Algeta Board Backs Bayer $2.9B Buy Offer

The Board of Directors of Algeta ASA unanimously recommends voluntary cash offer from Bayer to acquire the entire issued share capital of Algeta
 

•Offer at NOK 362 per Algeta share, in cash, valuing the total share capital of Algeta at approximately NOK 17.6 billion (USD 2.9 billion) on a fully diluted basis
•Offer unanimously recommended by the Board of Directors of Algeta
•Pre-acceptance of the Offer on certain terms and conditions by HealthCap IV, Algeta's largest shareholder

OSLO, Norway, Dec. 19, 2013 (GLOBE NEWSWIRE) -- The Board of Directors of Algeta ASA ("Algeta"; OSE: ALGETA) today announced an agreement with the Bayer Group ("Bayer") whereby Bayer, through Aviator Acquisition AS, a wholly-owned subsidiary of Bayer Nordic SE, will launch a voluntary cash offer (the "Offer") to acquire the entire issued share capital of Algeta for NOK 362 per share in cash. The Offer values the total share capital of Algeta at approximately NOK 17.6 billion (USD 2.9 billion) on a fully diluted basis. The Board of Directors of Algeta has unanimously decided to recommend that its shareholders accept the Offer. The recommendation will be made public through the Oslo Stock Exchange and appended to the offer document.

The Offer price represents a 37% premium to Algeta's closing share price on 25 November 2013 and a 48% premium to the three-month volume weighted average stock price on 25 November 2013, the last trading day prior to the announcement of Bayer's preliminary acquisition proposal.

"The Board of Directors of Algeta has undertaken a careful review of the terms and conditions of the Offer. We believe the Offer recognizes the strategic value of Algeta and delivers a considerable cash premium to our shareholders." said Stein Holst Annexstad, Chairman of the Board of Directors of Algeta. "Having worked with Bayer since 2009, the Board of Directors is convinced of Bayer's commitment to establishing Xofigo® (radium Ra 223 dichloride) globally, and maximizing its blockbuster potential. We are also pleased that Bayer intends to further invest in the potential of Algeta's Targeted Thorium Conjugate (TTC) research platform."

Algeta's largest and leading shareholder HealthCap IV[1] has, on certain terms and conditions, pre-accepted the Offer for all shares that it owns. In addition, Bayer has received undertakings from each of the Directors and certain senior managers holding shares in Algeta to tender their shares into the Offer, subject to certain conditions. The total shares subject to these several commitments represent approximately 14% of Algeta's issued share capital.
Terms and conditions of the Offer

Under the terms of the Offer, Aviator Acquisition AS will make a voluntary offer to acquire the entire issued share capital of Algeta for NOK 362 per share in cash. The complete details of the Offer, including all terms and conditions, will be included in an offer document expected to be distributed to Algeta shareholders in January 2014, following approval by the Oslo Stock Exchange. The consummation of the Offer is subject to satisfaction or waiver of customary conditions, including, without limitation, a minimum acceptance of at least 90% or such lower percentage (not being less than 50%) of the outstanding Algeta shares as Aviator Acquisition AS determines, regulatory approval by German competition authorities being obtained and no material adverse change having occurred in Algeta. The Offer is not subject to any financing condition. Bayer will finance the transaction with available cash and new debt. Bayer expects to close the transaction during the first quarter of 2014.

The Board of Directors of Algeta has the right to withdraw its recommendation of the Offer in the event a superior competing offer is announced that is not matched by Bayer within three business days of being provided with notice thereof. Any such amendment or withdrawal will permit Bayer to withdraw from the Offer. Algeta has agreed to pay Bayer a break fee of 1.0% of the total Offer value in the event that the Offer lapses following the announcement of a competing offer that results in the acquisition of Algeta, payable upon completion of such competing offer. As part of the agreement with Bayer and subject to customary exceptions, Algeta has entered into undertakings not to solicit competing offers from third parties.

In the event the Offer is completed on the terms described above, there will be a Change of Control Event under the Loan Agreement governing Algeta's convertible bonds due 2018. As described in the Loan Agreement, this would result in such bonds being convertible at the Change of Control Conversion Price during the 60-day Change of Control Conversion Period following the occurrence of such a Change of Control Event (or notice thereof, if later). The conversion of bonds may, at the sole discretion of Algeta, be settled, in whole or in part, by cash payment, as described in the Loan Agreement.

Goldman Sachs International is acting as exclusive financial advisor to Algeta. Skadden, Arps, Slate, Meagher & Flom LLP and Wikborg, Rein & Co. DA are acting as legal advisors to Algeta.

DNB Markets has been engaged to provide the formal statement to be issued in accordance with section 6-16 (1) c.f. 6-19 (1) of the Norwegian Securities Trading Act, which includes a fairness opinion in support of the Board of Directors' recommendation of the Offer.

Centerview Partners provided an additional fairness opinion in support of the Board of Directors' recommendation of the Offer.

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Xofigo ® is a registered trademark of Bayer AG

For further information, please contact:

Oystein Soug +47 90 65 65 25
Chief Financial Officer   
    
Mike Booth +1 646 410 1884
Communications & Corporate Affairs ir@algeta.com
    

About Algeta

Algeta is a company focused on developing, manufacturing and marketing novel targeted therapies for patients with cancer. The company is headquartered in Oslo, Norway, and has a US subsidiary, Algeta US, LLC, based in Cambridge, MA performing commercial marketing operations in the US. Algeta is listed on the Oslo Stock Exchange (Ticker: ALGETA). For more information please visit www.algeta.com.

