Bioenvision Inc (Other)
September 19 2007 - 5:11PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement
Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than the
Registrant
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Check the appropriate
box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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BIOENVISION,
INC.
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(Name of
Registrant as Specified In Its Charter)
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(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which
transaction applies:
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(2)
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Aggregate number of securities to which transaction
applies:
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(3)
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Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it was
determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the
date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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This filing consists of a presentation initially used on September 19,
2007, by Bioenvision, Inc. (Bioenvision) in connection with a meeting with
Institutional Shareholder Services. Bioenvision may also use the presentation
in connection with meetings with certain of its stockholders.
ADDITIONAL
INFORMATION AND WHERE TO FIND IT
In connection with the
proposed acquisition of Bioenvision, Inc. (Bioenvision) by Genzyme
Corporation (Genzyme) and the required approval of the transaction by
Bioenvisions stockholders, Bioenvision filed a definitive proxy statement and
other relevant documents concerning the transaction with the Securities and
Exchange Commission (SEC) on September 7, 2007. Stockholders of Bioenvision
are urged to read the definitive proxy statement and any other relevant
documents because they contain important information. Investors and security
holders can obtain free copies of the definitive proxy statement and other
relevant documents when they become available by contacting Bioenvision
Investor Relations at (212) 750-6700 ext. 160. In addition, documents filed
with the SEC by both Genzyme and Bioenvision are available free of charge at
the SECs web site at http://www.sec.gov.
Information regarding the
identity of the persons who may, under SEC rules, be deemed to be participants
in the solicitation of stockholders of Bioenvision in connection with the
transaction, and their interests in the solicitation, is set forth in the proxy
materials filed by Bioenvision with the SEC.
FORWARD-LOOKING
STATEMENTS
Certain
statements contained in the presentation are forward-looking statements,
including express or implied statements regarding the future approval by
Bioenvisions stockholders of the pending agreement and plan of merger with
Genzyme and regarding Bioenvision obtaining regulatory approval of its
products. Because these statements are subject to risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Specifically, factors that could cause
actual results to differ materially from those expressed or implied by such
forward-looking statements include, but are not limited to: risks associated
with whether the merger of Wichita Bio Corporation with and into Bioenvision
will be approved by the stockholders of Bioenvision; risks associated with the
uncertainty as to whether such merger will in fact occur, risks associated with
disruptions from the proposed merger transaction which may harm relationships
with customers, employees, suppliers and partners; risks associated with the
outcome of litigation and regulatory proceedings to which we are currently a
party and may become a party in the future; risks associated with preclinical
and clinical developments in the biopharmaceutical industry in general and in
Bioenvisions compounds under development in particular; the potential failure
of Bioenvisions compounds under development to prove safe and effective for
treatment of disease; uncertainties inherent in the early stage of Bioenvisions
compounds under development; failure to successfully implement or complete
clinical trials; failure to receive marketing clearance from regulatory
agencies for our compounds under development; acquisitions, divestitures,
mergers, licenses or strategic initiatives that change Bioenvisions business,
structure or projections; the development of competing products; uncertainties
related to Bioenvisions dependence on third parties and partners; and those
risks described in Bioenvisions filings with the SEC. Bioenvision assumes no
obligation to update any forward-looking statements as a result of new
information or future events or developments, except as required by law and the
statements contained in the presentation are current as of the date hereof only.
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Proposed Acquisition by Genzyme Corporation
September 2007 Rationale and Valuation Perspectives
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Certain forward
looking statements are included in this presentation, including statements
relating to a proposed transaction by and among Bioenvision Inc., Genzyme
Corporation and Wichita Bio Corporation. These statements are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. The forward looking statements reflect Bioenvision managements
current expectations regarding the proposed transaction, and speak only as of
September 19, 2007. Investors are cautioned that all forward looking
statements herein involve risks and uncertainties that could cause actual
results to differ materially from those referred to in the forward looking
statements. Such risks and uncertainties include, among other things: (i)
that Bioenvision stockholders will not support or approve the transaction in
a timely manner, if at all; (ii) that the closing of the transaction by and among
Bioenvision Inc., Genzyme Corporation and Wichita Bio Corporation could be
materially delayed or more costly and difficult than expected; and/or (iii)
that the transaction will not be consummated. A full discussion of known
risks and uncertainties is included in the Companys Definitive Merger Proxy,
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with
the SEC, copies of which are available without charge from the Company. These
filings are also available electronically through the link from the
Bioenvision Investor Relations Web page or from the SEC Web site at
www.sec.gov under Bioenvision, Inc. If any of the events described in those
filings were to occur, either alone or in combination, it is likely that the
Companys ability to reach the results described in the forward looking
statements could be impaired and the Companys stock price could be adversely
affected. Bioenvision does not undertake any obligation to update or correct
any forward looking statements included herein to reflect events or
circumstances occurring after September 19, 2007. Bioenvision, the
Bioenvision logo and Evoltra ® are registered trademarks of Bioenvision, Inc.
