Teva Reinforces Leadership Position in CNS with Acquisition of Auspex
Expected to strengthen Tevas core CNS franchise, establish Tevas leadership in underserved
movement disorders space, provide compelling new treatment options for patients in need, and
enhance Tevas long-term revenue and earnings growth
All-Cash Transaction with Enterprise Value of $3.2 Billion
Jerusalem and La Jolla, CA, March 30, 2015 Teva Pharmaceutical Industries Ltd. (NYSE
and TASE: TEVA) and Auspex Pharmaceuticals, Inc. (Nasdaq: ASPX), today announced that they
have entered into a definitive merger agreement under which Teva will commence a tender
offer for all of the outstanding shares of Auspex at $101.00 per share in cash, representing
total consideration of approximately $3.2 billion in enterprise value and approximately $3.5
billion in equity value. This transaction is expected to enhance Tevas revenue and
earnings growth profile and strengthen its core central nervous system (CNS) franchise with
the addition of Auspexs portfolio of innovative medicines for people who live with movement
disorders. The transaction has been unanimously approved by the Boards of Directors of both
Teva and Auspex, and key shareholders of Auspex have entered into agreements indicating
their support for the transaction.
Auspex is an innovative biopharmaceutical company specializing in applying deuterium
chemistry to known molecules to create novel therapies with improved safety and efficacy
profiles. Its lead investigational product, SD-809 (deutetrabenazine), which leverages
Auspexs deuterium technology platform is being developed for the potential treatment of
chorea associated with Huntingtons disease, tardive dyskinesia, and Tourette syndrome, with
a pharmacokinetic profile that allows for lower doses resulting in a favorable safety
profile.
In 2014, Auspex reported positive results from its Phase 3 clinical trial for SD-809 in
Huntingtons disease, with plans to submit a New Drug Application (NDA) for this indication
by mid-2015. SD-809 has been granted orphan drug designation for the treatment of
Huntingtons disease by the United States Food and Drug Administration (FDA), and Auspex
expects regulatory approval and commercial launch for this indication in 2016 in the United
States. Topline results for Auspexs Phase 3 ARM-TD study of SD-809 as a potential
treatment for tardive dyskinesia, a disorder for which there are no approved therapies, are
also expected in mid-2015. Other pipeline candidates include deuterated versions of
pirfenidone for idiopathic pulmonary fibrosis and levodopa for Parkinsons disease. Auspex
has an additional 60 molecules in its patent portfolio.
Transaction Highlights
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Excellent strategic fit strengthens Tevas leadership position within CNS and expands
presence into underserved movement disorder markets |
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Tevas existing capabilities and infrastructure in CNS are expected to accelerate the
potential for SD-809 and Auspexs additional pipeline assets |
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Near-term value creation SD-809 for Huntingtons disease is expected to be approved
and launched commercially in 2016 |
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Deep pipeline and proven deuterium chemistry technology supports multiple platforms for growth |
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SD-809 is currently in Phase 3 for tardive dyskinesia and Phase 1 for Tourette syndrome |
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SD-560 (deuterated pirfenidone) is currently in development for idiopathic pulmonary fibrosis |
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Additional candidates identified for deuterium chemistry platform that
are aligned with Tevas strategy |
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Enhances Tevas mid to long-term revenue and earnings growth, profitability, and product
diversity expected to be accretive to non-GAAP EPS beginning in 2017 and meaningfully
accretive thereafter, and diversifies Tevas Specialty medicines product mix |
The acquisition of Auspex is a significant step in strengthening Tevas leadership position in
CNS and advances us into underserved movement disorder markets. We look forward to accelerating
the development and commercialization of the Auspex portfolio based on our infrastructure,
capabilities and strong commercial and R&D position in CNS. As we have outlined recently, one of
our key priorities for 2015 is to support Tevas mid to long-term growth and create value for our
shareholders with business development opportunities that are closely aligned with our core
therapeutic areas. This transaction represents a first major step with regards to that commitment
and we expect to continue this focus in the future, said Erez Vigodman, President and CEO of
Teva.
