AstraZeneca to Acquire Alexion, Accelerating the Company’s Strategic and Financial Development

On December 12, 2020 AstraZeneca and Alexion Pharmaceuticals, Inc. (Alexion) reported that have entered into a definitive agreement for AstraZeneca to acquire Alexion(Press release, Alexion, DEC 12, 2020, View Source [SID1234572775]).

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Alexion shareholders will receive $60 in cash and 2.1243 AstraZeneca American Depositary Shares (ADSs) (each ADS representing one-half of one (1/2) ordinary share of AstraZeneca, as evidenced by American Depositary Receipts (ADRs)) for each Alexion share. Based on AstraZeneca’s reference average ADR price of $54.14, this implies total consideration to Alexion shareholders of $39bn or $175 per share.

The boards of directors of both companies have unanimously approved the acquisition. Subject to receipt of regulatory clearances and approval by shareholders of both companies, the acquisition is expected to close in Q3 2021, and upon completion, Alexion shareholders will own c.15% of the combined company.

Pascal Soriot, Chief Executive Officer, AstraZeneca, said: "Alexion has established itself as a leader in complement biology, bringing life-changing benefits to patients with rare diseases. This acquisition allows us to enhance our presence in immunology. We look forward to welcoming our new colleagues at Alexion so that we can together build on our combined expertise in immunology and precision medicines to drive innovation that delivers life-changing medicines for more patients."

Ludwig Hantson, Ph.D., Chief Executive Officer, Alexion, said: "For nearly 30 years Alexion has worked to develop and deliver transformative medicines to patients around the world with rare and devastating diseases. I am incredibly proud of what our organisation has accomplished and am grateful to our employees for their contributions. This transaction marks the start of an exciting new chapter for Alexion. We bring to AstraZeneca a strong portfolio, innovative rare disease pipeline, a talented global workforce and strong manufacturing capabilities in biologics. We remain committed to continuing to serve the patients who rely on our medicines and firmly believe the combined organisation will be well positioned to accelerate innovation and deliver enhanced value for our shareholders, patients and the rare disease communities."

Strategic rationale

Both companies share the same dedication to science and innovation to deliver life-changing medicines. The capabilities of both organisations will create a company with great strengths across a range of technology platforms, with the ability to bring innovative medicines to millions of people worldwide. The combined company will also have an enhanced global footprint and broad coverage across primary, speciality and highly specialised care.

Scientific leadership – accelerated presence in immunology

AstraZeneca has built a growing scientific presence in oncology, and in cardiovascular, renal and metabolism, and respiratory diseases, with a focus on organ protection. AstraZeneca has developed a broad range of technologies, initially focused on small molecules and biologics and with a growing focus in precision medicine, genomics, oligonucleotides and epigenetics. More recently, AstraZeneca has increased its efforts in immunology research and the development of medicines for immune-mediated diseases.

Alexion has pioneered complement inhibition for a broad spectrum of immune-mediated rare diseases caused by uncontrolled activation of the complement system, a vital part of the immune system. Alexion’s franchise includes Soliris (eculizumab), a first-in-class anti-complement component 5 (C5) monoclonal antibody. The medicine is approved in many countries for the treatment of patients with paroxysmal nocturnal haemoglobinuria (PNH), atypical haemolytic uremic syndrome, generalized myasthenia gravis and neuromyelitis optica spectrum disorder. More recently, Alexion launched Ultomiris (ravulizumab), a second-generation C5 monoclonal antibody with a more convenient dosing regimen.

Alexion’s immunology expertise extends to other targets in the complement cascade beyond C5 as well as additional modalities, with its deep pipeline including Factor D small-molecule inhibitors of the alternative pathway of the complement system, an antibody blocking neonatal Fc receptor (FcRn)-mediated recycling, and a bi-specific mini-body targeting C5, among others. The FcRn extends the half-life and hence the availability of pathogenic immunoglobulin G (IgG) antibodies.