All other company and product names mentioned are trademarks of the companies
with which they are associates. Forward-looking statements
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Overview of
Rationale The transaction is in the best interests of stockholders The
transaction allows Evoltra® to be developed and commercialized more rapidly
toward the advancement of human health
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Summary of
Rationale Process The transaction process was professional and comprehensive
Negotiation The transaction price was determined to be the highest price then
obtainable Cash Value Certainty There is certainty in the transaction value
of $5.60 per share in cash Key Terms Our Board had the ability to review a
superior proposal, if one emerged After transaction announced no other
bidders emerged
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Summary of
Rationale (contd) Valuation The transaction value is fair The transaction
value represents a significant premium Alternatives There are significant
operating risks to going it alone Incentives Board, management and
shareholders incentives are aligned
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Transaction
Review May 29, 2007 announcement $5.60 per share Two-step merger process Transaction
valued Bioenvision at $345 million Step 1: Tender period closed July 10, 2007
Genzyme purchased 22% of shares on an as-converted basis Genzyme owns all of
the preferred shares and the rights appurtenant thereto Step 2: Merger vote
Bioenvision definitive proxy filed September 7, 2007 Special stockholder
meeting scheduled for October 4, 2007
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Company
Overview Product focused biopharmaceutical company with approved cancer
therapeutics Lead product Evoltra ® (clofarabine) Approved in E.U. for pediatric
ALL with orphan drug exclusivity through 2016 Further clinical development
opportunities Pending Adult AML elderly non-intensive Adult AML elderly
intensive Adult AML non-elderly intensive Myelodysplastic syndrome (MDS)
Transplant pre-conditioning Solid tumors U.S. partner Genzyme selling Clolar
(clofarabine) in the U.S. for pediatric ALL Building oncology focused
commercial organization
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BIVN Genzyme
Co-Development Agreement Formed March 12, 2001 with Ilex Oncology to
co-develop, commercialize and market purine nucleoside analogues (i.e.
clofarabine) Genzyme is successor-in-interest to Ilex U.S./Canada Rights*
100% of development costs in U.S./Canada 50% of approved development costs
ex-U.S./Canada Royalties on sales to BIVN Europe Japan & Australasia
Royalties on E.U. sales to Southern Research Institute (SRI) and Genzyme
Maintenance fee and milestone payments to SRI Disputes over R&D
reimbursement in Europe and rights to certain cancer indications in the U.S.
Various strategic transaction discussions since 2004 *certain cancer
indications
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Transaction
Rationale Bidding Process Genzyme was the ONLY third party that made an
offer which was not subsequently withdrawn. Since 2003, potential strategic
alternatives explored with multiple parties Advisor engaged in 2003;
subsequent advisor, UBS, engaged in mid-2005 Prior to 2007, over 20 potential
buyers contacted One offer made but subsequently withdrawn In conjunction
with 2007 review of Genzyme offer, UBS conducted market check with potential
third parties
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Transaction
Rationale Price Negotiation Based on the results of our prior efforts and
our extended arms-length negotiations with Genzyme, our board believed that
the merger consideration represented the highest price per share that was then
obtainable On April 11, 2007, the Company received an offer from Genzyme for
$5.25 per share On that day, BIVN closed at $3.70 on 233,000 shares traded
Endeavored to negotiate the price higher An independent director became
directly involved in the negotiations Explained Board not prepared to move
