Depomed (NASDAQ:DEPO) is up 14% premarket on modestly higher volume stoked by its announcement that it is preparing to put itself up for sale. Former suitor Horizon Pharma (NASDAQ:HZNP) says it is uninterested in another shot, however.
Depomed (NASDAQ:DEPO) is preparing to put itself up for sale, caving in to calls from activist investor Starboard to do so.
Negotiations with potential buyers will kick off shortly after Depomed receives a court decision clarifying the patent exclusivity of its biggest drug, Nucynta, an opiate used to treat severe, often chronic pain, sources tell Reuters.
Depomed is working with Morgan Stanley, which last year helped it defend itself against a $3B unsolicited stock-for-stock offer from Horizon Pharma (NASDAQ:HZNP).
In recent months Nucynta sales have lagged expectations, partly because of increasing concern among health insurers about their addictive potential.
In April, Horizon said it was not interested in revisiting a deal with Depomed.
However, in May the NYP reported it was interested in resurrecting the deal.
Horizon Pharma (NASDAQ:HZNP) acquires Raptor Pharmaceuticals (NASDAQ:RPTP) for $9 a share in cash ($800M). The deal, to be financed with debt and cash, should close in Q4.
Raptor's leading products are PROCYSBI (cysteamine bitartrate) delay-release capsules for the treatment of a rare metabolic disorder called nephropathic cystinosis and QUINSAIR (aerosolized levofloxacin) for the management of chronic pulmonary infections. Its revenue guidance for this year is $125M - 135M.
Horizon Pharma plc (NASDAQ:HZNP) acquires the rights to interferon gamma-1b, marketed under the brand names IMUKIN, IMUKINE, IMMUKIN and IMMUKINE, from Boehringer Ingelheim International GmbH. The products are sold in 30 countries in Europe and the Middle East.
Under the terms of the agreement, Boehringer will receive €5M upon signing and €20M upon closing, expected to occur by year end. Horizon will own global rights to the products except the U.S., Canada and Japan.
In a separate deal, Horizon licensed the U.S. Canadian and European rights for interferon gamma-1b for the treatment Friedreich's ataxia to an undisclosed third party.
Horizon will immediately begin investing in manufacturing, supply chain, regulatory and commercial activities to support the new business. The investments will trim ~$10M from its 2016 EBITDA guidance.
Horizon Pharam (NASDAQ:HZNP) acquires privately held Crealta Holdings LLC for $510M in cash. The Glendale, WI-based firm's lead product is Krystexxa (pegloticase), a PEGylated uric acid-specific enzyme indicated for the treatment of chronic gout in adults who fail to respond to conventional therapy. The FDA cleared the product in 2010.
The deal should add $70M - 80M to Horizon's top line and $45M - 50M to non-GAAP EBITDA in the first 12 months following the close, expected to happen in Q1.
Horizon will host a conference call this morning at 8:00 am ET to discuss the transaction.
In a regulatory filing, Depomed (DEPO -4%) reports that the Superior Court, County of Santa Clara, California, granted its request for a preliminary injunction prohibiting Horizon Pharma (HZNP +8%) from continuing its unsolicited hostile takeover attempt. The court also denied Horizon's request to invalidate certain of Depomed's bylaws and a Shareholder Rights Agreement adopted by the Depomed board on July 12.
The ruling followed a lawsuit filed by Depomed in August against Horizon accusing the latter of breach of contract and other violations of California law based on Horizon's misuse of confidential information it obtained from Janssen Pharmaceuticals under a confidentiality agreement it entered into with Janssen in connection with its failed attempt to acquire the NUCYNTA franchise of products, which Depomed acquired from Janssen in April.
Judge Peter Kirwan ruled that Depomed would likely succeed on its breach of contract claim based on findings that the company was likely to show that the confidentiality agreement covered the NUCYNTA auction, Janssen's rights under the agreement were transferred to Depomed and Horizon used confidential information concerning NYCYNTA in connection with its bid for Depomed, in violation of the confidentiality agreement.
""While we strongly disagree with the court's ruling, we are withdrawing our offer to acquire Depomed (NASDAQ:DEPO)," says Horizon Pharma (NASDAQ:HZNP) CEO Timothy Walbert, after a California court blocked the Horizon bid, saying it was based on improper use of confidential information.
"Depomed was only one of many attractive acquisition opportunities we have been actively pursuing," Walbert adds, noting the court ruling won't affect 2016 guidance nor the company's long-range plan or expectations.
