Spectrum Pharmaceuticals to acquire Allos Therapeutics

HENDERSON, Nev.—Spectrum Pharmaceuticals has announced thesigning of a definitive agreement with Allos Therapeutics, Inc., under whichSpectrum will acquire all outstanding shares of the Westminster, Colo.-basedbiopharmaceutical company for $1.82 per share in cash plus one Contingent ValueRight (CVR). The CVR entitles stockholders to an additional payment of $0.11per share in cash if certain European regulatory approval and commercializationmilestones are met for FOLOTYN, Allos' folate analogue metabolic inhibitor forthe treatment of patients with relapsed or refractory peripheral T-celllymphoma (PTCL).

The transaction is valued at up to $206 million on a fullydiluted basis, and $108 million net of Allos' cash balance at the end of lastyear, and Spectrum will finance the acquisition with cash on hand and arevolving credit line from Bank of America, N.A. Both companies' boards ofdirectors unanimously approved the transaction.

"For Spectrum, this acquisition adds anotherdiversified source of revenue, accelerates the development of our hematologyfranchise and affirms our commitment to becoming a leader in the treatment oflymphoma," Rajesh C. Shrotriya, M.D., chairman, CEO and president ofSpectrum Pharmaceuticals. "ZEVALIN and FOLOTYN are targeted to the samehematologists/oncologists for the treatment of different forms of lymphoma.Thus, we are well positioned to immediately leverage the combined strengths ofthe two companies, while expanding the number of cancer patients that canbenefit from our products. Because of our strong operating performance, cashreserves, fiscal discipline and a revolving credit line, we do not need toissue any equity to close this transaction."

The definitive agreement states that Specturm will purchaseall of Allos' outstanding shares for $1.82 in cash plus one CVR. The extrapayments associated with the CVR will be based on FOLOTYN gaining conditionalapproval for the treatment of patients with relapsed/refractory PTCL in Europein 2012 and achieving its first reimbursable commercial sale in at least threeEuropean Union markets by the end of 2013.

Warburg Pincus, the largest of Allos' shareholders withapproximately 24 percent of the company's outstanding shares, as well as thedirectors and select officers of Allos, have entered into tender and votingagreements, due to which stockholders have agreed to tender their shares to theoffer and vote in favor of the acquisition.

The transaction is anticipated to close in the secondquarter of this year, with the expectation that it will be accretive toSpectrum on a cash basis by the fourth quarter of 2012.

"This transaction represents an excellent strategic andcultural fit that leverages two strong brands in the hematology/oncology markettoday with potential for future growth," Paul L. Berns, president and CEOof Allos Therapeutics, said in a press release regarding the transaction."Spectrum shares our commitment to patients and their healthcareproviders, and we believe FOLOTYN will be a welcomed addition to its commercialproduct offering and diversified portfolio of development-stage drugs."

Spectrum brought on RBC Capital Markets, LLC as itsexclusive financial advisor for the transaction, and brought on Kirkland &Ellis LLP and Stradling Yocca Carlson & Rauth, P.C. as its legal advisors.Allos brought on J.P. Morgan Securities LLC as its financial advisor, andLatham & Watkins LLP as its legal counsel.

SOURCE: Spectrum Pharmaceuticals press release