BRISBANE, Calif., Sept. 19, 2014 /PRNewswire/ -- InterMune,
Inc. (Nasdaq: ITMN) today announced that it entered into a
Memorandum of Understanding to settle the litigation in the
Delaware Court of Chancery
relating to the Agreement and Plan of Merger dated as of
August 22, 2014, among Roche
Holdings, Inc., Klee Acquisition Corporation and InterMune,
Inc. As one term of the Memorandum of Understanding, the
Company agreed to make certain supplemental disclosures set forth
in the attached exhibit reflecting the amendment to the Company's
Schedule 14D-9 to be filed with the Securities and Exchange
Commission on the morning of Monday,
September 22, 2014.
About InterMune
InterMune is a biotechnology company focused on the research,
development and commercialization of innovative therapies in
pulmonology and orphan fibrotic diseases. In pulmonology,
InterMune is focused on therapies for the treatment of idiopathic
pulmonary fibrosis (IPF), a progressive and fatal lung disease.
Pirfenidone is approved for marketing by InterMune in the EU
and Canada as Esbriet®.
Pirfenidone is not approved for marketing in the United
States. InterMune resubmitted the pirfenidone New Drug
Application (NDA) to the U.S. FDA on May 23,
2014, to support regulatory registration in the United
States. The resubmission has been accepted by the FDA and
assigned a target PDUFA date of November
23, 2014. The FDA has granted pirfenidone Breakthrough
Therapy Designation. InterMune's research programs are
focused on the discovery of targeted, small-molecule therapeutics
and biomarkers to treat and monitor serious pulmonary and fibrotic
diseases. For additional information about InterMune and
its R&D pipeline, please visit http://www.intermune.com.
Forward-Looking Statements
Some of the statements contained in this announcement are
forward-looking statements, including statements regarding the
expected consummation of the acquisition, which involves a number
of risks and uncertainties, including the satisfaction of closing
conditions for the acquisition, such as regulatory approval for the
transaction, the tender of a majority of the outstanding shares of
common stock of InterMune, the possibility that the transaction
will not be completed and other risks and uncertainties discussed
in InterMune's public filings with the SEC, including the "Risk
Factors" section of InterMune's annual report on Form 10-K for the
year ended December 31, 2013 and
subsequent quarterly reports on Form 10-Q, as well as the tender
offer documents filed by Klee Acquisition Corporation and the
Solicitation/Recommendation Statement filed by InterMune.
These statements are based on current expectations, assumptions,
estimates and projections, and involve known and unknown risks,
uncertainties and other factors that may cause results, levels of
activity, performance or achievements to be materially different
from any future statements. These statements are generally
identified by words or phrases such as "believe", "anticipate",
"expect", "intend", "plan", "will", "may", "should", "estimate",
"predict", "potential", "continue" or the negative of such terms or
other similar expressions. If underlying assumptions prove
inaccurate or unknown risks or uncertainties materialize, actual
results and the timing of events may differ materially from the
results and/or timing discussed in the forward-looking statements,
and you should not place undue reliance on these statements.
InterMune disclaims any intent or obligation to update any
forward-looking statements as a result of developments occurring
after the date of this announcement or otherwise.
Notice to Investors
This announcement is for informational purposes only and does
not constitute an offer to purchase or a solicitation of an offer
to sell InterMune common stock. On August 29, 2014, Roche Holdings, Inc. ("Roche")
and Klee Acquisition Corporation, a wholly owned subsidiary of
Roche, filed a tender offer statement on Schedule TO with the SEC
and InterMune filed a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the offer. Investors and
security holders are urged to read these materials carefully since
they contain important information, including the terms and
conditions of the offer. The tender offer statement on
Schedule TO, Solicitation/Recommendation Statement and related
materials have been filed by Roche and InterMune with the SEC, and
investors and security holders may obtain a free copy of these
materials and other documents filed by Roche and InterMune with the
SEC at the website maintained by the SEC at www.sec.gov.
