I saw an article today on Endpoints News about UCB
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Posted On: 02/01/2022 11:45:47 PM
I saw an article today on Endpoints News about UCB’s purchase of Zogenix. In view of the many ideas being expressed about partnerships, buyouts, etc., I thought this story would be of interest. Without knowing details about market size, competitive drugs, etc., it would be difficult to use the buyout price as an indication of market value for CYDY. I do believe, however, the bidding process itself offers some insight as to how a future buyout process might work for CYDY. Note the following:
• Interest from the first bidder started right before Zogenix got FDA approval for their drug
• Additional outside interest was shown upon FDA approval
• Three bidders took two months to make contact with Zogenix, so the process was an extended one
• The BOD met during this period and discussed Zogenix’s “financial needs”
• UCB, who ultimately succeeded with their offer, asked for additional confidential information for DD during the bidding process.
• Look what happens to the bids after the first bid is rejected. With the many indications for Leronlimab, one would think the bids would jump more significantly.
• The entire process took about 7 months.
Many of the posters on this board think a partnership is imminent. Perhaps that will lead to a process similar to Zogenix’s buyout. The entire article and the link are posted below.
How UCB beat 2 other bidders to land $1.9B buyout of Zogenix and its epilepsy drug
Days before it would nail down the FDA’s approval for its epilepsy drug Fintepla, Zogenix received one of the first inquiries from a pharma company about pursuing a potential partnership to market the drug in the EU and other geographies outside the US.
But it wasn’t until the OK came through, in late June, that eventual buyer UCB made initial contact, according to an SEC filing detailing the background leading up to the deal.
The inside look documents a three-way negotiation that lasted half a year before UCB, the Belgian pharma, emerged victorious with a $1.9 billion offer.
The narrative features three key players: Party A, a pharma company that first expressed its interest on June 4; UCB, which made contact on July 19; and Party B, a global pharma player that touched base on Aug. 3 about a potential US deal.
A week after that initial introduction, Party B became the first to bring up a potential acquisition, as execs called Zogenix CEO Stephen Farr to discuss either partnering in the US or buying out the company — to which Farr replied he was not interested.
Things took a turn in September, following a board meeting around Zogenix’s financial needs and the state of the broader biotech market.
When UCB’s EVP of neurology and head of Europe/international markets, Charl van Zyl, communicated its first non-binding offer to acquire the biotech — later confirmed in an offer at $20.50 per share — it was told that the price was “materially inadequate.”
However, Dr. Farr indicated that the Company was willing to meet with Parent as it was Dr. Farr’s view that both companies had similar objectives in serving patients with epilepsy. On that same day, (Zogenix CFO Michael) Smith and (UCB head of M&A David) Flint held another call where Mr. Smith reiterated the statement made by Dr. Farr to Mr. van Zyl, indicated that the Company Board was not providing guidance on an acceptable valuation and explained that, in light of the Company Board’s view expressed by Dr. Farr, the Company was still planning to move forward with a strategic partnership for the EU, with offers for a partnership expected in the coming weeks.
UCB then upped the offer to $23 per share.
While Zogenix kept Party A and Party B apprised of the situation, UCB CEO Jean-Christophe Tellier got in touch with Zogenix board chair Cam Garner to discuss whether an alternative deal structure would be more appealing — and to ask for more confidential information for due diligence.
After Party B pulled out in early November (it paused the assessment of Zogenix due to “prioritization of other company initiatives”), the CEO of Party A called Farr “to inform him that Party A and its board of directors viewed the companies as having a good strategic fit, and noting that Party A was actively conducting diligence of the Company in preparation of submitting a non-binding offer to acquire the Company.”
Before Party A submitted its offer, though, UCB came back with its updated proposal: $23 per share in upfront, $2 in contingent value rights if Fintepla is still an orphan drug at the time of EU approval, and a final $2 CVR if Fintepla global sales are at least $700 million in 2026 — adding up to a $27 per share deal.
Party A, meanwhile, sent over an all-cash offer of $21.50 per share, kicking off a bidding war in December.
Over the next hectic few days, UCB and Party A each sent in updated offers until Party A came back on Dec. 21 to say that it’s not going to increase its offer beyond a $25 cash price plus two $1 CVRs. On the same day, UCB drafted up an exclusivity agreement to lock down Zogenix for the next four weeks.
With its main rival now out, UCB and Zogenix took their time — resting over Christmas break — and tied up the loose ends, reaching the final deal on Jan. 18.
On Jan. 19, the two companies went public with the buyout that would pay $26 per share in cash and offer a contingent value right worth $2 more per share if Fintepla lands an extra EU approval by the end of 2023.
