Spectrum Pharmaceuticals (NASDAQ: SPPI) and Allos Therapeutics, Inc. (NASDAQ: ALTH) today announced that they have signed a definitive agreement under which Spectrum will acquire all of the outstanding shares of Allos for $1.82 per share in cash plus one Contingent Value Right (CVR). This CVR entitles Allos stockholders to an additional payment of $0.11 per share in cash if certain European regulatory approval and commercialization milestones for FOLOTYN® are achieved. The upfront portion of the transaction is valued at up to $206 million on a fully-diluted basis, and $108 million net of Allos’ cash balance at the end of 2011. The acquisition is expected to be accretive to Spectrum on a cash basis in the fourth quarter of 2012.
Allos markets FOLOTYN (pralatrexate injection) which is a folate analogue metabolic inhibitor. In September 2009, the U.S. Food and Drug Administration (FDA) granted accelerated approval for FOLOTYN for use as a single agent for the treatment of patients with relapsed or refractory peripheral T-cell lymphoma (PTCL). FOLOTYN generated more than $35 million in U.S. net sales in 2010 and $50 million in 2011.
"For Spectrum, this acquisition adds another diversified source of revenue, accelerates the development of our hematology franchise, and affirms our commitment to becoming a leader in the treatment of lymphoma," said Rajesh C. Shrotriya, MD, Chairman, Chief Executive Officer and President of Spectrum Pharmaceuticals. "ZEVALIN®and FOLOTYN are targeted to the same hematologists/oncologists for the treatment of different forms of lymphoma. Thus, we are well positioned to immediately leverage the combined strengths of the two companies, while expanding the number of cancer patients that can benefit from our products. Because of our strong operating performance, cash reserves, fiscal discipline, and a revolving credit line, we do not need to issue any equity to close this transaction."
Under the agreement, Spectrum will commence a tender offer to purchase all of the outstanding shares of Allos for $1.82 in cash plus one CVR. The CVR will entitle each Allos stockholder to an additional payment of $0.11 per share in cash if FOLOTYN obtains conditional approval for the treatment of patients with relapsed/refractory PTCL in Europe in 2012 and achieves its first reimbursable commercial sale in at least three major EU markets by December 31, 2013. The CVR will not be publicly traded.
The transaction has been unanimously approved by the Boards of Directors of both companies. Additionally, Warburg Pincus, Allos’ largest shareholder and the owner of approximately 24% of Allos’ outstanding shares, along with the directors and certain officers of Allos, have entered into tender and voting agreements pursuant to which such stockholders have agreed to tender all of their Allos shares into the tender offer and vote their shares in favor of the transaction. The transaction is expected to close in the second quarter of 2012. Spectrum currently intends to finance the acquisition with a combination of cash on hand and a revolving credit line from Bank of America, N.A.
“This transaction represents an excellent strategic and cultural fit that leverages two strong brands in the hematology/oncology market today with potential for future growth,” commented Paul L. Berns, President and Chief Executive Officer of Allos Therapeutics. “Spectrum shares our commitment to patients and their healthcare providers, and we believe FOLOTYN will be a welcomed addition to its commercial product offering and diversified portfolio of development-stage drugs.”
RBC Capital Markets, LLC is acting as Spectrum’s exclusive financial advisor, and Kirkland & Ellis LLP and Stradling Yocca Carlson & Rauth, P.C. are acting as legal counsel to Spectrum Pharmaceuticals. J.P. Morgan Securities LLC is acting as Allos' financial advisor, and Latham & Watkins LLP is acting as legal counsel to Allos Therapeutics.
Conference Call
Thursday, April 5, 2012 @ 8:30 a.m. Eastern/5:30 a.m. Pacific
Domestic:
(877) 837-3910, Conference ID# 68595555
International:
(973) 796-5077, Conference ID# 68595555
For interested individuals unable to join the call, a replay will be available from April 5, 2012 @ 11:30 a.m. ET/8:30 a.m. PT through April 19, 2012 until 11:59 p.m. ET/8:59 p.m. PT.
Domestic Replay Dial-In #:
(855) 859-2056, Conference ID# 68595555
International Replay Dial-In #:
(404) 537-3406, Conference ID# 68595555
This conference call will also be webcast. Listeners may access the webcast, which is available on the investor relations page of Spectrum Pharmaceuticals’ website: www.sppirx.com.
