| Item 1.01. | Entry into a Material Definitive Agreement. |
Prior to the effective time of the completion of the acquisition of Pfenex Inc. (“Pfenex”) by Ligand Pharmaceuticals Incorporated (“Ligand”) by consummating a merger of Pelican Acquisition Sub, Inc. (“Purchaser”), a wholly-owned subsidiary of Ligand, with and into Pfenex (the “Merger”), and in connection with the acceptance for payment by Purchaser of all of the shares of Pfenex common stock, par value $0.001 per share (the “Shares”), validly tendered and not properly withdrawn pursuant to the Offer (as defined below), Ligand and a duly qualified rights agent, American Stock Transfer & Trust Company, LLC, entered into a contingent value rights agreement on September 30, 2020 (as it may be amended from time to time, the “CVR Agreement”). Pursuant to the CVR Agreement, each Share held by the stockholders immediately prior to the closing of the Merger will be entitled to receive one non-transferrable contractual right (a “CVR”) entitling such holder to receive, subject to the achievement of the CVR Payment Milestone (as defined below), an amount in cash equal to $2.00.
The CVR Agreement provides that the required milestone shall be achieved upon, with respect to Pfenex’s teriparatide injection (also referred to as PF708 or BonsityTM) (the “CVR Product”), the receipt of a notice from the U.S. Food and Drug Administration (the “FDA” ) that the CVR Product is therapeutically equivalent (as will be indicated by assignment of a therapeutic equivalence code that begins with an “A” in the FDA publication, Approved Drug Products with Therapeutic Equivalence Evaluations) with respect to the listed product, FORTEO® (teriparatide injection) (the “CVR Payment Milestone”).
CVRs are complex instruments and a number of factors will determine whether any amount will actually be paid to Pfenex’s stockholders in accordance with the terms of the CVR Agreement. If the milestone is not met, the CVRs will have no value. There can be no assurance that the milestone set forth in the CVR Agreement will be achieved and that the resulting payment will be required of Ligand.
The foregoing description of the CVR Agreement does not purport to be complete and is qualified in its entirety by the full text of the CVR Agreement, the form of which is attached as Exhibit 99.1 and is incorporated herein by reference.
| Item 2.01. | Completion of Acquisition or Disposition of Assets |
Completion of Acquisition of Pfenex Inc.
As previously disclosed on August 10, 2020, Purchaser, Ligand and Pfenex entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”).
Pursuant to the Merger Agreement, Purchaser commenced a tender offer to acquire all of the outstanding Shares, at a price of (i) $12.00 per share, in cash (the “Cash Portion”), and (ii) a CVR pursuant to the CVR Agreement, to receive a contingent payment upon the achievement of the CVR Payment Milestone, without interest (the “CVR Portion”, and together with the Cash Portion, the “Offer Price”), subject to any required tax withholding, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated August 31, 2020, and the related Letter of Transmittal (which, together with the Offer to Purchase, as each may be amended or supplemented from time to time, constituted the “Offer”).
The Offer expired at midnight (New York City time) at the end of the day on Tuesday, September 29, 2020. The depositary for the Offer advised Ligand and Pfenex that, as of the expiration of the Offer, a total of 24,744,327 Shares (excluding Shares with respect to which notices of guaranteed delivery were delivered) had been validly tendered and not properly withdrawn pursuant to the Offer, representing approximately 72.0% of Pfenex’s then outstanding Shares (determined in accordance with the Merger Agreement). In addition, notices of guaranteed delivery were delivered with respect to approximately 2,847,227 Shares that have not yet been tendered, representing approximately 8.3% of Pfenex’s then outstanding Shares. The Minimum Condition (as defined in the Merger Agreement) for the Offer was satisfied because the number of Shares validly tendered and not properly withdrawn pursuant to the Offer represented at least a majority of the Shares then outstanding (determined in accordance with the Merger Agreement and excluding from the number of tendered Shares, but not from the number of outstanding Shares, Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee). All other conditions to the Offer having also been satisfied or waived, immediately after the expiration of the Offer, Purchaser accepted all of the Shares for payment, and will promptly pay for such Shares in accordance with the terms of the Offer.
On September 30, 2020, Ligand issued a press release announcing the expiration and results of the Offer, a copy of which is attached as Exhibit (a)(5)(xi) to Amendment No. 3 to Schedule TO filed by Ligand with the Securities and Exchange Commission (the “SEC”) on September 30, 2020 and is incorporated herein by reference.