We believe that the application of Auspexs deuterium platform to known pharmaceuticals
holds great promise across a wide spectrum of neurological diseases and associated movement
disorders, including Huntingtons disease, tardive dyskinesia and Tourette syndrome.
Auspexs lead candidate, SD-809, offers compelling efficacy and safety benefits to patients,
as demonstrated by the impressive Phase 3 topline data in Huntingtons disease announced in
December 2014, said Michael Hayden, MD, PhD, Tevas President of Global R&D and Chief
Scientific Officer. Teva is well positioned to realize the robust IP potential of these
investigational products with Auspexs deuterated technology which could represent a
significant breakthrough for patients who often have no sustainable symptom relief from
their disease.
Teva has established itself as a global leader in CNS diseases, characterized by strong
management and commercial execution, said Pratik Shah, Ph.D., President and CEO of Auspex.
Importantly, the Teva organization has a commitment to patients that matches our own in
developing and commercializing treatments for patients who suffer from movement disorders.
This transaction will enhance Auspexs mission by bringing innovative therapies to patients
across the world as quickly and efficiently as possible. The transaction also marks a great
outcome for Auspex shareholders and stakeholders as it not only validates our portfolio of
drug candidates while delivering significant financial return, but it also puts our programs
into the hands of a company that has the experience and commitment to deliver our pipeline
of therapies to patients in need.
Financial Benefit to Teva
The acquisition of Auspex is expected to generate value and enhance Tevas mid to long-term
revenue and earnings growth profile. Teva expects the transaction to begin contributing to
revenues in 2016 with the anticipated launch of SD-809 for Huntingtons disease and to be
accretive to non-GAAP EPS beginning in 2017 with minimal dilution to non-GAAP EPS in the
second half of 2015 and 2016. The transaction is expected to be funded with cash on hand
and is not subject to any financing contingencies.
Closing
Under the terms of the merger agreement, an affiliate of Teva will promptly commence a
tender offer to acquire all of the outstanding shares of Auspexs common stock for $101 per
share in cash. Following the successful completion of the tender offer, Teva will acquire
all remaining shares not tendered in the tender offer through a second-step merger at the
same price as to be paid to stockholders tendering their shares in the tender offer. The
tender offer and withdrawal rights are expected to expire at 12:01 a.m., New York City time
on the 21st business day after the launch of the tender offer, unless extended in
accordance with the merger agreement and the applicable rules and regulations of the
Securities and Exchange Commission.
The consummation of the tender offer is subject to various conditions, including a minimum
tender of a majority of outstanding Auspex shares, the expiration or termination of any
applicable waiting periods under applicable competition laws, and other customary
conditions. Pending such closing conditions, Teva expects the transaction will close in
mid-2015.
Goldman, Sachs & Co. is acting as the exclusive financial advisor to Teva and Goodwin
Procter LLP is serving as legal counsel to Teva. J.P. Morgan Securities LLC is acting as the
exclusive financial advisor to Auspex and Cooley LLP is serving as legal counsel to Auspex.
Live Conference Call for Investors:
A conference call and a live webcast with slides will be hosted on Monday, March 30, 2015 at
8:30 AM EST to discuss the transaction. To access the live webcast, including the slide
presentation, please go to the Investor Relations page of Tevas website, ir.tevapharm.com,
at least 15 minutes before the start of the event to register and download or install any
necessary software. The number to call from within the U.S. is 1 (888) 771-4371, conference
ID 39358445. From international locations, the conference call can be accessed at 1 (847)
585-4405 using the same conference ID. A replay of the conference call will also be
available by calling 1 (888) 843-7419 in the U.S. or 1 (630) 652-3042 outside of the U.S.,
conference ID 3935 8445#.
