Expands Ligand’s industry-leading technology
offerings by adding a proprietary protein expression technology
platform
Business expected to be earnings accretive
in 2021 and to contribute substantial annual royalty revenue and
cash flow going forward
Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) and Pfenex
Inc. (NYSE American: PFNX) today announced the signing of a
definitive agreement for Ligand to acquire all outstanding shares
of Pfenex for $12.00 per share in cash or $438 million in equity
value on a fully diluted basis. In addition, Ligand will pay $2.00
per share or $78 million as a Contingent Value Right (CVR) in the
event a predefined regulatory milestone is achieved by December 31,
2021, for a total transaction value of up to $516 million. The
closing of this transaction is subject to customary conditions and
is expected to occur in the fourth quarter.
Pfenex is a development and licensing biotechnology company
focused on leveraging its proprietary Pfenex Expression
Technology®, which offers a robust, validated, cost-effective and
scalable approach to recombinant protein production, and is
especially well-suited for complex, large-scale protein production
that cannot be made by more traditional systems. The technology is
currently out-licensed for numerous commercial and
development-stage programs, as well as used by Pfenex in developing
an early stage product pipeline and nanobody discovery and
development capability. The versatile platform has demonstrated
consistent success in the production of enzymes, peptides, antibody
derivatives and engineered non-natural proteins. Partners seek the
Pfenex technology as it can contribute significant value to
biopharmaceutical development programs by reducing development
timelines and costs for manufacturing human therapeutics and
vaccines.
Pfenex’s expertise in the expression of complex proteins is
highly complementary to Ligand’s industry-leading antibody and drug
enabling technologies, building a comprehensive discovery and early
stage platform.
The acquisition of Pfenex is expected to contribute a number of
strategic benefits to Ligand:
- Access to a proprietary, protein expression technology that is
utilized in various commercial and development-stage
biopharmaceutical programs.
- Versatile operating business that is focused on licensing and
generating royalty revenue from partners.
- Profitable, cash-flow positive business that is projected to be
accretive to Ligand’s adjusted diluted EPS beginning in 2021.
- Numerous major collaborations with leading pharmaceutical
companies for treatments and vaccines, including Merck, Jazz
Pharmaceuticals, Serum Institute of India and Alvogen.
- Outlook for numerous additional licenses to be potentially
secured over the next few years by Ligand leveraging the Pfenex
technology.
- Validated discovery platform technology driving a deep pipeline
of next generation product candidates for future internal and
external development.
- State-of-the-art process development operation located in San
Diego with scalable equipment and engineering capabilities designed
to serve the world’s largest pharmaceutical companies.
“Pfenex is an ideal strategic, business and cultural fit with
Ligand. The acquisition holds potential to have a significantly
positive scientific and financial impact on our business in the
short and long term, similar to how our Captisol and OmniAb
acquisitions have played out,” said John Higgins, Chief Executive
Officer of Ligand. “Pfenex will add an established, proven protein
expression platform to Ligand that is highly complementary to our
essential, proprietary drug discovery and formulation technologies.
We are confident we will be able to quickly and efficiently grow
the Pfenex business, along with our core existing technologies. It
has been a very positive experience working with the Pfenex
executive leadership and senior scientists while we put this deal
together. We look forward to welcoming the talented Pfenex team to
Ligand.”
“The Ligand-Pfenex combination is an excellent strategic and
cultural fit, presenting a unique opportunity to leverage the
complementary strengths of robust platforms and rich pipelines, we
expect it to position us even better to deliver on our joint vision
to develop therapeutics that provide patients a better future,”
said Eef Schimmelpennink, Chief Executive Officer, Pfenex. “I want
to recognize and thank the Pfenex team, and express deep gratitude
to each of you for your many contributions over the years, which
have enabled us to reach this milestone.”
