Veloxis Pharmaceuticals A/S’ board chairman, Michael Heffernan, said investors will find out in “the next four weeks” more details related to the $1.3 billion takeover by Tokyo-based Asahi Kasei Corp., which gets control of Envarsus XR, an improved formulation of tacrolimus for prophylaxis of organ rejection in kidney transplant patients converted from tacrolimus and for use in de novo kidney transplant patients. Envarsus XR boasts better bioavailability and controlled, smooth delivery, which means once-daily dosing, a lower total daily dose requirement, and lower peak concentrations with less fluctuation.
Board members took a hard look at prospects for the Copenhagen-based firm, Heffernan said. “We’re a one-product company. In order to grow into a diversified company, we would need to make significant additional financial investments, which brings with it potential clinical and regulatory risk.” Based on their analysis and “on all valuation methodologies that we did along with our external financial advisors, we believe this was the right time and this was the right price,” he said.
The recommended conditional voluntary public offer is for all issued and outstanding shares and warrants of Copenhagen-based Veloxis (except for treasury shares). Veloxis’ board has unanimously agreed to the deal, conducted through Asahi Kasei Pharma Denmark A/S, and the price of the offer is DKK6 (US88 cents) in cash for each share in Veloxis, other than shares and warrants owned by the two majority shareholders and a group of directors who have accepted to tender their shares at DKK4.45 for each Veloxis share. Warrant-holders will be offered a price corresponding to the share offer price or the major shareholders’ and group of directors’ share offer price, as applicable, with the deduction of the pre-fixed exercise price for each of the warrants, Veloxis said.
The two majority shareholders of Veloxis, Novo Holdings A/S and Lundbeckfond Invest A/S (which own 81.2% between them) have – along with Veloxis CEO Craig Collard, Chief Financial Officer Ira Duarte, and the rest of the group's management team and the members of Veloxis' board – irrevocably undertaken to accept the offer.
Finding a buyer was competitive, Heffernan said, touting the value of the deal to Veloxis. The DKK6 offer represents a premium of 6% compared to the 30-trading day volume-weighted average share price of DKK5.68 for the period of Oct. 14 to Nov. 22. It’s a premium of 14% compared to the 60-trading day volume-weighted average share price of DKK5.25 for the period of Sept. 2 to Nov. 22; of 36% compared to the six-month volume-weighted average share price of DKK4.41 for the period of May 23 to Nov. 22; and of 75% compared to the one-year volume-weighted average share price of DKK3.43 for the period of Nov. 23, 2018, to Nov. 22, 2019.
“The U.S. operations of Veloxis will continue to operate and [Collard] will continue to run that organization,” Heffernan said, but word regarding further fine points will have to wait, along with granularity about regulatory matters. “All of that will be laid out in the offering document,” he said.
A minority shareholder on the conference call wanted to know what would happen if he kept his shares. “The offer is a voluntary offer to all minority shareholders,” Heffernan said. “It’s your choice whether to sell your shares.” The majority shareholders who agreed to the DKK4.45 price “obviously have tremendous insight into what’s going on in the company,” he said. “We believe that DKK4.45 is a very good price, but in recognition of the fact that over the last couple of weeks, the stock has traded above that, we have agreed to offer minority shareholders DKK6.” The investor on the call, though, pointed out that the market price had approached DKK7.50, and wanted to know if Veloxis could have asked for a better offer. “There is no process for increasing that price,” Heffernan said. Veloxis shares (OTCMKTS:LFCYF) closed Friday at 88 cents.
Earlier this month, Veloxis reported product revenue for the first nine months of 2019 of $54 million, an increase of 97% compared to the same period last year. U.S. revenue rose 98% to $47.3 million; EU intake jumped 80% to $7 million. More than 96% of U.S. transplant centers have used Envarsus XR since its launch. The company had a cash balance of $35.9 million on Sept. 30.
Astellas Pharma Inc., of Tokyo, gained approval from the FDA for tacrolimus, branded Astagraf XL, in the summer of 2013 for prophylaxis of organ rejection in patients receiving a kidney transplant with mycophenolate mofetil and corticosteroids, with or without basiliximab (Simulect, Novartis AG) induction.
Also working with tacrolimus is Campbell, Calif.-based Vivus Inc., which in January 2017 entered an agreement with Selten Pharma Inc., of San Carlos, Calif., for exclusive, worldwide rights for the development and commercialization of tacrolimus and ascomycin for the treatment of pulmonary arterial hypertension and related vascular diseases. Vivus assumes all development and commercialization responsibilities. Selten assigned Vivus its license to a family of patents owned by the board of trustees of the Leland Stanford Junior University and all rights under a collection of patent applications owned by Selten. Vivus has tacrolimus at the phase II stage for PAH.