AstraZeneca, with Alexion’s R&D team, will work to build on Alexion’s pipeline of 11 molecules across more than 20 clinical-development programmes across the spectrum of indications, in rare diseases and beyond.

Alexion’s leading expertise in complement biology will accelerate AstraZeneca’s growing presence in immunology. The acquisition adds a new technology platform to AstraZeneca’s science and innovation-driven strategy. The complement cascade is pivotal to the innate immune system. It plays a crucial role in many inflammatory and autoimmune diseases across multiple therapy areas, including haematology, nephrology, neurology, metabolic disorders, cardiology, ophthalmology and acute care. In contrast, AstraZeneca’s capabilities in genomics, precision medicine and oligonucleotides can be leveraged to develop medicines targeting less-frequent diseases. Combining AstraZeneca’s capabilities in precision medicine and Alexion’s expertise in rare-disease development and commercialisation will enable the new company to develop a portfolio of medicines addressing the large unmet needs of patients suffering from rare diseases.

The combined companies will bring together two rapidly converging, patient-centric models of care delivery with combined strengths in immunology, biologics, genomics and oligonucleotides to drive future medicine innovation. AstraZeneca intends to establish Boston, Massachusetts, US as its headquarters for rare diseases, capitalising on talent in the greater Boston area.

Industry-leading revenue growth; enhanced geographical presence and broad coverage across primary, specialised and highly specialised care

AstraZeneca’s acquisition of Alexion, with its strong commercial portfolio and robust pipeline, will support its long-term ambition to develop novel medicines in areas of immunology with high unmet medical needs. Alexion achieved impressive revenue growth over the last few years, with revenues of $5.0bn in 2019 (21% year-on-year growth). Alexion has exhibited skilful commercial execution in building its ‘blockbuster’ C5 franchise. The success of the franchise is demonstrated by the effective transition of over 70% of PNH patients from Soliris to Ultomiris in less than two years of launch in its key markets, including the US, Japan and Germany, as well as the strong pipeline of additional indications for Ultomiris.

Rare diseases is a high-growth therapy area with rapid innovation and significant unmet medical need. Over 7,000 rare diseases are known today, and only c.5% have US Food and Drug Administration-approved treatments.1 The global rare disease market is forecasted to grow by a low double digit percentage in the future.2

AstraZeneca intends to build on its geographical footprint and extensive emerging markets presence to accelerate the worldwide expansion of Alexion’s portfolio.

The two companies have been on converging paths, AstraZeneca expanding its presence from primary to speciality care, whereas Alexion has been progressing from ultra-orphan to orphan and speciality conditions.

The acquisition strengthens AstraZeneca’s industry-leading growth, underpinned by its broad portfolio of medicines, which will enable the new company to bring innovative medicines to a broad range of healthcare practitioners in primary, speciality and highly specialised care.

The combined company is expected to deliver double-digit average annual revenue growth through 2025.

Financial benefits

Enhanced revenue growth, operating margin and cash-flow generation

The acquisition is expected to improve the combined Group’s profitability, with the core operating margin significantly enhanced in the short term, and with continued expansion thereafter. This uplift is supported by increased scale and expected recurring run-rate pre-tax synergies of c.$500m per year from the combined Group (by end of the third year following completion of the acquisition). AstraZeneca expects to generate significant value from the acquisition by extending Alexion’s commercial reach through leveraging AstraZeneca’s global presence and accelerating the development of Alexion’s pipeline.

The acquisition also strengthens AstraZeneca’s cash-flow generation, providing additional flexibility to reinvest in R&D and rapid debt reduction, with an ambition to increase the dividend.

Immediately earnings-accretive and value-enhancing acquisition, in line with stated capital-allocation priorities

The acquisition is expected to deliver robust and sustainable accretion to AstraZeneca’s core earnings per share (EPS) from the outset, with double-digit percentage accretion anticipated in the first three years following the completion of the acquisition.