About Teva
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) is a leading global pharmaceutical
company that delivers high-quality, patient-centric healthcare solutions to millions of
patients every day. Headquartered in Israel, Teva is the worlds largest generic medicines
producer, leveraging its portfolio of more than 1,000 molecules to produce a wide range of
generic products in nearly every therapeutic area. In specialty medicines, Teva has a
world-leading position in innovative treatments for disorders of the central nervous system,
including pain, as well as a strong portfolio of respiratory products. Teva integrates its
generics and specialty capabilities in its global research and development division to
create new ways of addressing unmet patient needs by combining drug development capabilities
with devices, services and technologies. Tevas net revenues in 2014 amounted to $20.3
billion. For more information, visit www.tevapharm.com.
About Auspex Pharmaceuticals
Auspex Pharmaceuticals is a late-clinical stage biopharmaceutical company dedicated to
developing innovative medicines for hyperkinetic movement disorders and other rare diseases.
Auspex employs its proprietary technology to create patent-protected, new chemical entities
from known, clinically proven therapies. The companys lead product, SD-809
(deutetrabenazine), is in final stages of development for the treatment of chorea associated
with Huntingtons disease, a neurodegenerative movement disorder that impacts cognition,
behavior and movements. In addition, Auspex is investing in the broad potential of SD-809
for the treatment of other movement disorders, including tardive dyskinesia and tics
associated with Tourettes syndrome. The companys pipeline also includes SD-560, being
developed for fibrotic conditions, and SD-1077, which is being developed for Parkinsons
disease. For further information, please visit the companys website
www.auspexpharma.com.
Tevas Safe Harbor Statement under the U. S. Private Securities Litigation Reform Act of 1995:
This release contains forward-looking statements, which are based on managements current beliefs
and expectations and involve a number of known and unknown risks and uncertainties that could
cause our future results, performance or achievements to differ significantly from the results,
performance or achievements expressed or implied by such forward-looking statements. All
statements, other than statements of historical fact, are statements that could be deemed
forward-looking statements, including statements about the planned acquisition of Auspex, the
expected financial impact and benefits to Teva of such acquisition, and anticipated milestones
and other expectations regarding Auspexs product development activities and clinical trials.
Important factors that could cause or contribute to such differences include risks relating to:
the possibility that the transaction with Auspex will not be completed, including due to the
failure to obtain the minimum tender condition; uncertainties as to the timing of the
transaction; the possibility that the expected benefits of the transaction will not be fully
realized by us or may take longer to realize than expected; future results of on-going or later
clinical trials for Auspexs product candidates, including SD-809; our ability to obtain
regulatory approvals and commercialize Auspexs product candidates following the closing and
market acceptance of such products; our ability to develop and commercialize additional
pharmaceutical products; competition for our innovative products, especially Copaxone®
(including competition from orally-administered alternatives, as well as from potential purported
generic equivalents) and our ability to migrate users to our 40 mg/mL version; the possibility of
material fines, penalties and other sanctions and other adverse consequences arising out of our
ongoing FCPA investigations and related matters; our ability to achieve expected results from the
research and development efforts invested in our pipeline of specialty and other products; our
ability to reduce operating expenses to the extent and during the timeframe intended by our cost
reduction program; our ability to identify and successfully bid for suitable acquisition targets
or licensing opportunities, or to consummate and integrate acquisitions; the extent to which any
manufacturing or quality control problems damage our reputation for quality production and
require costly remediation; increased government scrutiny in both the U.S. and Europe of our
patent settlement agreements; our exposure to currency fluctuations and restrictions as well as
credit risks; the effectiveness of our patents, confidentiality agreements and other measures to
protect the intellectual property rights of our specialty medicines; the effects of reforms in
healthcare regulation and pharmaceutical pricing, reimbursement and coverage; governmental
investigations into sales and marketing practices, particularly for our specialty pharmaceutical
products; adverse effects of political or economic instability, major hostilities or acts of
terrorism on our significant worldwide operations; interruptions in our supply chain or problems
