with varicella shortly before or after delivery, premature infants, neonates and infants less than one year of age, adults without evidence of immunity, and pregnant women.
Administer VARIZIG as soon as possible following varicella zoster virus (VZV) exposure, ideally within 96 hours for greatest effectiveness. There is no convincing evidence that VARIZIG reduces the incidence of chickenpox infection after exposure to VZV. There is no convincing evidence that established infections with VZV can be modified by VARIZIG administration. There is no indication for the prophylactic use of VARIZIG in immunodeficient children or adults when there is a past history of varicella, unless the patient is undergoing bone marrow transplantation.
Animal reproduction studies have not been conducted with VARIZIG. It also is not known whether VARIZIG can cause fetal harm when administered to a pregnant woman or can affect reproduction capacity. VARIZIG should be given to a pregnant woman only if clearly needed.
It is not known whether VARIZIG is excreted in human milk. Because many drugs are excreted in human milk, caution should be exercised when VARIZIG is administered to a nursing mother.
Product Insert: http://www.varizig.com/VariZig_prescribing_information_Jan2013.pdf
Website: http://www.varizig.com/
About episil®
Do not use episil if you are allergic (hypersensitive) to any of the ingredients, to peanuts or soya, or to peppermint oil.
Product Insert: http://www.episilusa.com/pdfs/episil-prescribing-information.pdf
Website: http://www.episilusa.com/
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Emergent BioSolutions Safe Harbor Statement
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements, other than statements of historical fact, including statements regarding the expected closing of the transaction, the potential opportunities and financial impact of the transaction, our financial guidance, and any other statements containing the words “believes”, “expects”, “anticipates”, “intends”, “plans”, “forecasts”, “estimates” and similar expressions, are forward-looking statements. These forward-looking statements are based on our current intentions, beliefs and expectations regarding future events. We cannot guarantee that any forward-looking statement will be accurate. Investors should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could differ materially from our expectations. Investors are, therefore, cautioned not to place undue reliance on any forward-looking statement. Any forward-looking statement speaks only as of the date of this press release, and, except as required by law, we do not undertake to update any forward-looking statement to reflect new information, events or circumstances.
There are a number of important factors that could cause the company’s
actual results to differ materially from those indicated by such
forward-looking statements, including uncertainties as to the
satisfaction of closing conditions with respect to the transaction,
including the timing and receipt of
Source:
Emergent BioSolutions
Investor Contact:
Robert
G. Burrows, 301-795-1877
Vice President, Investor Relations
BurrowsR@ebsi.com
or
Media
Contact:
Tracey Schmitt, 301-795-1800
Vice President,
Corporate Communications
SchmittT@ebsi.com