forward at $5.25 per share Genzyme agreed to pay $5.60 per share, or $21.5
million more
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Transaction
Rationale Key Term Negotiations Since the public announcement on May 29,
2007, when it became public that the company was for sale for at $5.60 per
share, we have not received ANY indication of interest from ANY third party
regarding the sale of the Company. The transaction terms allowed for our
Board to evaluate and negotiate an unsolicited superior proposal The 2.6%
termination fee is not a deterrent to a potential superior proposal $0.15 per
share Our Board negotiated this fee down to a below-average level explicitly
because it did not want to deter a superior proposal
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Transaction
Rationale Market Premium 08/15/06 LTM Price/Volume Performance 05/31/06
Receives European approval for Evoltra 09/18/06 Announces it is expanding
into Japan and Southeast Asia for the clinical and commercial development of
Evoltra 11/10/06 Announces the filing of a clinical trial authorization (CTA)
to begin two Phase I studies of Clofarabine gel for the treatment of
psoriasis 02/07/07 Announces the filing with the EMeA to expand the Evoltra
label to include the treatment of AML in certain patients over 65 years old
04/02/07 Announces registered direct offering of $30 million in common stock
at $3.75 per share 5/16/07 Genzyme expresses interest in acquiring global
rights to Clofarabine during Investor Day presentation 08/15/07 Initiation of
coverage by Prudential Equity 05/24/06 08/04/06 10/17/06 12/29/06 03/12/07
05/25/07 2 3 4 5 6 7 8 Price ($USD) 0 500 1,000 1,500 2,000 2,500 3,000
Volume (000s) Volume Price Source : FactSet Current Price (05/25/07) $5.25 30
- Day Average $3.74 60 - Day Average $3.89 90 Day Average $4.18 52 - Week
High (09/06/06) $6.41 52 - Wee k Low (04/30/07) $3.23
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Transaction
Rationale Market Premium Price Implied ($/Share) Premium (%) 1 Day Prior to
Announcement Date (5/25/07) 5.25 6.7 Unaffected Stock Price (5/15/07) (1)
3.35 67.2 1 Week Prior to Announcement Date (5/18/07) 4.00 40.0 1 Month Prior
to Announcement Date (4/25/07) 3.75 49.3 30 Trading Day Average 3.74 49.7 60
Trading Day Average 3.89 44.1 90 Trading Day Average 4.18 33.9 (1) BIVN
closing stock price one day prior to Genzyme's Investor Day, when Genzyme
announced that it remained interested in obtaining worldwide rights to
clofarabine.
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Transaction
Rationale Market Premium @ Unaffected (US $mm, unless otherwise noted)
Stock Price (1) @ Offer Price Share Price ($/Share) 3.35 $ 5.60 $ Diluted
Shares Outstanding (Treasury Method) (2) 60.9 61.5 Equity Value (4) 204 $ 345
$ Plus: Debt - $ - $ Less: Cash (3) (48) $ (48) $ Enterprise Value (4) 156 $ 296 $ (1) BIVN closing stock price one day prior to Genzyme's Investor Day, when
Genzyme announced that is remained (2) As of May 7, 2007. Unchanged as of
July 31, 2007. (3) Estimated June 30, 2007 cash balance prior to transaction
announcement. Reported cash as of June 30, 2007 is $49.2 million. (4) As of
transaction announcement. interested in obtaining worldwide rights to
clofarabine.
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Transaction
Rationale Financials FYE 2007 Financial Performance Revenue of $19 million
40% sold to Cardiff into AML-16 trials Operating Loss of $37.6 million
Company does not provide revenue guidance (1) Forecast / Strategic Review
Independent third party consultant retained Review initiated and largely
conducted prior to receiving the Genzyme offer Evaluated Bioenvision assets
including IP, market size, clinical indications, clinical & regulatory
strategy, costs, adoption rates, etc Forecast accepted only those assets that
provide positive NPV contribution (1) Exception of guidance provided for
quarter ended March 31, 2007 in public filings related to Registered Direct
offering of April 2007 prior to release of 10-Q for quarter ended March 31,
2007.
