Emergent Biosolutions to acquire Cangene

U.S. company seeks to boost role in biodefense market with addition of three products from Canadian company

Jeffrey Bouley
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ROCKVILLE, Md.—Looking to solidify what it sees as a leadership position in the growing biodefense market and to broaden its manufacturing capabilities with a revenue-generating fill/finish business, Emergent BioSolutions Inc. announced near the end of 2013 that it had entered into a definitive agreement with Winnipeg, Manitoba-based Cangene Corp. under which Emergent will acquire all of the outstanding common shares of Cangene in an all-cash transaction valued at $3.24 per share on a fully diluted basis for an aggregate purchase price of $222 million. 
Emergent noted that the transaction is “consistent with Emergent’s growth plan in that it diversifies the company’s revenue mix, adds commercial product sales and contributes to earnings growth.”  The transaction is expected to be accretive in 2014, exclusive of transaction-related costs.
“The addition of Cangene is expected to accelerate our growth, driven by a substantially expanded biodefense franchise, a portfolio of approved specialty therapeutics sold through an established commercial infrastructure and fill/finish manufacturing capabilities with growing contract revenues,” said  Daniel J. Abdun-Nabi, president and CEO of Emergent BioSolutions. “The combined company presents a clearly attractive financial profile with pro-forma total revenues of over $430 million and pretax operating income of approximately $55 million. This acquisition represents an important step in advancing Emergent’s leadership in specialty pharmaceuticals and positions us to drive significant growth in shareholder value.”
Cangene is a biopharmaceutical company focused on the development and commercialization of specialty therapeutics, primarily targeting biodefense applications as well as infectious disease, hematology and transplantation. Cangene has three specialty products that are included in the U.S. Strategic National Stockpile: BAT (botulism antitoxin heptavalent), VIGIV (vaccinia immune globulin intravenous) and AIGIV (anthrax immune globulin intravenous).  Cangene also has four approved commercial specialty products: WinRho SDF (Rho(d) immune globulin intravenous), HepaGam B (hepatitis B immune globulin injection), VARIZIG (Varicella zoster immune globulin) and episil. 
Cangene maintains its headquarters and its manufacturing and plasma collection facilities in Winnipeg but also has a U.S. presence in terms of facilities, with contract manufacturing facilities in Baltimore and a sales and marketing office in Philadelphia. Cangene’s biodefense revenue for its fiscal year ended July 31, 2013, was approximately $50 million. Its commercial product revenue and contract manufacturing revenue for the same period were approximately $44 million and $33 million, respectively.
 “Cangene has a history of success in medical countermeasures while building a growing, profitable product portfolio supported by a strong, focused commercial platform and an established contract manufacturing operation,” noted John Sedor, president and CEO of Cangene. “Our diversified business across biodefense, specialty pharmaceuticals and contract manufacturing is strategically consistent with Emergent’s infrastructure and vision for the future.  We are confident the Emergent team believes in what we do, in our products, in our people and in our potential.  We look forward to building a highly successful future together.”
The boards of directors of both companies have approved the transaction. As of the end of 2013, agreements were in place with shareholders who collectively control, directly or indirectly, approximately 61 percent of the outstanding common shares of Cangene, under which they have agreed to irrevocably support and vote in favor of the transaction.  The companies expected to complete the transaction in the first calendar quarter of the year.
Looking at the biodefense assets that Cangene brings to Emergent, BAT is reportedly the only FDA-licensed therapeutic for the treatment of symptomatic botulism following suspected or documented exposure to the botulinum neurotoxin serotypes A, B, C, D, E, F or G. VIGIV is an FDA-licensed therapeutic for the treatment of complications due to smallpox vaccination, including eczema vaccinatum, progressive vaccinia, severe generalized vaccinia, vaccinia infections in individuals who have skin conditions and aberrant infections induced by vaccinia virus, except in cases of isolated keratitis. AIGIV is an investigational therapeutic designed for the treatment of toxemia associated with symptomatic inhalational anthrax.
As far as Cangene’s commercial product portfolio, that is composed of four FDA-licensed, hospital-based specialty therapeutics, with WinRho SDF being a therapeutic for the treatment of immune thrombocytopenia purpurain Rho(D)-positive patients and for the suppression of Rh isoimmunization in non-sensitized Rho(D)-negative patients, otherwise known as hemolytic disease of the newborn. HepaGam B is an immune globulin for the prevention of hepatitis B recurrence following liver transplant in HBsAg-positive liver transplant patients and post-exposure prophylaxis in the following settings: acute exposure to HBsAg-positive blood, plasma or serum, perinatal exposure of infants born to HBsAg-positive mothers, sexual exposure to HBsAg-positive persons and household exposure to persons with acute HBV infection. Finally, there are VARIZIG, a post-exposure prophylaxis of varicella in high-risk individuals intended to reduce the severity of chickenpox infections, and episil, a medical device for the management and relief of pain associated with oral lesions of various etiologies, including oral mucositis/stomatitis, which may be caused by chemotherapy or radiotherapy.
Emergent Biosolutions

Jeffrey Bouley

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