Emergent BioSolutions Inc. (NYSE:EBS) and Protein Sciences Corporation (PSC), based in Meriden, Connecticut, announced that the two companies have entered into an asset purchase agreement under which Emergent will acquire PSC’s ongoing operations, such as FluBlok, a Phase III recombinant influenza vaccine candidate, and certain other assets. This agreement achieves a important component of Emergent’s stated technique for growth via acquisition of late-stage product candidates.
Under the terms of the agreement, Emergent will acquire substantially all assets of PSC, such as:
-FluBlok? (trivalent recombinant hemagglutinin vaccine). FluBlok is a Phase III influenza vaccine candidate that, if approved, could be the first recombinant cell culture influenza vaccine. FluBlok has potential for use in each seasonal and pandemic settings. The clinical program for FluBlok, which consists of four trials and much more than 6,000 participants, has demonstrated promising immunogenicity, including within the elderly. FluBlok has been granted each fast track status and priority review by FDA.
-Baculovirus Expression Vector Method (BEVS) technology. BEVS is a cell culture-based manufacturing platform utilized to manufacture FluBlok. The BEVS technology can be applied to develop vaccines and therapeutic candidates to avoid or treat a wide range of illnesses.
-Other product candidates. PSC’s other product candidates are according to the BEVS platform and include a SARS vaccine in preclinical development.
-A vaccine manufacturing facility. This facility is located in Meriden, Connecticut and consists of a 600-liter bioreactor and associated upstream and downstream capabilities.
Emergent intends to retain all of the approximately 50 PSC employees and anticipates continuing production of FluBlok in the Meriden, Connecticut facility. Emergent expects to launch out of this location. In parallel, Emergent is evaluating plans for future large-scale manufacturing of FluBlok and is considering Meriden as a web site for the facility.
In April 2008, PSC submitted to FDA a Biologics License Application (BLA) for FluBlok, including information from the Phase III clinical program. The next steps within the BLA method include readiness preparations for the upcoming FDA pre-approval inspection. Furthermore, late last year, PSC applied for a study and development grant in response to a Biomedical Advanced Investigation and Development Authority (BARDA) RFP, “Advanced Development of Recombinant Influenza Virus Vaccines.” BARDA has indicated its intention to issue one or much more awards under this RFP in late 2008.
“We are delighted concerning the opportunity to commercialize the first recombinant cell culture influenza vaccine. We believe that FluBlok will turn into a strong competitive product within the sizeable and growing seasonal influenza market and that BEVS will offer a distinctive platform for the development of a novel pandemic influenza candidate. We congratulate the management of PSC in building a manufacturing operation and for bringing FluBlok through a Phase III clinical trial to the point of a BLA submission. Emergent, using the combined resources of PSC, is properly positioned to bring this exciting product to the market successfully, according to our product development, regulatory and manufacturing experience,” stated Fuad El-Hibri, chairman and chief executive officer of Emergent BioSolutions. “The acquisition of FluBlok is consistent with Emergent’s technique of expanding its product portfolio with a vaccine candidate focused on a significant infectious illness.”
Daniel D. Adams, president and chief executive officer of Protein Sciences Corporation, said, “We are grateful that Emergent recognized the value of our lead product, FluBlok, and our proprietary BEVS technology and is supplying financial and operational assistance to assist us in bringing FluBlok by way of regulatory approval. Combining our expertises should help to make sure the continued success of FluBlok and our other strategic assets.”
William H. Narwold, chairman of the board of directors of Protein Sciences Corporation, commented, “Emergent enhances our regulatory, manufacturing and approach development capabilities and brings a confirmed track record of operating using the United States Government to deliver critical infectious illness products. It truly is for these reasons that the Board of Directors of Protein Sciences has approved this transaction and believes that our shareholders will have the opportunity to benefit from the continued growth and success of Emergent BioSolutions.”
Terms of Acquisition
Under the terms of the asset purchase agreement, the consideration paid by Emergent will incorporate:
-Up to $28 million in cash as well as the assumption of PSC liabilities, which includes trade payables associated with the Phase III clinical trials of FluBlok;
-A $20 million, 4.75%, 5-year note, convertible into Emergent common stock at a conversion cost of $12.50 per share;
-Up to $30 million in future payments according to the achievement of FluBlok commercialization milestones and net sales of FluBlok;
-A percentage of net sales of FluBlok.
The closing of this transaction, anticipated by the end of the second quarter of this year, is subject to the approval of the stockholders of PSC, the receipt of regulatory approvals as well as the satisfaction of certain conditions of closing. Emergent BioSolutions’ financial advisor on this transaction was Jefferies & Company, with Thelen Reid Brown Raysman & Steiner LLP as primary legal counsel. PSC’s financial advisor on this transaction was BMO Capital Markets, with Brenner, Saltzman & Wallman, LLP as legal counsel.
Update on Emergent BioSolutions 2008 Financial Guidance
As Emergent evaluates the impact of this acquisition on current year financial guidance, management expects revenue for 2008 to remain unchanged, between $180 and $195 million. With respect to net income, management is still evaluating present forecasts associated to PSC’s anticipated operating fees as well as the appropriate accounting treatment for the acquisition. Management expects to be in a position to update guidance for 2008 net income when the company reports financial outcomes for the second quarter of 2008, anticipated during early August.
About the Influenza Market
According to industry reports, you will find 1 billion cases of influenza every year, resulting in 250,000 to 500,000 deaths, world-wide. Within the US alone, you will find an estimated 15 million to 60 million cases and 30,000 to 40,000 deaths annually, making influenza a key public wellness concern. Young kids as well as the elderly are at a particularly high risk of infection and complications.
About FluBlok?
FluBlok is a novel recombinant subunit influenza vaccine manufactured in a cell culture medium, which represents the next-generation in flu vaccine technology. The currently licensed flu vaccines are manufactured via egg-based technologies, which presents numerous operational and market challenges. FluBlok consists of 3 recombinant hemagglutinin (rHA) proteins derived from the flu strains selected by the World Health Organization as well as the U.S. Centers for Disease Control and Prevention for every year’s seasonal flu vaccine. These proteins are produced in a proprietary cell culture and formulated without preservatives, adjuvants, or antibiotics. FluBlok has been developed as a single-dose vaccine to be administered intramuscularly. In clinical trials, FluBlok has demonstrated promising immunogenicity in both healthy adults as well as the elderly, with a positive safety profile. Preliminary evidence of protection against influenza illness has been observed in adults, as published in the April 2007 concern of JAMA? (The Journal of the American Medical Association).
About BEVS
The Baculovirus Expression Vector Technique (BEVS) is recognized as a robust and versatile tool for producing a variety of functional recombinant proteins. The BEVS manufacturing method begins by cloning the gene for the desired target protein into a virus capable of infecting insect cells (baculovirus). When these genetically engineered baculoviruses are utilised to infect insect cell cultures, these cells are “programmed” to manufacture the desired proteins.
About Emergent BioSolutions Inc.
Emergent BioSolutions Inc. is a profitable biopharmaceutical company dedicated to 1 simple mission-to defend life. We develop, manufacture and commercialize vaccines and therapeutics that assist the body’s immune technique to stop or treat illness. Our products target infectious illnesses along with other medical conditions that have resulted in important unmet or underserved public well being needs. Our marketed product, BioThrax? (Anthrax Vaccine Adsorbed), is the only vaccine approved by the U.S. Food and Drug Administration for the prevention of anthrax infection.
Emergent BioSolutions Inc.