Forward-looking Statements

This news release contains certain forward-looking statements that are based on uncertainty, as they relate to events and depend on circumstances that will occur in the future and which, by their nature, may have an impact on results of operations and the financial condition of Algeta. Such forward-looking statements reflect our current expectations and are based on the information currently available to Algeta. Algeta cannot give any assurance as to whether such forward looking statements will prove to be correct. These forward looking statements include statements regarding the Offer, our expectations as to the launch of the Offer, including the terms of the Offer and expected timing, expected benefits of the Offer for the development of Xofigo ® and our Targeted Thorium Conjugate (TTC) platform . There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, among other things, satisfactions of conditions to the Offer, receipt of regulatory clearance, and investor participation in the Offer.

About Xofigo ® (radium Ra 223 dichloride)

Xofigo® is approved in the United States and is indicated for the treatment of patients with castration-resistant prostate cancer, symptomatic bone metastases and no known visceral metastatic disease.

In September 2009, Algeta signed an agreement with Bayer for the development and commercialization of Xofigo. Under the terms of this agreement, Bayer will develop, apply for health authority approvals worldwide and commercialize Xofigo globally. Algeta is eligible for royalties and milestones based on Bayer's sales of Xofigo outside the US, and Algeta US, LLC is co-promoting Xofigo with Bayer in the US.

Xofigo is an alpha particle-emitting radioactive therapeutic agent with an anti-tumor effect on bone metastases. The active ingredient in Xofigo is the alpha particle-emitting isotope radium-223, which mimics calcium and forms complexes with the bone mineral hydroxyapatite at areas of increased bone turnover, such as bone metastases. The high linear energy transfer of radium-223 may cause double-strand DNA breaks in adjacent cells, resulting in an anti-tumor effect on bone metastases. The alpha particle range from radium-223 is less than 100 micrometers which may limit the damage to the surrounding normal tissue[2].
Important Safety Information for Xofigo (radium Ra 223 dichloride)

Xofigo is contraindicated in women who are or may become pregnant. Xofigo can cause fetal harm when administered to a pregnant woman.

In the randomized trial, 2% of patients in the Xofigo arm experienced bone marrow failure or ongoing pancytopenia, compared to no patients treated with placebo. There were two deaths due to bone marrow failure. For 7 of 13 patients treated with Xofigo bone marrow failure was ongoing at the time of death. Among the 13 patients who experienced bone marrow failure, 54% required blood transfusions. Four percent (4%) of patients in the Xofigo arm and 2% in the placebo arm permanently discontinued therapy due to bone marrow suppression. In the randomized trial, deaths related to vascular hemorrhage in association with myelosuppression were observed in 1% of Xofigo-treated patients compared to 0.3% of patients treated with placebo. The incidence of infection-related deaths (2%), serious infections (10%), and febrile neutropenia (less than 1%) was similar for patients treated with Xofigo and placebo. Myelosuppression - notably thrombocytopenia, neutropenia, pancytopenia, and leukopenia - has been reported in patients treated with Xofigo.

Monitor patients with evidence of compromised bone marrow reserve closely and provide supportive care measures when clinically indicated. Discontinue Xofigo in patients who experience life-threatening complications despite supportive care for bone marrow failure.

Monitor blood counts at baseline and prior to every dose of Xofigo. Prior to first administering Xofigo, the absolute neutrophil count (ANC) should be greater than to equal to 1.5 × 109/L, the platelet count greater than or equal to 100 × 109/L, and hemoglobin greater than or equal to 10 g/dL. Prior to subsequent administrations, the ANC should be greater than or equal to 1 × 109/L and the platelet count greater than or equal to 50 × 109/L. Discontinue Xofigo if hematologic values do not recover within 6 to 8 weeks after the last administration despite receiving supportive care.

Safety and efficacy of concomitant chemotherapy with Xofigo have not been established. Outside of a clinical trial, concomitant use of Xofigo in patients on chemotherapy is not recommended due to the potential for additive myelosuppression. If chemotherapy, other systemic radioisotopes, or hemibody external radiotherapy are administered during the treatment period, Xofigo should be discontinued.

Xofigo should be received, used, and administered only by authorized persons in designated clinical settings. The administration of Xofigo is associated with potential risks to other persons from radiation or contamination from spills of bodily fluids such as urine, feces, or vomit. Therefore, radiation protection precautions must be taken in accordance with national and local regulations.  

The most common adverse reactions (greater than or equal to 10%) in the Xofigo arm vs. the placebo arm, respectively, were nausea (36% vs 35%) diarrhea (25% vs 15%), vomiting (19% vs 14%), and peripheral edema (13% vs 10%). Grade 3 and 4 adverse events were reported in 57% of Xofigo-treated patients and 63% of placebo-treated patients. The most common hematologic laboratory abnormalities in the Xofigo arm (greater than or equal to 10%) vs the placebo arm, respectively, were anemia (93% vs 88%), lymphocytopenia (72% vs.53%), leukopenia (35% vs. 10%), thrombocytopenia (31% vs. 22%), and neutropenia (18% vs. 5%).

For full US prescribing information visit:
http://labeling.bayerhealthcare.com/html/products/pi/Xofigo_PI.pdf

[1] The HealthCap managed funds HealthCap IV L.P. (3,324,407 shares), HealthCap IV Bis L.P. (2,402,147 shares), HealthCap IV KB (242,546 shares) and OFCO Club IV (90,900 shares)
[2] XOFIGO Prescribing information. May 2013
 

Posted: December 2013


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