On September 5, 2016, Navidea Biopharmaceuticals,
Inc. (the “Company”) entered into a non-binding letter of intent (“LOI”) with Cardinal Health, Inc. (“Cardinal”)
pursuant to which Cardinal intends to acquire the Company’s Lymphoseek product (the “Product”) and certain intellectual
property rights and other assets related to the Product (the “Acquired Assets”) and assume certain liabilities associated
with the Acquired Assets (the “Proposed Transaction”). The purchase price for the Proposed Transaction shall consist
of (i) $80 million in cash payable at closing (reduced to the extent the amount of transferred Product inventory is less than $6
million),
plus
(ii) annual earn-out and milestone payments based upon the volume of Product sales. For the first three years,
the earn-out payments shall be no less than $6.7 million per year. In no event will the entire purchase price, including all earn-out
payments, exceed $310,000,000.
As part of the Proposed Transaction, the
parties have agreed that simultaneous with the closing, subject to certain conditions, Cardinal will license to the Company (“License
Back”), on a perpetual royalty free exclusive basis, certain rights to the Acquired Assets necessary for the Company to (i)
develop, manufacture, market, sell and distribute new pharmaceutical and other products so long as such products do not compete
with the Product, and (ii) manufacture, market, sell and distribute the Product throughout the world other than in North America.
Also as part of the Proposed Transaction,
the Company shall grant to Cardinal five (5) year warrants to purchase up to 10 million shares of the Company’s common stock,
par value $.001 per share, at an exercise price of $1.50 per share and provide Cardinal with a right of first offer related to
the assets covered by the License Back and new products developed by the Company in certain circumstances during the life of the
Product’s patents.
The parties intend to negotiate and execute
definitive agreements for the Proposed Transaction with customary provisions for a transaction of this size and scope, including
representations and warranties regarding the Company, its business, and the Acquired Assets, indemnification of Cardinal by the
Company, covenants and closing conditions.
Unless written notice is given to the Company
that Cardinal is ceasing further discussions related to the Proposed Transaction, the Company has agreed not to initiate or enter
into any discussions with any third party regarding a possible sale of any equity or material assets of the Company or its subsidiaries
for a period of thirty days from the date of the LOI. If the Company does not consummate a transaction with Cardinal as contemplated
by the LOI and at any time within 180 days of the date of the LOI consummates one or more transactions that, directly or indirectly,
result in a sale, license or other transfer of the Product, or all or substantially all of the Company’s assets, then a certain
Supply and Distribution Agreement between the Company and Cardinal shall automatically be extended for an additional three year
period. The parties have agreed that the provisions described in this paragraph shall be binding.
The closing of the Proposed Transaction
is subject to, among other things, the satisfactory completion of due diligence by Cardinal.
A copy of the press release announcing entering
into the LOI is attached hereto as Exhibit 99.1.