Farr, who’s been at the helm for 15 years, is getting a golden parachute worth $4.5 million, while Smith grabbed $1.6 million.
https://endpts.com/how-ucb-beat-2-other-bidde...epsy-drug/
• Interest from the first bidder started right before Zogenix got FDA approval for their drug
• Additional outside interest was shown upon FDA approval
• Three bidders took two months to make contact with Zogenix, so the process was an extended one
• The BOD met during this period and discussed Zogenix’s “financial needs”
• UCB, who ultimately succeeded with their offer, asked for additional confidential information for DD during the bidding process.
• Look what happens to the bids after the first bid is rejected. With the many indications for Leronlimab, one would think the bids would jump more significantly.
• The entire process took about 7 months.
Many of the posters on this board think a partnership is imminent. Perhaps that will lead to a process similar to Zogenix’s buyout. The entire article and the link are posted below.
How UCB beat 2 other bidders to land $1.9B buyout of Zogenix and its epilepsy drug
Days before it would nail down the FDA’s approval for its epilepsy drug Fintepla, Zogenix received one of the first inquiries from a pharma company about pursuing a potential partnership to market the drug in the EU and other geographies outside the US.
But it wasn’t until the OK came through, in late June, that eventual buyer UCB made initial contact, according to an SEC filing detailing the background leading up to the deal.
The inside look documents a three-way negotiation that lasted half a year before UCB, the Belgian pharma, emerged victorious with a $1.9 billion offer.
The narrative features three key players: Party A, a pharma company that first expressed its interest on June 4; UCB, which made contact on July 19; and Party B, a global pharma player that touched base on Aug. 3 about a potential US deal.
A week after that initial introduction, Party B became the first to bring up a potential acquisition, as execs called Zogenix CEO Stephen Farr to discuss either partnering in the US or buying out the company — to which Farr replied he was not interested.
Things took a turn in September, following a board meeting around Zogenix’s financial needs and the state of the broader biotech market.
When UCB’s EVP of neurology and head of Europe/international markets, Charl van Zyl, communicated its first non-binding offer to acquire the biotech — later confirmed in an offer at $20.50 per share — it was told that the price was “materially inadequate.”
However, Dr. Farr indicated that the Company was willing to meet with Parent as it was Dr. Farr’s view that both companies had similar objectives in serving patients with epilepsy. On that same day, (Zogenix CFO Michael) Smith and (UCB head of M&A David) Flint held another call where Mr. Smith reiterated the statement made by Dr. Farr to Mr. van Zyl, indicated that the Company Board was not providing guidance on an acceptable valuation and explained that, in light of the Company Board’s view expressed by Dr. Farr, the Company was still planning to move forward with a strategic partnership for the EU, with offers for a partnership expected in the coming weeks.
UCB then upped the offer to $23 per share.
While Zogenix kept Party A and Party B apprised of the situation, UCB CEO Jean-Christophe Tellier got in touch with Zogenix board chair Cam Garner to discuss whether an alternative deal structure would be more appealing — and to ask for more confidential information for due diligence.
After Party B pulled out in early November (it paused the assessment of Zogenix due to “prioritization of other company initiatives”), the CEO of Party A called Farr “to inform him that Party A and its board of directors viewed the companies as having a good strategic fit, and noting that Party A was actively conducting diligence of the Company in preparation of submitting a non-binding offer to acquire the Company.”
Before Party A submitted its offer, though, UCB came back with its updated proposal: $23 per share in upfront, $2 in contingent value rights if Fintepla is still an orphan drug at the time of EU approval, and a final $2 CVR if Fintepla global sales are at least $700 million in 2026 — adding up to a $27 per share deal.
Party A, meanwhile, sent over an all-cash offer of $21.50 per share, kicking off a bidding war in December.
Over the next hectic few days, UCB and Party A each sent in updated offers until Party A came back on Dec. 21 to say that it’s not going to increase its offer beyond a $25 cash price plus two $1 CVRs. On the same day, UCB drafted up an exclusivity agreement to lock down Zogenix for the next four weeks.
With its main rival now out, UCB and Zogenix took their time — resting over Christmas break — and tied up the loose ends, reaching the final deal on Jan. 18.
On Jan. 19, the two companies went public with the buyout that would pay $26 per share in cash and offer a contingent value right worth $2 more per share if Fintepla lands an extra EU approval by the end of 2023.
Farr, who’s been at the helm for 15 years, is getting a golden parachute worth $4.5 million, while Smith grabbed $1.6 million.
https://endpts.com/how-ucb-beat-2-other-bidde...epsy-drug/
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