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Transaction
Rationale Strategic Review and Forecast Fiscal Year End June 30,
($000,000s) 2017 2018 2019 2020 2021 2022 Net Sales 405.1 243.1 72.9 43.8
30.6 24.5 Total Royalties 2.6 0.7 0.7 0.7 0.7 0.7 Net Sales & Royalties
407.7 243.8 73.7 44.5 31.4 25.2 Total Op. Costs (before SRI Royalty and
Profit Share (59.6 ) (36.6 ) (12.6 ) (8.4 ) (6.6 ) (5.7 ) SRI Royalty
Payments and Profit Share 0.0 0.0 0.0 0.0 0.0 0.0 Total Operating Costs (60.1
) (37.0 ) (13.0 ) (8.9 ) (7.0 ) (6.2 ) EBIT 347.6 206.8 60.7 35 .6 24.3 19.1
Plus: D&A 2.2 2.2 2.2 2.2 2.2 2.2 EBITDA 349.8 209.0 62.9 37.8 26.5 21.3
Fiscal Year End June 30, ($000,000s) 2008 2009 2010 2011 2012 2013 2014
2015 2016
Net Sales 24.1 41.8 65.6 124.6 205.0 309.7 416.3 508.1 578.7
Royalties 3.1 6.9 10.4 15.4 19.9 15.7 11.3 6.1 5.2 Net Sales & Royalties
27.2 48.6 76.0 139.9 224.9 325.4 427.6 514.2 583.9 COGS & Royalty (2.5)
(4.4 ) (6.9 ) (13.1) (21.9) (36.2) (53.9) (69.4 ) (80.2 ) R&D (19.5)
(30.8) (20.3) (4.8) (4.3) (3.0) (5.0) (3.0) (3.0) SG&A (37.3) (51.5 )
(72.4 ) (102.0) (123.4) (126.3) (141.1) (145.6 ) (146.9 ) SRI Royalty
Payments and Profit Share (2.1) (6.1) (8.8) (28.2) (10.2) (47.2) (4.3) (1.3)
(0.8) Total Operating Expense (61.4) (92.8 ) (108.4) (148.1) (159.8) (212.7)
(204.4) (219.3 ) (230.8) EBIT (34.2) (44.1) (32.4) (8.2) 65.1 112.7 223.2
294.9 353.1 Plus: D&A 1.2 1.3 1.4 1.5 1.6 1.7 1.9 2.0 2.2 EBITDA (33.0)
(42.8) (31.1) (6.7) 66.8 114.4 225.1 296.9 355.3
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Revenue
Multiples 4.8x 4.0x 2009 7.8x 6.8x 7.8x 6.4x 2008 12.4x 8.0x 12.4x 7.6x 2007
Implied BIVN Selected Companies (Mean) Implied BIVN Selected Companies (Mean)
Comparable Transactions Comparable Companies Discounted Cash Flow Reference
Range For Fair Price 22.5% 17.5% Offer $3.72 $5.33 $5.60 Transaction
Rationale Valuation UBS acted as financial advisor Management provided
forecast from strategic review WACC
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Transaction
Rationale Street Expectations ($mm) Report Date Price Target Revenue EBITDA
AG Edwards May 18, 2007 $9.00 284.1 139.9 UBS May 17, 2007 $13.00 207.6 57.1
CIBC World Markets May 9, 2007 $9.00 170.9 75.1 Rodman & Renshaw May 9,
2007 $12.00 199.5 72.1 Fortis Bank April 3, 2007 $3.00 107.6 20.2 Friedman
Billings Ramsey May 8, 2007 $6.00 109.1 13.1 Average $8.67 179.8 62.9
Management Financials May 29, 2007 $5.60 76.0 (31.1) Source: Management
financials and Wall Street research Wall Street Analyst Price Targets as of
May 29, 2007 2010 Revenue Fiscal
Year Ending June 30th, ($mm) 2008 2009 2010 AG Edwards 76.0 199.1
284.1 UBS 61.9 134.5 207.6 CIBC World Markets 70.4 127.9 170.9 Rodman &
Renshaw 59.0 117.0 199.5 Fortis Bank 42.0 73.9 107.6 Friedman Billings Ramsey
45.7 72.4 109.1 Average 59.2 120.8
179.8 Management Financials 27.2 48.6 76.0 EBITDA Fiscal
Year Ending June 30th, ($mm) 2008 2009 2010 AG Edwards 5.3 83.7 139.9
UBS (13.0) 22.4 57.1 CIBC World Markets 5.4 46.2 75.1 Rodman & Renshaw
(13.1) 22.4 72.1 Fortis Bank (16.1) 1.5 20.2 Friedman Billings Ramsey (18.0)
(10.2) 13.1 Average (8.2) 27.7 62.9
Management Financials (33.0) (42.8) (31.1) Source: Management
financials and Wall Street research Wall
Street
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Transaction
Rationale Operational Risks of Going It Alone Forecast assumes mid-2008
launch in adult AML elderly non-intensive indication in Europe Adult AML
filing risk of non-randomized trial and request for AML-16 data Changing
standards of care as additional drugs seek approval in hematological cancers
in Europe, Japan and elsewhere Regulatory Current infrastructure includes 6
full time sales employees, 2 full time marketing employees and an arrangement
with Innovex for remainder of sales force The creation of infrastructure to
commercialize oncology products is difficult, expensive and time-consuming
Commercial Our success will depend in part on the expansion of our operations
and the effective management of growth The unexpected loss of our key
employees could have a material adverse effect on our business Organization