Investors and security holders may also obtain free copies of the
Solicitation/Recommendation Statement and other documents filed
with the SEC by InterMune at www.intermune.com.
Esbriet® is a registered trademark of InterMune,
Inc.
Exhibit I
This Exhibit I reflects the amendment to the Company's Schedule
14D-9 to be filed with the Securities and Exchange Commission on
the morning of Monday, September 22,
2014.
Capitalized terms used, but not otherwise defined, in this
Exhibit shall have the meanings ascribed to them in the Schedule
14D-9 filed by InterMune on August 29,
2014, as amended through the date hereof.
Item 4 of the Schedule 14D-9 under the heading "Background of
the Merger Agreement; Reasons for Recommendation—Background of the
Merger Agreement" is to be amended and supplemented by:
(i) Replacing the first sentence of the
eighth paragraph of such section with the following:
"In February 2014, a member of the
Board ("Director A"), who is also an executive at a global life
sciences company ("Company A") which was not contacted in
connection with the Company's 2011 strategic transaction review,
expressed to Daniel Welch, the
Company's Chairman, Chief Executive Officer and President, that if
the Company determined to undertake a strategic transaction
process, Company A may have a potential interest in participating
in such a process."
(ii) Replacing the second sentence of the 11th
paragraph of such section with the following:
"Following the ATS Conference, in May
2014, Mr. Welch was contacted by business development
executives of Parent and Company B, a global life sciences company
which was contacted in connection with the Company's 2011 strategic
transaction review but declined to execute a confidentiality
agreement to engage in due diligence of the Company, noting the
favorable trial results."
(iii) Replacing the 13th paragraph of such section
with the following:
"At the end of June 2014, an
executive from Company C, a global life sciences company which was
contacted in connection with the Company's 2011 strategic
transaction review but declined to execute a confidentiality
agreement to engage in due diligence of the Company, contacted Mr.
Welch noting the favorable trial results and suggesting that
Company C may be in touch in the future regarding the possibility
of exploring a transaction with the Company."
(iv) Replacing the second sentence of the 28th
paragraph of such section with the following:
"Over the course of August 13,
2014 through August 15, 2014,
the Company received an additional inquiry from a business
development executive representing Company D, a global life
sciences company which executed a confidentiality agreement with
the Company in connection with the Company's 2011 strategic
transaction review but declined to provide a preliminary indication
of interest."
(v) Replacing the last sentence of the 29th
paragraph of such section with the following:
"The Executive Committee also discussed the leak and the
significant concern regarding the impact of the leak on the hiring
of the U.S. sales force, and actions that might be taken to avoid
losing the prospective hires, including providing them with
change-in-control protection."
(vi) Adding the following sentence after the third
sentence of the 38th paragraph of such section:
"Mr. Welch noted to the Executive Committee that, as previously
discussed and approved, the Company had taken certain steps to
secure the hiring of the U.S. sales force, including, among other
things, adding change-in-control protections for them."
(vii) Replacing the 39th paragraph of such section with
the following:
"The Executive Committee also discussed with its advisors the
potential advantages, risks and considerations of the expedited
timeline that Parent desired to pursue, noting that Parent's agreed
risk allocation did not afford the Company any protection until a
Merger Agreement is actually signed, and any negative developments
prior to signing would affect Parent's willingness to proceed on
the price and terms that had been negotiated. After rumors of a
possible offer or transaction were publicly reported, the Executive
Committee continued to conclude that lengthening the timetable to
signing with Parent in order to explore other potential interest
pre-signing was not cost-free, and required a balancing of the risk
of losing the favorable transaction offered by Parent as a result
of some new negative development against the possibility of finding
another acquiror willing to assume the same risk allocation at a
price higher than $74.00 per share.