Financial Outlook
Ligand will provide a detailed outlook for the Pfenex business
and financial contribution after the transaction has closed. At
this time, Ligand expects the transaction will be modestly dilutive
to 2020 adjusted diluted EPS, will provide $0.10 to $0.30 of
adjusted diluted EPS accretion in 2021, and will provide
significant annual adjusted diluted EPS accretion thereafter with
the current forecast of $0.60 to $0.80 in 2022 and $1.25 to $1.50
in 2023.
Transaction Terms
Under the terms of the merger agreement, Ligand will commence a
tender offer to acquire all of the outstanding shares of Pfenex
common stock for $12.00 per share, or $438 million upfront in cash.
This represents a 57% premium to the closing price of Pfenex’s
stock on August 10, 2020. Ligand will also pay holders of Pfenex
common stock a price of $2.00 per share, or $78 million, as a
Contingent Value Right in the event a predefined regulatory
milestone is achieved by December 31, 2021. The tender offer is
subject to customary conditions, including the tender of a majority
of the outstanding shares of Pfenex common stock, and the
expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. The
transaction is expected to close in the fourth quarter of 2020 and
be funded by Ligand with cash on hand.
William Blair & Company, L.L.C. served as Pfenex’s exclusive
financial advisor. Wilson Sonsini Goodrich & Rosati served as
Pfenex’s legal counsel. Barclays Capital Inc. served as Ligand’s
exclusive financial advisor. Latham & Watkins LLP served as
Ligand’s legal counsel.
Adjusted Financial Measures
The adjusted financial measures discussed above exclude changes
in contingent liabilities, mark-to-market adjustment for amounts
owed to licensors, non-cash stock-based compensation expense,
non-cash debt-related costs, pro-rata non-cash net losses of
Pfenex, non-cash Pfenex purchase price amortization and non-cash
tax expense.
Ligand believes that the presentation of adjusted financial
measures provides useful supplementary information to investors and
reflects amounts that are more closely aligned with the cash
profits for the period as the items that are excluded from adjusted
net income are all non-cash items. Ligand uses these adjusted
financial measures in connection with its own budgeting and
financial planning. These adjusted financial measures are in
addition to, and not a substitute for, or superior to, measures of
financial performance prepared in conformity with GAAP.
About Pfenex Inc.
Pfenex is a development and licensing biotechnology company with
commercial products focused on leveraging its proprietary protein
production platform, Pfenex Expression Technology®, to develop
next-generation and novel protein therapeutics to meaningfully
improve existing therapies and create novel therapies for
biological targets linked to critical, unmet diseases. Pfenex uses
P. fluorescens bacterium, which are especially well-suited for
complex, large-scale protein production that cannot be made by more
traditional host systems. Using the patented Pfenex Expression
Technology platform, Pfenex has created a broad pipeline that is
diversified across multiple assets, including FDA-approved,
next-generation and novel biopharmaceutical products.
Pfenex’s lead product is Teriparatide Injection (previously
referred to as PF708 and Bonsity™), a therapeutic equivalent
candidate to Forteo® (Teriparatide Injection) exclusively licensed
to Alvogen. Teriparatide Injection has been commercialized in the
U.S. for, among other uses, the treatment of osteoporosis in
certain patients at high risk for fracture, and marketing
authorization applications are pending in other jurisdictions.
Licensee Jazz Pharmaceuticals is utilizing the Pfenex Expression
Technology to develop hematologic oncology products including
PF743, a recombinant Erwinia asparaginase, and PF745, a half-life
extended recombinant Erwinia asparaginase. In addition, Serum
Institute of India and Merck & Co., Inc. are using the Pfenex
Expression Technology platform to produce CRM197, a diphtheria
toxoid carrier protein for use in prophylactic and therapeutic
vaccines. With headquarters in San Diego, Pfenex has 88 employees,
24 U.S. patents, 16 active partnerships and 10 products available
for partnering.