Additional approvals will require significant investment in additional clinical
trials Progress could be hindered by manufacturing, patient recruitment, lack
of efficacy, unforeseen safety issues or side effects Clinical Forecast
results in over $100 million of losses prior to profitability Any decision to
forego investment into assets driving the forecast revenue would by virtue
of the fact that only positive NPV contributing assets were included in
forecast lower the DCF valuation derived from the forecast Dilution /
Financing ... Include but are not limited to:
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Transaction
Rationale Other Risks of Going It Alone Absence of transaction price to
maintain floor on stock price Absence of buyout premium because market has
information that no alternate bidders exist at this price Genzyme preferred
stock rights Macro-environment: Small cap stocks in $100 million to $500
million range are down 10% since May 25, 2007 (1) (1) Source: UBS
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Market Reaction
Drivers 1 Source: 13-D filing of SCO Capital and affiliates dated June 6,
2007 and September 12, 2007. 13-D filings of Elliott Associates and
affiliates dated August 10, 2007 and September 5, 2007. 2 Source: January 8,
2002 8-K filings of the Company, and Company records. 3 Source: February 21,
2002 8-K filings of the Company, and Company records. SCO Capital Partners
LLC, a private investment fund, and other affiliates of the Company's
investment bankers, SCO Financial Group LLC, owned approximately 82% of
Pathagon's common stock prior to the merger. Reported Shares Ownership (1)
(millions) 3.7 6.7% 7.2 13.1% Latest Filing 0.0 0.0% 7.2 13.4% May 29, 2007
None 2001 2004: Acted as investment banker on transactions with SCO
affiliates and third parties, and as lender Feb 2002: Joined Bioenvision
Board June 2004: Resigned from Board History with BIVN Prior to Announcement
of Transaction 3.68 million shares, acquired as (1) : 3.2 million shares at
average price of $5.71 from June 5, 2007 to August 2, 2007 and, 470,000
shares at average price of $5.41 from August 6, 2007 to August 29, 2007.
Elliott Associates and affiliates 1.16 million shares: Cashless exercise of
1.5 million warrants at $1.25 issued in Nov 2001 in conjunction with $1.0
million credit facility issued by SCO affiliate (2) 77,314 shares: Cashless
exercise of 100,000 warrants at $1.25 issued in Nov 2001 for financial advisory
services (2) 6.1 million shares: Issued in conjunction with acquisition of
Pathagon in Feb 2002 (3) 1.0 million shares: Exercise of 1.0 million warrants
at $1.50 issued in May 2002 for financial advisory services related to
preferred stock offering (2) SCO Capital and affiliates BIVN Share
Acquisition History
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Severance Stock
Options Equity $ 2.6 $ 0.09 $ 7.9 Additional Value of Hypothetical $1
Increase in Purchase Price $ 3.3 $ 0.11 - Additional In-The-Money Value of
Hypothetical $1 Increase in Purchase Price $ 14.3 $ 0.5 $ 44.1 Value at $5.60
$ 1.5 (3) $ 10.4 Executive Management (2) - $ 0.08 Other Independent
Directors (1) - - Perseus-Soros Contractual Change in Control Severance
In-The-Money Value @ $5.60 millions (1) All values as of May 29, 2007. Other
independent directors include Mr. Nelson, Mr. Cooper and Dr. Kauffman. (2)All
values as of May 29, 2007. Executive management includes only executives
involved in transaction evaluation process: Dr. Wood, Mr. Luci, Mr. Griffith
and Mr. Scibetta. (3)Amounts to 0.4% of transaction value. Incentives Board,
management and shareholder incentives are aligned Board, management and
shareholders all benefit from the best attainable price
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Conclusion 1 The
transaction is the highest 2 The transaction value represents a substantial
premium when analyzed using standard valuation metrics 3 The operating and
other risks of not pursuing the transaction are significant The Board and
management recommend voting for approval by proxy or in person at the Special
Stockholder Meeting scheduled for October 4, 2007
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