In this regard the Executive Committee discussed with its advisors
the various interactions with Company B, Company C and Company D
and the likelihood of such companies offering a more compelling
value than the proposal from Parent, including, among other things,
(i) the fact that Company B did not have a history of making large
acquisitions and had not pursued discussions with the Company
following its initial contact in May
2014 and its cancellation of a follow-up conversation with
Mr. Welch, (ii) the significantly lower value of the Company C
Proposal as compared with Parent's offer of $74.00 per share and Company C's indication to
Mr. Welch, following the calls with Company executives and outside
counsel regarding commercialization, intellectual property and
other matters, that the timing for Company C to be able to discuss
a potential transaction with its own board of directors in order to
make a more concrete proposal would not be in August and instead at
the earliest would be mid-September and (iii) Company D's
indication that its preference was to pursue a transaction after
approval of the Company's NDA application, and that it would need
to conduct significant due diligence to consider a transaction in
advance of such approval. Following discussion, the Executive
Committee concluded that none of Company B, Company C or Company D
was likely in a position to move on a timeline approaching that of
Parent, none provided any reasonable likelihood of offering a more
compelling value than the proposal from Parent, and none should be
deterred from making an offer to acquire the Company following
announcement of a transaction with Parent pursuant to the
"fiduciary out" in the proposed Merger Agreement. Thus the
Executive Committee concluded that a post-signing market check,
with Parent's valuation and strong contract terms as to risk
allocation relating to approval and launch matters providing the
"floor" for other potential acquirors to beat, would be the best
approach to seek to maximize value for the Company's stockholders,
and in connection therewith and taking into consideration Parent's
repeated insistence that it would be unwilling to agree to such a
provision, the Executive Committee was willing to concede the
go-shop in light of the favorable price and other contract terms.
In addition, Mr. Welch informed the Executive Committee that Dr.
Schwan had indicated that it would be beneficial to the upcoming
launch for Mr. Welch to stay on to assist in the integration and
transition efforts if the proposed transaction was consummated. The
Executive Committee discussed with Mr. Welch that having him
indicate a willingness to remain under those circumstances would be
beneficial to the transaction process and, if he were willing to do
so, he should discuss with Dr. Schwan the basis on which he would
consider remaining for a transition period."
Item 4 of the Schedule 14D-9 under the heading "Financial
Analyses and Opinions—Opinion of Centerview—Selected Comparable
Public Company Analysis" is to be amended and supplemented
by:
(i) Replacing the first sentence of such
section with the following:
"Centerview reviewed and compared certain financial information
for InterMune to corresponding financial information for the
following publicly traded biopharmaceutical companies:"
(ii) Replacing the bullet points on page 29 of
the Schedule 14D-9 with the following chart:
Company
|
Revenue Multiple
2016E
|
Acadia
Pharmaceuticals Inc.
|
NM
|
Incyte
Corporation
|
10.5x
|
Intercept
Pharmaceuticals, Inc.
|
NM
|
Medivation,
Inc.
|
6.8x
|
NPS Pharmaceuticals,
Inc.
|
4.2x
|
Pharmacyclics,
Inc.
|
5.9x
|
Puma Biotechnology,
Inc.
|
NM
|
Seattle Genetics,
Inc.
|
12.7x
|
Synageva Biopharma
Corp.
|
23.0x
|
Note: Multiples greater than 25x deemed not meaningful
("NM").
(iii) Replacing the second sentence of the third
paragraph under such section with the following:
"With respect to each of the selected comparable companies,
Centerview calculated enterprise value (calculated as the equity
value (calculated using the treasury stock method and taking into
account outstanding in-the-money options, restricted stock units,
warrants and other convertible securities) plus the book value of
debt less cash and cash equivalents) as a multiple of the consensus
equity research analyst estimated calendar year 2016 revenues."
(iv) Replacing the "Note" under the first table on
page 30 of the Schedule 14D-9 with the following:
"Note: Multiples greater than 25x (for Acadia Pharmaceuticals
Inc., Intercept Pharmaceuticals, Inc. and Puma Biotechnology, Inc.)
were excluded from this analysis as not meaningful."