The acquisition of Alexion is consistent with AstraZeneca’s capital-allocation priorities. The combined company is expected to maintain a strong, investment-grade credit rating, and the acquisition supports AstraZeneca’s progressive dividend policy. The combination represents a significant step in AstraZeneca’s strategic and financial-growth plans.

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Details of the acquisition

Key terms

The acquisition will be undertaken through a US statutory merger in which Alexion shareholders will receive $60 in cash and 2.1243 new AstraZeneca ADSs listed on the Nasdaq exchange for each of their Alexion shares. The cash and ADS consideration represents an c.45% premium to Alexion shareholders based on the closing stock price of Alexion on 11 December 2020 and a c.43% premium, based on the 30-day volume-weighted average closing stock price of $122.04 before this announcement. If they elect, Alexion shareholders may receive their allocation of AstraZeneca ADSs in the form of a corresponding number of ordinary shares of AstraZeneca in addition to the cash consideration.

Based on AstraZeneca’s reference average ADR price of $54.14, this implies total consideration to Alexion shareholders of $39bn or $175 per share.

Financing

To support the financing of the offer consideration, AstraZeneca has entered into a new committed $17.5bn bridge-financing facility, provided by Morgan Stanley, J.P. Morgan Securities plc and Goldman Sachs. The bridge-financing facility is available for an initial term of 12 months from the earlier of the date of completion of the acquisition and 12 December 2021 with up to two six-month extensions available at the discretion of AstraZeneca. The initial bridge financing facility is intended to cover the financing of the cash portion of the acquisition consideration and associated acquisition costs and to refinance the existing term loan and revolving credit facilities of Alexion. In due course, AstraZeneca intends to refinance the initial bridge-financing facility through a combination of new medium-term bank loan facilities, debt-capital market issuances and business cash flows.

The acquisition is expected to significantly enhance cash generation, which will support rapid debt reduction and overall deleveraging. AstraZeneca remains committed to maintaining a strong investment-grade credit rating. The dividend policy remains unchanged with a commitment to a progressive dividend policy; dividend cover is expected to be materially enhanced as a result of the acquisition.

Further information on synergies

The acquisition is expected to realise recurring run-rate pre-tax synergies of c.$500m per year from the combined Group, generated from commercial and manufacturing efficiencies as well as savings in central costs, with full run-rate expected to be achieved by end of the third year following completion of the acquisition.

To realise the total synergies, AstraZeneca expects to incur one-time cash costs of c.$650m, during the first three years following completion.

Management and employees

Members of Alexion’s current senior management team will lead the future rare-disease activities. Under the terms of the acquisition agreement, AstraZeneca has agreed that for 12 months following closing, it will provide the Alexion employees with the same level of salary as such employees had before closing, incentive compensation opportunities that are in the aggregate no less favourable than those provided before closing and substantially comparable benefits to those provided before closing.

Governance

The companies will mutually agree on two individuals from the Alexion board of directors who will join the AstraZeneca board as directors upon closing of the acquisition.

Closing conditions

Closing of the acquisition is subject to approval by AstraZeneca and Alexion shareholders, certain regulatory approvals, approval of the new AstraZeneca shares for listing with the Financial Conduct Authority and to trading on the London Stock Exchange, and other customary closing conditions.

The acquisition is a Class 1 transaction for AstraZeneca and as such, will require the approval of its shareholders to comply with the UK Listing Rules. A shareholder circular, together with notice of the relevant shareholder meeting, will be distributed to shareholders in the first half of 2021. The Alexion proxy statement is also expected to be published in the first half of 2021.

Subject to the satisfaction of the closing conditions to the proposed acquisition, the companies expect the acquisition to close in Q3 2021.

Termination

The acquisition terms provide that Alexion will be liable to pay a break fee of up to $1.2bn to AstraZeneca in certain specified circumstances (including a change of Alexion’s board recommendation or completion of an alternative acquisition). AstraZeneca will also be required to pay Alexion a break fee of $1.4bn in certain specified circumstances, including a change of AstraZeneca’s board recommendation.

