AMAG enters definitive merger agreement with Allos Therapeutics

AMAG Pharmaceuticals, Inc.Jul 21 2011

AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) and Allos Therapeutics, Inc. (NASDAQ: ALTH) today announced that they have entered into a definitive merger agreement under which the companies will combine in an all-stock merger with a total equity value of approximately $686 million. The transaction is expected to result in annual cost savings synergies of between $55 million and $60 million, the majority of which are expected to be realized in the first fiscal year after closing.

Under the terms of the transaction, which has been approved by the boards of directors of both companies, Allos stockholders will receive a fixed ratio of 0.1282 shares of AMAG common stock for each share of Allos common stock they own. Following the consummation of the merger, AMAG stockholders will own approximately 61 percent of the combined company and Allos stockholders will own approximately 39 percent of the combined company.

The Board of Directors of the combined company will have 9 members in total, including 5 members nominated by the Board of AMAG and 4 members nominated by the Board of Allos. Brian J.G. Pereira, MD, President and Chief Executive Officer of AMAG, will serve as President and Chief Executive Officer of the combined company, and Paul L. Berns, President and Chief Executive Officer of Allos, will serve on the combined company's Board of Directors. Michael Narachi, AMAG's current Chairman will serve as Chairman of the combined company's Board of Directors. The combined company will have headquarters in Lexington, MA and is expected to be renamed to reflect its strategic focus. The transaction is expected to close in the fourth quarter of 2011 and is structured to be a tax-free reorganization for the stockholders of both companies.

The combined company will have a portfolio of commercial products in the U.S. comprised of AMAG's FERAHEME® (ferumoxytol injection) and Allos' FOLOTYN® (pralatrexate injection). FERAHEME is indicated for the treatment of iron deficiency anemia (IDA) in adult patients with chronic kidney disease (CKD), and FOLOTYN is indicated for use as a single agent for patients with relapsed or refractory peripheral T-cell lymphoma (PTCL).

Strategic and Financial Benefits of the Transaction

• Combined company will have a commercial portfolio of products focused on high-potential markets
• The overall U.S. non-dialysis IV iron market is estimated to be $400 million. Approximately 1.6 million Americans are estimated to have non-dialysis dependent CKD and IDA, and only a fraction are treated.
• The total U.S. market for second line peripheral T-cell lymphoma is estimated to be $400 million. The total U.S. relapsed or refractory PTCL treatable population is estimated to be approximately 10,000 patients.
• Combined company to leverage customer relationships for benefit of both brands
• Common commercial call points in hematology/oncology clinics and hospitals
• Overlap in customer base expected to facilitate increased brand awareness and market penetration
• Annual estimated synergies of $55 million to $60 million from elimination of costs, the majority of which are expected to be realized in the first fiscal year after closing. One-time costs associated with the transaction are expected to total approximately $35 million to $38 million.
• Strong balance sheet for business reinvestment and further portfolio diversification
• As of June 30, 2011, the two companies had combined unaudited cash, cash equivalents, and investments of $373.7 million
• Combined company's cash position expected to be sufficient to reach cash flow positive status
• Combined company has potential to earn up to $530.5 million in ex-U.S. development and commercial milestone payments from established collaborations and partnerships. Additionally, the combined company will be eligible to receive double-digit, tiered royalties based on product sales in the partnered regions.
• Collaborations outside the U.S. with industry leaders — Takeda Pharmaceutical Company Limited (Takeda) in several ex-U.S. regions and 3Sbio in China for FERAHEME, and Mundipharma International Corporation Limited (Mundipharma) for FOLOTYN
• Global development program expected to drive expanded market opportunities for both brands
• FERAHEME marketing applications are under review in the EU, Canada and Switzerland for the treatment of IDA in adult CKD patients; regulatory decisions expected in the EU and Canada in 2011 and in Switzerland in 2012
• FERAHEME is being evaluated in a global registrational program for a broad IDA indication; completion of enrollment expected by the end of 2011
• FOLOTYN marketing application is under review in the EU for the treatment of patients with relapsed or refractory PTCL; regulatory decision expected in the EU in early 2012
• FOLOTYN will be evaluated in two global Phase 3 registrational studies exploring its activity in first-line PTCL and relapsed or refractory cutaneous T-cell lymphoma

"We are very excited about this merger as it creates a combined company with an enhanced commercial presence in attractive market segments supported by a more efficient organizational structure," said Brian J.G. Pereira, MD, CEO of AMAG. "As a new company, we will remain committed to the development and commercialization of innovative therapies for the treatment of serious and life-threatening diseases. Together, we will have a stronger balance sheet with the resources to further expand our portfolio through the in-licensing or acquisition of new products, providing new opportunities for employees, effective treatments for patients and enhanced value for stockholders."

"This merger provides Allos and AMAG stockholders with a unique opportunity to benefit from a new company with a diversified portfolio of commercial products and significantly improved operating leverage," said Paul L. Berns, CEO of Allos. "We believe that Allos' product development and commercial experience in oncology will be a valuable asset for the combined company and will help both brands achieve their full market potential while improving the lives of patients."