Item 4 of the Schedule 14D-9 under the heading "Financial
Analyses and Opinions—Opinion of Centerview—Selected Precedent
Transactions Analysis" is to be amended and supplemented
by:
(i) Adding the following sentence after
the first sentence of the first paragraph under such section:
"The transactions below were selected, among other reasons,
because their participants (i.e., biopharmaceutical companies),
size (between $2 billion and
$10 billion in transaction value) or
other factors, for purposes of Centerview's analysis, may be
considered similar to the Transaction."
(ii) Replacing the second table on page 30 of
the Schedule 14D-9 with the following:
|
|
|
Trans
Val/
2Yr Fwd
Rev.
|
Unaffected
Premiums
|
Date
Announced
|
Target
|
Acquiror
|
1-Day
|
52-Wk
High
|
|
|
|
|
|
|
06/09/14
|
Idenix
Pharmaceuticals, Inc.
|
Merck & Co.,
Inc.
|
NM
|
239%
|
205%
|
04/07/14
|
Questcor
Pharmaceuticals, Inc.
|
Mallinckrodt
plc
|
3.8x
|
27%
|
8%
|
12/19/13
|
Algeta ASA
|
Bayer AG
|
10.8x
|
37%
|
31%
|
11/11/13
|
ViroPharma
Incorporated
|
Shire plc
|
5.7x
|
84%
|
63%
|
11/07/13
|
Santarus,
Inc.
|
Salix
Pharmaceuticals, Ltd.
|
4.5x
|
36%
|
17%
|
08/25/13
|
Onyx Pharmaceuticals,
Inc.
|
Amgen Inc.
|
7.8x
|
44%
|
25%
|
07/16/12
|
Human Genome
Sciences, Inc.
|
GlaxoSmithKline
plc
|
6.5x
|
99%
|
(52%)
|
06/29/12
|
Amylin
Pharmaceuticals, Inc.
|
Bristol-Myers Squibb
Company
|
6.8x
|
101%
|
72%
|
01/07/12
|
Inhibitex,
Inc.
|
Bristol-Myers Squibb
Company
|
NM
|
163%
|
68%
|
05/02/11
|
Cephalon,
Inc.
|
Teva Pharmaceutical
Industries Ltd.
|
2.8x
|
39%
|
15%
|
09/17/10
|
Crucell
N.V.
|
Johnson &
Johnson
|
3.7x
|
58%
|
51%
|
06/30/10
|
Abraxis BioScience,
Inc.
|
Celgene
Corporation
|
5.2x
|
17%
|
14%
|
05/16/10
|
OSI Pharmaceuticals,
Inc.
|
Astellas Pharma
Inc.
|
5.6x
|
55%
|
45%
|
Note: Multiples greater than 25x deemed not meaningful
("NM")
(iii) Replacing the first sentence of the fourth
paragraph of such section with the following:
"Centerview reviewed, among other things, transaction values in
the selected transactions and, in each case, calculated the
enterprise value (calculated as the equity purchase price
(calculated using the treasury stock method and taking into account
outstanding in-the-money options, restricted stock units, warrants
and other convertible securities), plus the book value of debt,
less cash and cash equivalents) implied for each target company
based on the consideration payable in the applicable selected
transaction as a multiple of estimated two-year forward
revenues."
(iv) Replacing the table on page 31 of the Schedule
14D-9 with the following:
|
Trans
Val/
2Yr Fwd
Rev.*
|
Unaffected
Premiums
|
1-Day
|
52-Wk
High
|
75th
Percentile
|
6.7x
|
99%
|
63%
|
Median
|
5.6x
|
55%
|
31%
|
25th
Percentile
|
4.1x
|
37%
|
15%
|
* Multiples greater than 25x (for the Idenix/Merck and
Inhibitex/Bristol-Myers Squibb transactions) were excluded from
this analysis as not meaningful.