Recommendation

The boards of directors of both Alexion and AstraZeneca have unanimously approved the proposed acquisition and resolved to recommend that their respective shareholders vote in favour of it.

Advisors to AstraZeneca

Evercore Partners International LLP ("Evercore"), and Centerview Partners UK LLP ("Centerview Partners") are acting as lead financial advisers. Ondra LLP ("Ondra") are providing advice as part of their ongoing financial advisory services. Morgan Stanley & Co. International plc ("Morgan Stanley") and Morgan Stanley Bank International Limited and J.P. Morgan are acting as financial advisors and lead debt financing underwriters. Goldman Sachs Bank USA is acting as lead debt financing underwriter. Morgan Stanley and Goldman Sachs International are joint corporate brokers. Evercore is acting as sponsor in relation to the transaction described in this announcement. Freshfields Bruckhaus Deringer is acting as legal counsel.

Advisors to Alexion

Bank of America Securities is serving as financial advisor to Alexion, and Wachtell, Lipton, Rosen & Katz is serving as legal counsel.

Nextera receives Norwegian Research Council funding to expand its NextCore platform with a novel therapeutic T cell receptor discovery pipeline.

On December 11, 2020 Nextera reported that the Norwegian Research Council (NRC) has awarded a prestigious 15.7 MNOK grant funding to expand our NextCore platform with a novel T cell receptor (TCR) discovery pipeline (Press release, Nextera, DEC 11, 2020, View Source [SID1234575788]).

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The latest generation immuno-oncology (IO) therapies have shown a remarkable ability to treat and eventually cure cancer by evoking or grafting an anti-cancer immune response into patients. T cells are at the core of this immune response and they acquire this ability through their TCRs. Therefore, further improvements in harnessing IO therapy will critically depend upon the availability of clinically safe and potent TCRs.

"The NextCore phage display platform is uniquely equipped to address the unmet need in therapeutic TCR supply and development. This project is a natural expansion of our already strong T cell immunology focus in drug discovery, and gives Nextera a solid footprint in current and next generation cancer immunotherapies. The grant is instrumental for the initiation of this project, and represents a validation of Nextera’s commercial pathway." Geir Åge Løset, PhD, co-founder and Chief Executive Officer, Nextera AS, commented.

BiOrion Technologies receives a EUROSTARS grant for their € 1.7 M colorectal cancer imaging program COLOSELECT

On December 11, 2020 BiOrion reported The EUROSTARS grant of a EUR 1.7 million colorectal cancer imaging program is awarded to a multidisciplinary consortium including BiOrion Technologies BV, The Netherlands (Press release, BiOrion, DEC 11, 2020, View Source [SID1234575366]).

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EUROSTARS is a joint program between EUREKA and the European Commission, co-funded from the national budgets of 36 EUROSTARS Participating States and Partner Countries and by the European Union through Horizon 2020. The subsidy is for a three-year period and will allow clinical development of PDGF beta receptor binding single domain antibodies conjugated to PET-imaging and therapeutic radionuclides and to target fibrotic stroma in advanced colorectal cancer.

Herman Steen, CEO of BiOrion, "We are delighted with the recognition and support for our PDGF beta receptor binding single domain antibodies targeting program by EUROSTARS. This strong and synergistic consortium will enable BiOrion to progress clinical development of our novel targeted imaging diagnostics and therapeutics against fibrotic stroma of solid cancers."

XNK Therapeutics partners with Cellect for next generation platform development

On December 11, 2020 XNK Therapeutics AB ("XNK") reported its collaboration agreement with Israel-based Cellect Biotechnology ("Cellect") to develop the next generation version of XNK’s innovative technology platform (Press release, CellProtect Nordic Pharmaceuticals, DEC 11, 2020, View Source [SID1234574490]).

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Under the terms of the agreement, Cellect will work to further improve XNK Therapeutics’ technology platform for targeting cancer across a wide range of indications. Cellect’s functional cell selection technology has the potential to significantly improve the consistency and manufacturing efficiency in autologous cell therapies.