with internal or third-party information technology systems that adversely affect our complex
manufacturing processes; significant disruptions of our information technology systems or
breaches of our data security; competition for our generic products, both from other
pharmaceutical companies and as a result of increased governmental pricing pressures; competition
for our specialty pharmaceutical businesses from companies with greater resources and
capabilities; the impact of continuing consolidation of our distributors and customers; decreased
opportunities to obtain U.S. market exclusivity for significant new generic products; potential
liability in the U.S., Europe and other markets for sales of generic products prior to a final
resolution of outstanding patent litigation; our potential exposure to product liability claims
that are not covered by insurance; any failure to recruit or retain key personnel, or to attract
additional executive and managerial talent; any failures to comply with complex Medicare and
Medicaid reporting and payment obligations; significant impairment charges relating to intangible
assets, goodwill and property, plant and equipment; the effects of increased leverage and our
resulting reliance on access to the capital markets; potentially significant increases in tax
liabilities; the effect on our overall effective tax rate of the termination or expiration of
governmental programs or tax benefits, or of a change in our business; variations in patent laws
that may adversely affect our ability to manufacture our products in the most efficient manner;
environmental risks; and other factors that are discussed in our Annual Report on Form 20-F for
the year ended December 31, 2014 and in our other filings with the U.S. Securities and Exchange
Commission. Forward-looking statements speak only as of the date on which they are made and we
assume no obligation to update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.
Auspex Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements. Any statements contained herein which do
not describe historical facts, including but not limited to, statements regarding: the proposed
transaction between Teva and Auspex; the expected timetable for completing the transaction;
strategic and other potential benefits of the transaction. Such risks and uncertainties include:
the possibility that certain closing conditions to the transaction will not be satisfied; that
required regulatory approvals for the transaction may not be obtained in a timely manner, if at
all; the ability to timely consummate the transaction and possibility that the transaction will
not be completed; and other factors that are discussed in Auspexs Annual Report on Form 10-K for
the year ended December 31, 2014 and in its other filings with the U.S. Securities and Exchange
Commission. Auspex cautions investors not to place considerable reliance on the forward-looking
statements contained in this press release. These forward-looking statements speak only as of the
date of this document, and Auspex undertakes no obligation to update or revise any of these
statements.
About the Tender Offer
THE PRESS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT AN OFFER TO BUY OR THE
SOLICITATION OF AN OFFER TO SELL ANY SHARES OF AUSPEX COMMON STOCK. THE TENDER OFFER DESCRIBED IN
THIS DOCUMENT HAS NOT YET COMMENCED.
At the time the offer is commenced, an affiliate of Teva will file a Tender Offer Statement on
Schedule TO with the United States Securities and Exchange Commission (SEC), and Auspex will
file a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the tender offer.
The Offer to Purchase, the related Letter of Transmittal and certain other offer documents, as
well as the Solicitation/Recommendation Statement, will be made available to all stockholders of
Auspex at no expense to them. The Tender Offer Statement and the Solicitation/Recommendation
Statement will be available without charge at the SECs web site, at http://www.sec.gov. Free
copies of these materials and certain other offering documents will be sent to Auspexs
stockholders by the information agent for the offer.
AUSPEX STOCKHOLDERS AND OTHER INVESTORS ARE URGED TO READ THE TENDER OFFER MATERIALS (INCLUDING
THE OFFER TO PURCHASE, RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER OFFER DOCUMENTS) AND THE
SOLICITATION/RECOMMENDATION STATEMENT, INCLUDING ALL AMENDMENTS TO THOSE MATERIALS. SUCH
DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION, WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE TENDER OFFER.
Additional Information and Where to Find It
In addition to the Solicitation/Recommendation Statement, Auspex files annual, quarterly and
current reports, proxy statements and other information with the SEC. You may read and copy any
reports, statements or other information filed by Auspex at the SEC public reference room at 100
F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.
Auspexs filings with the SEC are also available to the public from commercial document-retrieval
services and the SECs website at http://www.sec.gov.
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