Item 4 of the Schedule 14D-9 under the heading "Financial
Analyses and Opinions—Opinion of Centerview—Sum-of-the-Parts
Discounted Cash Flow Analysis" is to be amended and
supplemented by:
(i) Replacing the second paragraph of
such section with the following:
"Centerview performed a sum-of-the-parts analysis of InterMune
based on a discounted cash flow analysis representing the implied
present value of InterMune's projected unlevered fully-taxed free
cash flows from the fourth quarter of 2014 through 2033 based on
the InterMune Forecasts plus the present value of an implied
terminal value in 2033 (calculated using a range of year-over-year
decline in free cash flow, in perpetuity, of 15% to 35%, based on
the InterMune Forecasts, and taking into account the fact that the
expiry of InterMune's patents on pirfenidone would lead to
increased competition from generics), in each case discounted to
September 30, 2014 using a discount
rate range of 10% to 12% (based on a weighted average cost of
capital calculation based on considerations that Centerview deemed
relevant in its professional judgment and experience) using the
mid-year convention. The weighted average cost of capital was
calculated using InterMune's cost of debt and tax rate and
InterMune's cost of equity calculated (based on the Capital Asset
Pricing Model) using the risk free rate (based on the 10-year U.S.
treasury yield as of August 21,
2014), the market risk premium, and unlevered beta based on
information derived from the companies listed above in "—Selected
Comparable Public Company Analysis." The discounted cash flow
analysis accounted for: (i) projected sales and product-related
expenses of pirfenidone in the U.S., (ii) projected sales and
product-related expenses of Esbriet in the EU, (iii) projected
sales and product-related expenses of Esbriet in Canada, (iv) projected worldwide corporate
general and administrative expenses, capital expenditures,
depreciation and amortization, sales and marketing-specific
stock-based compensation, and changes in net working capital, (v)
overhead research and development expenses (including facilities
and IT allocated to research and development, research and
development-specific stock-based compensation, and general research
in pulmonology, but excluding expenditures for pipeline research
and development) and (vi) accumulated net operating losses of
$647 million in the third quarter of
2014 plus additional projected net operating losses. Centerview
then added to the discounted cash flow value (x) the estimated
value of InterMune's identified pipeline programs (calculated based
on median enterprise value of select publicly-traded
development-stage biopharmaceutical companies of approximately
$115 million) and (y) projected cash
as of September 2014 of $495 million. The select publicly-traded
development-stage biopharmaceutical companies used by Centerview in
connection with clause (x) above were ArQule, Inc., BIND
Therapeutics, Inc., Immune Design Corp., La Jolla Pharmaceutical
Company, MEI Pharma, Inc., Oncothyreon Inc., Regulus Therapeutics
Inc. and Verastem, Inc., the enterprise values (calculated as the
equity value (calculated using the treasury stock method and taking
into account outstanding in-the-money options, restricted stock
units, warrants and other convertible securities), plus the book
value of debt, less cash and cash equivalents) of which (based on
information Centerview obtained from SEC filings and Wall Street
research as of August 21, 2014)) are
set out in the following table."
Company
|
Ent. Value
($mm)
|
ArQule,
Inc.
|
3
|
BIND Therapeutics,
Inc.
|
114
|
Immune Design
Corp.
|
131
|
La Jolla
Pharmaceutical Company
|
99
|
MEI Pharma,
Inc.
|
118
|
Oncothyreon
Inc.
|
105
|
Regulus Therapeutics
Inc.
|
216
|
Verastem,
Inc.
|
121
|
Item 4 of the Schedule 14D-9 under the heading "Financial
Analyses and Opinions—Opinion of Centerview—Other
Considerations" is to be amended and supplemented by:
(i) Replacing the fourth sentence of the
last paragraph of such section with the following:
"In addition, Centerview will receive a fee (equal to 15% of the
termination fee received by InterMune, subject to certain
limitations and qualifications) in the event that the Merger
Agreement is terminated or the Transaction is not consummated and
InterMune receives a termination fee in connection therewith."