Pfenex investors and others should note that Pfenex announces
material information to the public about Pfenex through a variety
of means, including its website (http://www.pfenex.com/), its
investor relations website (http://pfenex.investorroom.com/), press
releases, SEC filings, public conference calls, corporate Twitter
account (https://twitter.com/pfenex), Facebook page
(https://www.facebook.com/Pfenex-Inc-105908276167776/timeline/),
and LinkedIn page (https://www.linkedin.com/company/pfenex-inc) in
order to achieve broad, non-exclusionary distribution of
information to the public and to comply with its disclosure
obligations under Regulation FD. Pfenex encourages its investors
and others to monitor and review the information Pfenex makes
public in these locations as such information could be deemed to be
material information. Please note that this list may be updated
from time to time.
Cautionary Statement Regarding Forward-Looking
Statements
This news release contains forward-looking statements by Pfenex
that involve risks and uncertainties and reflect Pfenex's judgment
as of the date of this release. These forward-looking statements
include, without limitation, statements regarding: the timing of
the anticipated acquisition and when and whether the anticipated
acquisition ultimately will close; the potential contributions the
acquisition is expected to bring, including technologies,
collaborations and revenue streams, the potential to secure
additional licenses, and development operations; and the expected
impact on Ligand’s future financial and operating results. Actual
events or results may differ from these expectations due to risks
and uncertainties inherent in Pfenex’s business, including, without
limitation: the risk that the conditions to the closing of the
transaction are not satisfied, including the risk that Ligand may
not receive sufficient number of shares tendered from Pfenex’s
stockholders to complete the tender offer; litigation relating to
the transaction; uncertainties as to the timing of the consummation
of the transaction and the ability of each of Ligand or Pfenex to
consummate the transaction; risks that the proposed transaction
disrupts the current plans and operations of Ligand or Pfenex; the
ability of Pfenex to retain key personnel; regulatory developments,
including risks related to achieving regulatory approvals and
marketing authorizations; competitive responses to the proposed
transaction; unexpected costs, charges or expenses resulting from
the transaction; potential adverse reactions or changes to business
relationships resulting from the announcement or completion of the
transaction; Ligand’s ability to achieve the growth prospects and
synergies expected from the transaction, as well as delays,
challenges and expenses associated with integrating Pfenex with its
existing businesses; the impact of COVID-19 on Ligand’s and
Pfenex’s businesses and the timing of the transaction; legislative,
regulatory and economic developments; and other risks described in
Pfenex’s prior press releases and filings with the SEC. The failure
to meet expectations with respect to any of the foregoing matters
may reduce Pfenex's stock price. Pfenex disclaims any intent or
obligation to update these forward-looking statements after the
date hereof. This caution is made under the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995.
About Ligand Pharmaceuticals
Ligand is a revenue-generating biopharmaceutical company focused
on developing or acquiring technologies that help pharmaceutical
companies discover and develop medicines. Our business model
creates value for stockholders by providing a diversified portfolio
of biotech and pharmaceutical product revenue streams that are
supported by an efficient and low corporate cost structure. Our
goal is to offer investors an opportunity to participate in the
promise of the biotech industry in a profitable, diversified and
lower-risk business than a typical biotech company. Our business
model is based on doing what we do best: drug discovery,
early-stage drug development, product reformulation and partnering.
We partner with other pharmaceutical companies to leverage what
they do best (late-stage development, regulatory management and
commercialization) to ultimately generate our revenue. Ligand’s
OmniAb® technology platform is a patent-protected transgenic animal
platform used in the discovery of fully human mono- and bispecific
therapeutic antibodies. The Captisol platform technology is a
patent-protected, chemically modified cyclodextrin with a structure
designed to optimize the solubility and stability of drugs. The
Vernalis Design Platform (VDP) integrates protein structure
determination and engineering, fragment screening and molecular
modeling, with medicinal chemistry, to help enable success in novel
drug discovery programs against highly-challenging targets. Ab
Initio™ technology and services for the design and preparation of
customized antigens enable the successful discovery of therapeutic
antibodies against difficult-to-access cellular targets. Ligand has
established multiple alliances, licenses and other business
relationships with the world’s leading pharmaceutical companies
including Amgen, Merck, Pfizer, Sanofi, Janssen, Takeda, Servier,
Gilead Sciences and Baxter International. For more information,
please visit www.ligand.com.
