- Solidifies leadership position in growing biodefense market with 3 additional US government procured therapeutics
- Advances Biosciences Division toward profitability through significant commercial product and service revenue
- Broadens manufacturing capabilities with revenue generating fill/finish business
- Expected to be accretive in 2014, exclusive of transaction-related costs
- Plan to fund acquisition through existing cash resources and new bank facility
The Boards of Directors of both companies have approved the transaction. Agreements are in place with shareholders who collectively control, directly or indirectly, approximately 61% of the outstanding common shares of
"The acquisition of
"This transaction represents an exciting and very promising opportunity for
Benefits of the Transaction
Emergent expects that the transaction will provide the following benefits:
1. Solidifies leadership position in growing biodefense market with 3 additional US government procured therapeutics
Cangene's biodefense business consists of three medical countermeasures targeting botulinum, smallpox and anthrax, and each with an existing multi-year US government contract.
BAT® (Botulism Antitoxin (Equine) Heptavalent) — the only
FDA-licensed therapeutic for the treatment of symptomatic botulism following suspected or documented exposure to the botulinum neurotoxin serotypes A, B, C, D, E, F or G.
VIGIV® (Vaccinia Immune Globulin Intravenous (Human)) — an
FDA-licensed therapeutic for the treatment of complications due to smallpox vaccination, including eczema vaccinatum, progressive vaccinia, severe generalized vaccinia, vaccinia infections in individuals who have skin conditions, and aberrant infections induced by vaccinia virus, except in cases of isolated keratitis.
- AIGIV (Anthrax Immune Globulin Intravenous) — an investigational therapeutic designed for the treatment of toxemia associated with symptomatic inhalational anthrax.
- BAT® (Botulism Antitoxin (Equine) Heptavalent) — the only
Cangene's biodefense revenue for its fiscal year ended
July 31, 2013was approximately $50 million.
2. Advances Biosciences Division towards profitability through significant commercial product and service revenue
Cangene's commercial product portfolio consists of four
FDA-licensed, hospital-based specialty therapeutics targeting infectious diseases, hematology and transplantation and sold worldwide through an established commercial infrastructure.
- WinRho® SDF (Rho(D) Immune Globulin Intravenous (Human)) — a therapeutic for the treatment of immune thrombocytopenia purpura (ITP) in Rho(D)-positive patients and for the suppression of Rh isoimmunization in non-sensitized Rho(D)-negative patients, otherwise known as hemolytic disease of the newborn (HDN).
- HepaGam B® (Hepatitis B Immune Globulin (Human) Injection) — an immune globulin for the prevention of Hepatitis B recurrence following liver transplant in HBsAg-positive liver transplant patients and post-exposure prophylaxis in the following settings: acute exposure to HBsAg-positive blood, plasma, or serum, perinatal exposure of infants born to HBsAg-positive mothers, sexual exposure to HBsAg-positive persons, and household exposure to persons with acute HBV infection.
- VARIZIG® (Varicella Zoster Immune Globulin (Human)) — a post-exposure prophylaxis of varicella in high-risk individuals intended to reduce the severity of chickenpox infections.
- episil® — a medical device for the management and relief of pain associated with oral lesions of various etiologies, including oral mucositis/stomatitis, which may be caused by chemotherapy or radiotherapy.
Cangene's commercial product revenue for its fiscal year ended
July 31, 2013was approximately $44 million.
3. Broadens manufacturing capabilities with revenue generating fill/finish business
- Cangene's contract manufacturing operations provide fill/finish services supporting over 20 approved products sold worldwide.
Cangene's contract manufacturing revenue for its fiscal year ended
July 31, 2013was approximately $33 million.
4. Attractive financial profile of combined company
Pro forma total revenues of approximately
$436 millionand operating income of approximately $55 million, calculated based on Cangene's FY 2013 results and the trailing twelve month period of September 30, 2013for Emergent.
- Diversified revenues in both the Biosciences and Biodefense Divisions with attractive gross margins.
In connection with the transaction, Emergent has secured committed debt financing from
Transaction Structure and Approvals
The transaction is structured as a Canadian court-approved plan of arrangement. Completion of the transaction is subject to approval by 66 2/3% of the votes cast by
Taking into account the expected closing date of Q1 2014, the company is reaffirming its full year 2013 GAAP guidance for total revenues of
The company expects that the transaction will be accretive for 2014 and beyond, assuming a Q1 2014 close. The company anticipates:
revenue contribution of
$90 to $100 millionfor the partial year period of 2014 with a compound annual growth rate of 4% to 6% over the following three year period (2015-2018); and
- pre-tax operating margin contribution of 4% to 6%, exclusive of transaction-related costs, for the partial year period of 2014, improving to a target of 15% over the following three year period (2015-2018).
Non-GAAP Financial Measures
This press release contains a financial measure, adjusted net income, which is considered a "non-GAAP" financial measure under applicable
The determination of the amounts that are excluded from this non-GAAP financial measure is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts. The company is likely to exclude the following items from its non-GAAP adjusted net income in the future, the effect of which is uncertain but may be significant in amount:
- Expenses related to completed and future acquisitions of other businesses, including amortization of acquired intangible and tangible assets, and transaction costs;
- Expenses associated with any potential restructuring activities, including but not limited to, asset impairments, accelerated depreciation, severance costs and lease abandonment charges; and
- Other one-time or non-recurring charges.
Because non-GAAP financial measures exclude the effect of items that will increase or decrease the company's reported results of operations, management strongly encourages investors to review the company's consolidated financial statements and publicly filed reports in their entirety. A reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure is included in the following table.
Financial Guidance for the Year
Ended December 31, 2013
|GAAP Net Income||
$25 to $30
-- Cangene transaction-related costs
-- HPPD transaction-related costs
-- UK restructuring expense
-- Adjusted income tax expense
|Non-GAAP Adjusted Net Income||
$30 to $35