Item 4 of the Schedule 14D-9 under the heading "Financial
Analyses and Opinions—Opinion of Goldman Sachs—Selected Companies
Analysis" is to be amended and supplemented by:
(i) Replacing the bullet points on page
35 of the Schedule 14D-9 with the following table:
Selected
Companies
|
2017E Enterprise
Value/Revenue
|
2017E Price/Earnings
Multiple
|
Actelion
Ltd
|
5.7x
|
18.6x
|
BioMarin
Pharmaceutical Inc.
|
8.2x
|
NM
|
Cubist
Pharmaceuticals, Inc.
|
3.4x
|
15.2x
|
Incyte
Corporation
|
8.9x
|
24.5x
|
Jazz Pharmaceuticals
plc
|
6.0x
|
10.8x
|
Medivation,
Inc.
|
5.9x
|
17.7x
|
NPS Pharmaceuticals,
Inc.
|
4.2x
|
11.5x
|
Pharmacyclics,
Inc.
|
4.6x
|
18.6x
|
Salix
Pharmaceuticals, Inc.
|
5.7x
|
15.6x
|
Seattle Genetics,
Inc.
|
10.4x
|
NM
|
United Therapeutics
Corporation
|
2.7x
|
7.8x
|
Median
Multiples:
|
5.2x
|
15.6x
|
"NM" = not meaningful
(ii) Replacing the second paragraph under such
section with the following:
"Although none of the selected companies is directly comparable
to InterMune, the selected companies were chosen because they are
publicly traded companies in the biotechnology industry with equity
market capitalizations of less than $15
billion and with operations and market size that for
purposes of analysis may be considered similar to certain of
InterMune's operations and market size."
(iii) Replacing the notes under the first table on
page 36 of the Schedule 14D-9 with the following:
"* Based on IBES estimates.
** Using earnings estimates based on the Forecasts.
Excludes P/E multiples above 50x , as such high multiples suggest
the equity markets are not valuing the comparable company based
upon a multiple of earnings, and, as a result, the quality of such
a high multiple from a comparable perspective is questionable and
therefore less reliable."
Item 4 of the Schedule 14D-9 under the heading "Financial
Analyses and Opinions—Opinion of Goldman Sachs—Premia Paid
Analysis" is to be amended and supplemented by:
(i) Replacing the table at the bottom of
page 36 of the Schedule 14D-9 with the following table:
Target
|
Acquiror
|
Announced
Date
|
1-Day
Prior
|
4-Weeks
Prior
|
Idenix
Pharmaceuticals, Inc.
|
Merck & Co.,
Inc.
|
June 9,
2014
|
239%
|
379%
|
Questcor
Pharmaceuticals, Inc.
|
Mallinckrodt
plc
|
April 7,
2014
|
27%
|
30%
|
Algeta ASA
|
Bayer AG
|
December 19,
2013
|
37%
|
61%
|
ViroPharma
Inc.
|
Shire plc
|
November 11,
2013
|
84%
|
93%
|
Santarus,
Inc.
|
Salix
Pharmaceuticals, Ltd.
|
November 7,
2013
|
36%
|
50%
|
Onyx Pharmaceuticals,
Inc.
|
Amgen Inc.
|
August 25,
2013
|
44%
|
31%
|
Human Genome
Sciences, Inc.
|
GlaxoSmithKline
plc
|
July 16,
2012
|
99%
|
85%
|
Amylin
Pharmaceuticals, Inc.
|
Bristol-Myers Squibb
Company
|
June 29,
2012
|
101%
|
75%
|
Inhibitex,
Inc.
|
Bristol-Myers Squibb
Company
|
January 7,
2012
|
163%
|
76%
|
Cephalon,
Inc.
|
Teva Pharmaceutical
Industries Ltd.
|
May 2,
2011
|
39%
|
46%
|
Crucell
N.V.
|
Johnson &
Johnson
|
September 17,
2010
|
58%
|
62%
|
Abraxis BioScience,
Inc.
|
Celgene
Corporation
|
June 30,
2010
|
17%
|
42%
|
OSI Pharmaceuticals,
Inc.
|
Astellas Pharma
Inc.
|
May 16,
2010
|
55%
|
68%
|
|
|
|
|
|
Item 4 of the Schedule 14D-9 under the heading "Financial
Analyses and Opinions—Opinion of Goldman Sachs—Illustrative Present
Value of Future Share Price Analysis" is to be amended and
supplemented by:
(i) Replacing the first paragraph under
such section with the following:
"Goldman Sachs performed an illustrative analysis of the implied
present value of the future price per Share, using the Forecasts.
