Item 4 of the Schedule
14D-9
is hereby amended and supplemented by
amending and restating in its entirety the last sentence of the last paragraph of the subheading
Illustrative
Sum-of-the
Parts Discounted Cash Flow
Analysis
under the heading
Opinion of Loxo Oncologys Financial Advisor
on page 32 of the Schedule
14D-9
as follows:
Goldman Sachs then divided the range of illustrative equity values it derived for Loxo Oncology as described above by the sum of total
number of fully diluted Shares outstanding as of January 4, 2019 of 33.6 million, calculated using treasury stock method and information provided by Loxo Oncology management, plus 2 million, the total number of shares estimated by
Loxo Oncology management to be issued in the anticipated equity issuances, to derive a range of illustrative present values per Share of $167.36 to $183.29.
Item 4 of the Schedule
14D-9
is hereby amended and supplemented by amending and restating in its entirety the first
sentence of the second paragraph under the subheading
Illustrative Discounted Cash Flow Analyses
under the heading
Opinion of Loxo Oncologys Financial Advisor
beginning on page 32 of the Schedule
14D-9
as follows:
Using
mid-year
convention and discount
rates ranging from 10.0% to 11.0%, reflecting estimates of Loxo Oncologys weighted average cost of capital, Goldman Sachs discounted to present value as of January 1, 2019 (i) Loxo Oncology managements risk-adjusted estimates of the
unlevered free cash flows (defined as revenue, less cost of goods sold, less operating expenses, less taxes, less capital expenditures, plus depreciation and amortization, less changes in net working capital, as set forth in the table of unlevered
free cash flow following the Projections under the caption
Certain Unaudited Prospective
Financial Information of Loxo Oncology
) to be generated by Loxo Oncology for the period from January 1, 2019 to December 31,
2028, as reflected in the Forecasts, and (ii) a range of illustrative terminal values for Loxo Oncology, calculated by applying perpetuity growth rates ranging from 3.5% to 4.5% to the Loxo Oncology managements risk-adjusted estimate of
the terminal year (2028) unlevered free cash flow of Loxo Oncology of $782 million, as reflected in the Forecasts.
Item 4 of the Schedule
14D-9
is hereby amended and supplemented by inserting the following sentence before the last sentence of the second paragraph under the subheading
Illustrative Discounted Cash Flow Analyses
under the heading
Opinion of Loxo Oncologys Financial Advisor
on page 33 of the Schedule
14D-9
as follows:
Goldman Sachs utilized unlevered free cash flow estimated through the end of 2028 for purposes of its analysis taking into account a
number of factors including the growth profile after 2028, patent expiry of the lead product, and anticipated future growth from products yet to be developed.
Item 4 of the Schedule
14D-9
is hereby amended and supplemented by amending and restating in its entirety the last
sentence of the third paragraph under the subheading
Illustrative Discounted Cash Flow Analyses
under the heading
Opinion of Loxo Oncologys Financial Advisor
on page 33 of the Schedule
14D-9
as follows:
Goldman Sachs then divided the range of illustrative equity values it derived
for Loxo Oncology by the sum of the total number of fully diluted Shares outstanding as of January 4, 2019 of 33.7 million, calculated using treasury stock method and information provided by Loxo Oncology management, plus 2 million,
the total number of shares estimated by Loxo Oncology management to be issued in the anticipated equity issuances, to derive a range of illustrative present values per Share of $159.51 to $222.13.
Item 4 of the Schedule
14D-9
is hereby amended and supplemented by inserting the following sentence after the third
sentence of the fifth paragraph under the subheading
General
under the heading
Opinion of Loxo Oncologys Financial Advisor
on page 34 of the Schedule
14D-9
as
follows:
During the
two-year
period ended January 5, 2019, the Investment Banking
Division of Goldman Sachs has not been engaged by Loxo Oncology or any of its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation.
Item 8. Additional Information
Item 8 of the
Schedule
14D-9
is hereby amended and supplemented by amending and restating in its entirety the first sentence of the last paragraph under the heading
Certain Litigation
as follows:
On January 31, 2019, Michael Stevens, a purported stockholder of Loxo Oncology, also filed a putative securities class action
complaint in the United States District Court for the District of Delaware against Loxo Oncology and the individual members of the Board, captioned
Michael Stevens v. Loxo Oncology, Inc., et. al.
, Case No.
1:19-cv-00207-UNA
(the
Stevens Complaint
).
The
section entitled
Certain Litigation
in Item 8 of the Schedule
14D-9
is hereby amended and supplemented by inserting the following at the end of the section:
On February 4, 2019, Christopher Patrick, a purported stockholder of Loxo Oncology, also filed a putative securities class action
complaint in the United States District Court for the District of Delaware against Loxo Oncology, the individual members of the Board, Lilly and Purchaser, captioned
Christopher Patrick v. Loxo Oncology, Inc., et. al
., Case No.
1:19-cv-00230-UNA (the
Patrick Complaint
). The Patrick Complaint asserts that defendant violated sections 14(e) and 20(a) of the Exchange Act by making untrue statements of material fact and omitting certain material facts related
to the Transactions in the Schedule 14D-9. The Patrick Complaint seeks, among other things, an order enjoining defendants from consummating the Transactions and money damages.
Loxo Oncology believes that the claims asserted in the pending actions in the United States District Court for the Northern District of
California (the Elasmar Complaint) and in the United States District Court for the District of Delaware (the Wang Complaint, the Witmer Complaint, the Stevens Complaint and the Patrick Complaint) (referred to collectively as the
Actions
) are without merit and denies the allegations in each of those Actions. However, in order to alleviate the costs, risks and uncertainties inherent in litigation and to provide additional information to its stockholders,
Loxo Oncology has provided certain additional disclosures in this Amendment No. 2 to Schedule 14D-9 (the
Supplemental Disclosures
). Counsel for plaintiffs in each of the Actions have confirmed that the Supplemental
Disclosures will moot their claims and that they will accordingly dismiss those Actions with prejudice as to the named plaintiffs, and without prejudice as to other stockholders. The Supplemental Disclosures should be read in conjunction with the
Schedule 14D-9, which should be read in its entirety. The Supplemental Disclosures should not be regarded as an indication that any of Loxo Oncology, Lilly, Purchaser or their respective affiliates, officers, directors or other representatives, or
any recipient of this information, considered or now considers the information contained in the Supplemental Disclosures to be material. Rather, Loxo Oncology believes that the Schedule 14D-9 disclosed all material information, and denies that any
additional disclosures are or were required under any applicable federal or state law, rule or regulation. To the extent that the information in the Supplemental Disclosures differ from information contained in the Schedule 14D-9, the
information in the Supplemental Disclosures supersede such information contained in the Schedule 14D-9.