Follow Ligand on Twitter @Ligand_LGND.
Cautionary Statement Regarding Forward-Looking
Statements
This news release contains forward-looking statements by Ligand
that involve risks and uncertainties and reflect Ligand's judgment
as of the date of this release. These forward-looking statements
include, without limitation, statements regarding: the timing of
the anticipated acquisition and when and whether the anticipated
acquisition ultimately will close; the potential contributions the
acquisition is expected to bring to Ligand, including technologies,
collaborations and revenue streams, the potential to secure
additional licenses, and development operations; and the expected
impact on Ligand’s future financial and operating results. Actual
events or results may differ from Ligand’s expectations due to
risks and uncertainties inherent in Ligand’s business, including,
without limitation: the risk that the conditions to the closing of
the transaction are not satisfied, including the risk that Ligand
may not receive sufficient number of shares tendered from Pfenex’s
stockholders to complete the tender offer; litigation relating to
the transaction; uncertainties as to the timing of the consummation
of the transaction and the ability of each of Ligand or Pfenex to
consummate the transaction; risks that the proposed transaction
disrupts the current plans and operations of Ligand or Pfenex; the
ability of Pfenex to retain key personnel; competitive responses to
the proposed transaction; unexpected costs, charges or expenses
resulting from the transaction; potential adverse reactions or
changes to business relationships resulting from the announcement
or completion of the transaction; Ligand’s ability to achieve the
growth prospects and synergies expected from the transaction, as
well as delays, challenges and expenses associated with integrating
Pfenex with its existing businesses; the impact of COVID-19 on
Ligand’s and Pfenex’s businesses and the timing of the transaction;
legislative, regulatory and economic developments; and other risks
described in Ligand’s prior press releases and filings with the
SEC. The failure to meet expectations with respect to any of the
foregoing matters may reduce Ligand's stock price. Ligand disclaims
any intent or obligation to update these forward-looking statements
after the date hereof. This caution is made under the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995.
Additional Information and Where to Find it
The tender offer for the outstanding shares of Pfenex common
stock referenced in this press release has not yet commenced. This
press release is for informational purposes only and is neither an
offer to purchase nor a solicitation of an offer to sell
securities, nor is it a substitute for the tender offer materials
that Ligand and its acquisition subsidiary will file with the SEC,
upon the commencement of the tender offer. At the time the tender
offer is commenced, Ligand and its acquisition subsidiary will file
a tender offer statement on Schedule TO and thereafter Pfenex will
file a Solicitation/Recommendation Statement on Schedule 14D-9 with
the SEC with respect to the tender offer. THE TENDER OFFER
MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF
TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS) AND THE
SOLICITATION/RECOMMENDATION STATEMENT WILL CONTAIN IMPORTANT
INFORMATION. PFENEX STOCKHOLDERS ARE URGED TO READ THESE DOCUMENTS
CAREFULLY WHEN THEY BECOME AVAILABLE (AS EACH MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME) BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION THAT HOLDERS OF PFENEX SHARES SHOULD CONSIDER BEFORE
MAKING ANY DECISION REGARDING TENDERING THEIR SHARES. Those
materials will be made available to Pfenex’s stockholders at no
expense to them. In addition, all of those materials (and any other
documents filed with the SEC) will be available at no charge on the
SEC’s website at www.sec.gov.
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version on businesswire.com: https://www.businesswire.com/news/home/20200810005790/en/
Ligand Pharmaceuticals Incorporated Patrick O’Brien
investors@ligand.com (858) 550-7893 Twitter: @Ligand_LGND
LHA Investor Relations Bruce Voss bvoss@lhai.com (310)
691-7100
Pfenex Inc. InvestorRelations@pfenex.com
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