For purposes of this analysis, Goldman Sachs calculated implied
future values per Share as of August
21 of 2017, 2018 and 2019 by applying illustrative price to
one year forward earnings per share multiples ranging from 15.0x to
25.0x to estimated fully taxed earnings per Share for 2018, 2019
and 2020 as reflected in the Forecasts and adjusted for net present
value of remaining net operating losses and tax credits in each
year. These illustrative P/E multiple estimates were derived by
Goldman Sachs utilizing its professional judgment and experience,
taking into account current and historical trading data and the
current P/E multiples for the selected companies. The resulting
implied future values per Share were then discounted to present
value as of August 21, 2014 using a
discount rate of 12.5%, reflecting an estimate of InterMune's cost
of equity. The 12.5% discount rate used by Goldman Sachs was
derived by application of the Capital Asset Pricing Model, taking
into account certain public and non-public company-specific
metrics, including InterMune's target capital structure and
predicted beta, as well as certain financial metrics for
the United States financial
markets generally, including a risk-free rate based on the 30-year
U.S. treasury yield as of August 21,
2014. This analysis resulted in illustrative ranges of
implied present values per Share of $33.04
to $53.46 as of August 21,
2017, $51.86 to $85.18 as of
August 21, 2018 and $74.81 to $124.23 as of August 21, 2019."
Item 4 of the Schedule 14D-9 under the heading "Financial
Analyses and Opinions—Opinion of Goldman Sachs—Illustrative
Discounted Cash Flow" is to be amended and supplemented by:
(i) Inserting after the second sentence
of the first paragraph of such section the following:
"Goldman Sachs used a range of discount rates from 11.0% to
14.0% derived by application of the Capital Asset Pricing Model,
which takes into account certain company-specific metrics,
including InterMune's target capital structure and predicted beta,
as well as certain financial metrics for the United States financial markets generally.
The range of perpetuity growth rates was estimated by Goldman Sachs
utilizing its professional judgment and experience, taking into
account the Forecasts and market expectations regarding long-term
real growth of gross domestic product and inflation."
Item 8 of the Schedule 14D-9 under the heading
"Litigation" is to be amended and supplemented by:
(a) Replacing paragraph one of such section with the
following:
"On August 28, 2014, InterMune and
its directors were named as defendants in a purported stockholder
class action lawsuit filed in the Superior Court of California, San
Mateo County: Kimberly
Walters v. InterMune, Inc.et al., CIV 530186. The case was a
putative class action brought by purported stockholders of
InterMune alleging, among other things, that InterMune's directors
breached their fiduciary duties to InterMune's stockholders by
approving the Merger Agreement, and that InterMune, Parent and
Purchaser aided and abetted these alleged breaches of fiduciary
duty. The complaint sought, among other things, an order enjoining
the proposed transaction. The foregoing description does not
purport to be complete and is qualified in its entirety by
reference to the complaint, which is filed as Exhibit (a)(5)(xii)
to the Schedule TO."
(b) Replacing paragraphs three and four of such
section with the following:
"Since August 29, 2014, InterMune
and its directors have been named as defendants in seven other
purported stockholder class actions. Four of these actions were
filed in the Superior Court of California, San
Mateo County: Meraz v. InterMune, Inc., et al., CIV 530275,
filed September 4, 2014, Corabi et
ano. v. InterMune, Inc., et al., CIV 530290, filed September 5, 2014, Paul v. InterMune, Inc, et
al., CIV 530304, filed September 5,
2014 and Tevanian v. InterMune, Inc., et al., CIV 530431,
filed September 15, 2014. The other
three actions were filed in the Court of Chancery of the
State of Delaware: McCracken v.
