Allos, AMAG see straight A's in merger deal

LEXINGTON, Mass. & WESTMINSTER, Colo.—AllosTherapeutics, Inc. and AMAG Pharmaceuticals, Inc. have announced that the twocompanies have entered into a definitive merger agreement by which they willcombine in an all-stock merger with a total equity value of approximately $686million. It is anticipated that the merger will result in annual cost savingssynergies in the range of $55 million to $60 million, most of which areexpected to be realized within the first fiscal year after the deal closes.

Per the terms of the agreement, Allos stockholders willreceive a fixed ratio of 0.1282 shares of AMAG common stock for each one shareof Allos common stock that they hold. After the merger, AMAG stockholders willown approximately 61 percent of the combined company, while Allos stockholderswill own the remaining approximately 39 percent of the combined company. Themerger has been approved by both companies' boards of directors, and the dealis expected to close in the fourth quarter of this year.

"We are very excited about this merger as it creates acombined company with an enhanced commercial presence in attractive marketsegments supported by a more efficient organizational structure," said BrianJ.G. Pereira, M.D., CEO of AMAG, in a press release regarding the merger. "As anew company, we will remain committed to the development and commercializationof innovative therapies for the treatment of serious and life-threateningdiseases."

The combined company's board of directors will consist ofnine members, with five nominated by AMAG's board of directors and fournominated by Allos' board. Pereira will be the President and CEO of thecombined company, while Paul Berns, President and CEO of Allos, will have aseat on the combined company's board of directors. AMAG's current chairman,Michael Narachi, will be the chairman of the combined company's board ofdirectors. The company, which will be renamed, will be headquartered inLexington, Mass.

The merger is a strong move for both companies, due to boththeir compatibility and the combined strength that their portfolios ofcommercial products will offer. AMAG brings to the table FERAHEME (ferumoxytolinjection), indicted for the treatment of iron deficiency anemia (IDA) in adultpatients with chronic kidney disease. Allos, for its part, brings FOLOTYN(pralatrexate injection), indicated for use as a single agent for patients withrelapsed or refractory peripheral T-cell lymphoma (PTCL).

"This merger provides Allos and AMAG stockholders with aunique opportunity to benefit from a new company with a diversified portfolioof commercial products and significantly improved operating leverage," saidBerns in a press release. "We believe that Allos' product development andcommercial experience in oncology will be a valuable asset for the combinedcompany and will help both brands achieve their full market potential whileimproving the lives of patients."

Both drugs have significant commercial potential, as theU.S. non-dialysis IV iron market and the U.S. market for second line peripheralT-cell lymphoma are both estimated at $400 million. Additionally, both drugshave marketing applications under review in the European Union, with regulatorydecisions expected either this year or in 2012. The companies' combined unauditedcash, cash equivalents and investments totaled $373.7 million at the end ofJune.

"Together, we will have a stronger balance sheet with theresources to further expand our portfolio through the in-licensing oracquisition of new products, providing new opportunities for employees,effective treatments for patients and enhanced value for stockholders," saidPereira.

The merger is subject to approval from both companies'stockholders, as well as other customary closing conditions and clearance underthe Hart-Scott-Rodino Act.

AMAG brought on Morgan Stanley as its financial advisor forthe merger, and Cooley LLP as its legal counsel. Allos brought on J.P. MorganSecurities LLC as its financial advisor, and Latham & Watkins LLP as itslegal counsel.

SOURCE: Allos press release