"I am excited that we will be able to continue developing the next generation of XNK Therapeutics’ technology platform in collaboration with Cellect," said Johan Liwing, CEO of XNK Therapeutics.

"We recognize the growing interest in NK cells and decided to work with XNK Therapeutics for further dissemination of our Apograft technology," said Dr. Shai Yarkoni, CEO of Cellect Biotechnology.

Entry into a Material Definitive Agreement

On December 11, 2020, Seelos Therapeutics, Inc. (the "Company") reported that it entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with Lind Global Asset Management II, LLC (the "Investor") pursuant to which, among other things, on December 11, 2020, the Company issued and sold to the Investor, in a private placement transaction (the "Private Placement"), in exchange for the payment by the Investor of $10,000,000, (1) a convertible promissory note (the "Note") in an aggregate principal amount of $12,000,000 (the "Principal Amount"), which will bear no interest and mature on December 11, 2022 (the "Maturity Date"), and (2) 975,000 shares (the "Closing Shares") of common stock of the Company, par value $0.001 per share ("Common Stock") (Filing, 8-K, Apricus Biosciences, DEC 11, 2020, View Source [SID1234572982]).

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At any time following June 11, 2021, and from time to time before the Maturity Date, the Investor shall have the option to convert any portion of the then-outstanding Principal Amount of the Note into shares of Common Stock at a price per share of $1.60, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions (the "Conversion Price"). Prior to June 11, 2021, the Company shall have the right to prepay up to sixty-six and two-thirds percent (662/3%) of the then-outstanding Principal Amount of the Note with no penalty. On or after July 11, 2021, the Company shall have the right to prepay up to the then-outstanding Principal Amount of the Note with no penalty; however, if the Company exercises such prepayment right, the Investor will have the option to convert up to thirty-three and one-third percent (331/3%) of the amount that the Company elects to prepay at the Conversion Price.

The Company intends to use the proceeds from the Private Placement for general corporate purposes and to advance the development of its product candidates.

Subject to certain exceptions, the Company will be required to direct proceeds from any subsequent debt financings (including subordinated debt, convertible debt or mandatorily redeemable preferred stock but other than purchase money debt or capital lease obligations or other indebtedness incurred in the ordinary course of business) to repay the Note, unless waived by the Investor in advance.

Beginning on June 9, 2021, the Note will amortize in eighteen monthly installments equal to the quotient of (i) the then-outstanding Principal Amount of the Note, divided by (ii) the number of months remaining until the Maturity Date. All amortization payments shall be payable solely in cash, plus a 2% premium.

In conjunction with the Securities Purchase Agreement and the Note, on December 11, 2020, the Company and the Investor entered into a security agreement (the "Security Agreement"), which provides the Investor with a first priority lien on the Company’s assets and properties.

Until December 11, 2021, the Investor will, subject to certain exceptions, have the right to participate for up to 10% of any Common Stock equity financing of the Company.

The Securities Purchase Agreement contains customary representations and warranties of the Company and the Investor. In addition, the Note contains restrictive covenants and event of default provisions that are customary for transactions of this type.

The foregoing summaries of the Securities Purchase Agreement, the Note and the Security Agreement do not purport to be complete and are qualified in their entirety by reference to the copies of the Securities Purchase Agreement and Form of Note filed herewith as Exhibits 10.1, 4.1 and 10.2, respectively.

The representations, warranties and covenants contained in the Securities Purchase Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to the Securities Purchase Agreement, and may be subject to limitations agreed upon by the contracting parties. Accordingly, the Securities Purchase Agreement is incorporated herein by reference only to provide investors with information regarding the terms of the Securities Purchase Agreement, and not to provide investors with any other factual information regarding the Company or its business, and should be read in conjunction with the disclosures in the Company’s periodic reports and other filings with the Securities and Exchange Commission (the "SEC").