Commenting on the news, Depomed - which fought the takeover bid over the last six months - reiterates its belief in the strong growth ahead, particularly from its acquisition of the U.S. rights to pain killer Nucynta (it was this drug - which Horizon had also bid for - that led to the confidentiality issues the court ruled on today).
Proposal #4, which would grant the board power to issues shares for cash without first offering the shares to existing shareholders, fell short of the 75% affirmative vote threshold needed for approval. According to the company, it will not have an effect on its bid for Depomed.
The deadline for Depomed stockholders to exchange each of their shares for 0.95 shares of Horizon has been extended to 5:00 pm ET, November 30 from 5:00 pm ET November 20. Horizon needs to do more than that. It is currently trading at ~$18 compared to Depomed's ~$18.60, so the current value of the deal would be $17.10 per share, which, of course, no sane Depomed shareholder would accept.
Leading proxy advisory firms Institutional Shareholder Services and Glass Lewis issue reports recommending that Horizon Pharma (NASDAQ:HZNP) shareholders vote against the issuance of Horizon shares related to its proposed takeover of Depomed (NASDAQ:DEPO). A special meeting of stockholders is set for November 13 to vote on the issuance of up to 81.7M common shares for the bid.
Both firms criticize Horizon's board for the authority it seeks to go after Depomed. They also note the lack of clarity pertaining to the actual cost to shareholders, the uncertainty regarding the supposed synergistic opportunities created by the merger and whether the existing offer is sufficient to close the deal (no way since Horizon's offer is ~$16 per share while DEPO is trading at ~$19).
Horizon Pharma (NASDAQ:HZNP) files its definitive proxy statement with the SEC in connection with its special meeting of shareholders scheduled for November 13. The purpose of the meeting is to approve the issuance of up to 81.7M ordinary shares for the Depomed bid, an increase in authorized share capital and related proposals.
Depomed's record date to determine which shareholders may request a special meeting to vote on three Horizon proposals that will remove obstacles to its takeover offer is October 29.
The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) expires today regarding Horizon Pharma's (NASDAQ:HZNP) proposed acquisition of Depomed (NASDAQ:DEPO), satisfying one of the conditions required to consummate the deal.
The next milestone is October 29, the record date to determine the shareholders of record who may request a special meeting to vote on Horizon's three proposals to remove obstacles to its bid, including replacing the board of directors and repealing its '"poison pill."
Depomed has rejected Horizon's offers three times, saying the bids undervalue the company.
In a letter to Horizon Pharma (NASDAQ:HZNP) Chairman Tim Walbert, Depomed (NASDAQ:DEPO) SVP and General Counsel Matt Gosling says that his firm has set October 29 as the record date to determine which shareholders may request a special meeting to vote on Horizon's three proposals to remove obstacles set by DEPO to fend off the its takeover bid.
The three proposals include replacing the board of directors and repealing its "poison pill" that was approved by the board on July 12.
Not to be outdone by Depomed's (NASDAQ:DEPO) legal maneuverings, Horizon Pharma (NASDAQ:HZNP) files a lawsuit with the Superior Court of California for the County of Santa Clara accusing its takeover target of unlawful behavior in response to its multiple offers to buy the firm.
The complaint states that management instituted a "poison pill" designed to thwart an acquisition by Horizon (or any other bidder) without taking a shareholder vote, violating the California Corporate Code and directors' fiduciary duty to shareholders. Horizon says the poison pill violates California law by virtue of its unequal treatment between the party who triggers the pill and other DEPO shareholders and its denying of a special shareholders meeting to vote on the bid and to potentially replace DEPO's directors.
Horizon's latest offer was $3.4B, which Depomed rejected.
To emphasize its lack of enthusiasm for a potential takeover by Horizon Pharma (HZNP -2.5%), Depomed (DEPO -1.2%) files a complaint in the Superior Court of the State of California for the County of Santa Clara accusing its unwanted suitor of basing its $3.4B bid on highly confidential proprietary information related to its top seller NUCYNTA (tapentadol), the U.S. rights for which both firms pursued in 2013. Depomed won the bidding for NUCYNTA, paying $1.05B. Before the process commenced, both companies signed non-disclosure agreements (NDAs) with owner Janssen Pharmaceuticals which allowed them access to confidential information. Depomed accuses Horizon of violating the NDA.
Depomed seeks an injunction to bar Horizon from using its trade secret data and to prevent it from continuing to make false and misleading statements in connection to its attempt to buy Depomed.
NUCYNTA accounted for 60% ($56.7M) of Depomed's Q2 net product sales of $94.3M.