Cephalon announces ChemGenex takeover bid

Cephalon CXS Holdings Pty Ltd., a wholly-owned subsidiary of Cephalon, Inc., announced today that it intends to make a takeover bid for Australian biopharmaceutical company ChemGenex.

Kelsey Kaustinen
FRAZER, Pa. & MELBOURNE, Australia—Cephalon CXS HoldingsPty Ltd., a wholly-owned subsidiary of Cephalon, Inc., announced today that itintends to make a takeover bid for Australian biopharmaceutical company ChemGenex.The announcement was made jointly by the two companies and has unanimoussupport from the ChemGenex directors, who will recommend the bid to thecompany's shareholders and the holders of ChemGenex listed options in theabsence of a better offer.
 
 
Through another of its wholly-owned subsidiaries, CephalonInternational Holdings Inc., Cephalon agreed to subscribe for A$15 million ofChemGenex convertible notes in October 2010, and also entered into call optionagreements with Stragen International N.V. and Merck Santé S.A.S., two ofChemGenex's major shareholders. In December 2010, the company's shareholdersgave advance approval to the conversion of the notes at a general meeting. Asof today, Cephalon International has served notice to convert those notes andto exercise its call options in order to acquire in aggregate 86.4 millionshares of ChemGenex. As a result, Cephalon International will hold a total of27.57 percent of ChemGenex's issued shares.
 
"The ChemGenex board welcomes Cephalon's bid, whichrepresents an attractive premium to the current and recent trading prices ofChemGenex shares," says Brett Heading, ChemGenex chairman. "In the absence of asuperior offer, the board will unanimously recommend that ChemGenexshareholders accept the offer and realize value for their shares."
 
Cephalon's takeover bid consists of two offers:
 
• an offer of A$0.70 (US $0.72) cash for each ChemGenex share, cum dividends and other rights; and
 
• an offer of A$0.02 (US $0.02) cash for each ASX-listedChemGenex option.
 
 
The total offer value for ChemGenex's shares and listedChemGenex options is approximately A$159 million (US$163 million), and theoffer values all ChemGenex shares and options at approximately A$225 million(US$231 million).
 
After receiving advice on applicable U.S. law requirements,Cephalon will also consider extending the share offer to holders of ChemGenexAmerican Depository Receipts, so long as compliance with said requirementsisn't impracticable.
 
 
"The proposed transaction allows ChemGenex shareholders torealize cash proceeds at a significant premium to recent trading levels," saidKevin Buchi, CEO of Cephalon.
 
ChemGenex focuses primarily on hematology, and is currentlydeveloping its lead product candidate, OMAPRO. OMAPRO, intended for thetreatment of patients with chronic myeloid leukemia, recently completed PhaseIII clinical trials. ChemGenex plans to file a new drug application with theU.S. Food and Drug Administration in the second half of the year.
 
 
The takeover bid is just one of several recent businessdevelopments for Cephalon. Also this month, Cephalon has signed a definitivemerger agreement with Gemin X Pharmaceuticals, Inc., to acquire all of theiroutstanding capital stock for $225 million. In addition, Cephalon has enteredinto a technology collaboration with Champions Biotechnology Inc. Bothventures reflect Cephalon's recent focus on developing the oncology branch ofits pipeline, as does the ChemGenex takeover bid, which Buchi says "adds aninteresting late-stage opportunity to our portfolio."
 
 
In a letter to his company, Buchi notes that "bystrategically investing in a comprehensive pipeline now, Cephalon will ensurethat it has the opportunities to continue to grow far into the future." Thestatement, a reflection on Cephalon's Q4 earnings and performance, goes on toadd that the company has "five Phase III programs planned for 2011 and threeadditional Phase III programs planned for 2012," which Buchi says will providethe company with "a wealth of opportunities to effectively and efficientlydevelop a strong pipeline."
 
 
Cephalon will be finalizing and mailing out its Bidder'sStatement and ChemGenex will be finalizing and mailing out its Target Statementas soon as practicable. Cephalon is being advised by Merrill Lynch and JohnsonWinter & Slattery for the bid, and ChemGenex is being advised by CanaccordGenuity and McCullough Robertson.
 

Kelsey Kaustinen

Subscribe to Newsletter
Subscribe to our eNewsletters

Stay connected with all of the latest from Drug Discovery News.

November 2022 Issue Front Cover

Latest Issue  

• Volume 18 • Issue 11 • November 2022

November 2022

November 2022