Welch, et al., C.A. No. 10086-VCN, filed September 4, 2014, Wagner v. InterMune, Inc.,et
al., C.A. No. 10098, filed September 5,
2014, and Miller v. InterMune, Inc., et al., C.A. No. 10096,
filed September 5, 2014. Each of
these seven cases is a putative class action brought by a purported
stockholder or stockholders of InterMune alleging, among other
things, that InterMune's directors breached their fiduciary duties
to InterMune's stockholders by approving the Merger Agreement, that
the disclosures in the Schedule 14D-9 are inadequate, and that
InterMune, Parent and Purchaser aided and abetted the alleged
breaches of fiduciary duty. The complaints seek, among other
things, an order enjoining the proposed transaction. The foregoing
description does not purport to be complete and is qualified in its
entirety by reference to the complaints, which are or will be filed
as Exhibits (a)(5)(x), (a)(5)(xi), (a)(5)(xii), (a)(5)(xiii),
(a)(5)(xiv), (a)(5)(xv) and (a)(5)(xvi) to the Schedule 14D-9.
On September 11, 2014, the three
putative shareholder class actions pending in the Court of Chancery
of the State of Delaware were
consolidated by the Court under the caption In re InterMune, Inc.
Stockholder Litigation, C.A. No. 10086-VCN (the "Consolidated
Delaware Action")."
(c) Adding the following paragraphs before the last
paragraph of such section:
"On September 17, 2014, the
plaintiff in the Paul action pending in California state court filed an application
for a temporary restraining order precluding the closing of the
Offer pending the issuance of certain supplemental disclosures. On
September 18, 2014, the defendants in
the Paul action filed an opposition to this application as well as
a motion to dismiss on the basis of an exclusive forum selection
provision in the Company's bylaws. Plaintiff's application for a
temporary restraining order is scheduled to be heard on
September 23, 2014, and the
defendants' motion to dismiss is scheduled to be heard on
October 17, 2014.
Beginning in mid-September 2014,
the parties to the Consolidated Delaware Action engaged in
expedited document and deposition discovery. On September 19, 2014, following expedited
discovery, the parties to the Consolidated Delaware Action entered
into a memorandum of understanding (the "MOU") reflecting the terms
of an agreement, subject to final approval by the Court of Chancery
of the State of Delaware, to
settle the Consolidated Delaware Action. Pursuant to the MOU, the
defendants agreed to make certain supplemental disclosures set
forth in this Amendment. The MOU further provides that, among other
things, (a) the parties will enter into a definitive stipulation of
settlement (the "Stipulation") and will submit the Stipulation to
the Court of Chancery of the State of
Delaware for review and approval, (b) the Stipulation will
provide for dismissal of the Consolidated Delaware Action, (c) the
Stipulation will include a general release of defendants of claims
relating to the Offer, the Merger, and the Merger Agreement and (d)
the proposed settlement is conditioned on, among other things,
consummation of the Merger, completion of confirmatory discovery,
class certification, and final approval by the Court of Chancery of
the State of Delaware after notice to InterMune's stockholders.
Notwithstanding the MOU, there can be no assurance that the Merger
will be consummated or that the court will approve the settlement
contemplated by the MOU. The settlement will not affect the amount
of consideration that InterMune's stockholders are entitled to
receive in the Offer or the Merger.
Defendants deny all liability with respect to the facts and
claims alleged in the Consolidated Delaware Action and specifically
deny that any breach of fiduciary duty occurred, or that any
further disclosure is required to supplement the Schedule 14D-9
under any applicable rule, statute, regulation or law. However, to
avoid the risk that litigation may delay or otherwise adversely
affect the consummation of the Merger, to minimize the expense of
defending such litigation, to remove the distraction of continued
litigation and to provide additional information to our
stockholders at a time and in a manner that would not cause any
delay of the closing of the Offer or the Merger, defendants have
agreed to the terms of the proposed settlement described
above."
SOURCE InterMune, Inc.