Date: 2015-07-01
Type of information: Establishment of a new subsidiary in the US
Compound:
Company: Baxter (USA - IL) Baxalta (USA - IL)
Therapeutic area: Rare diseases - Genetic diseases - Hematological diseases - Cancer - Oncology - Inflammatory diseases - Autoimmune diseases
Type agreement: establishment of a new company in the US
Action mechanism:
Disease:
Details: * On September 10, 2014, Baxter International announced that Baxalta Incorporated will be the name of the new, publicly traded biopharmaceutical company that is expected to launch in mid-2015. Last March, Baxter has announced the creation of two separate leading global healthcare companies in medical products (New Baxter) and biopharmaceuticals (Baxalta). Upon completion of the separation, Baxalta plans to trade on the New York Stock Exchange (NYSE) under the symbol BXLT. Baxter International will continue trading on the NYSE under the symbol BAX. As previously announced, the corporate headquarters of both companies will be located in northern Illinois. Baxalta will have approximately $6 billion in global revenues and be a leading provider of therapeutic treatments that save, sustain and improve the lives of people with rare conditions, chronic diseases or limited treatment options. Supported by advanced technical and manufacturing expertise, Baxalta’s broad pipeline is built on a legacy of innovation in bleeding disorders (hemophilia with Advate®, BAX855, FEIBA, Rixubis®, OBI-1/Obizur®, gene therapy... ) and immunology (Hyqvia®...), and is expanding to address unmet medical needs in niche areas of oncology, as well as technology platforms such as gene therapy. The pipeline also includes biosimilars. The company is collaborating with Coherus Bioscience on an investigational etanercept biosimilar CHS-0214. A phase 3 study has started last June in rheumatoid arthritis and Coherus is also preparing a two part study comparing CHS-0214 to Enbrel® in patients with chronic plaque psoriasis. The company is also involved in a collaboration with Momenta on development and commercialization of biosimilars.The Baxalta logo and full visual identity will be unveiled at a later date. NewBaxter will be focused on biosurgery markets (spine surgery, cardiovascular surgery and general surgery), inhaled anesthesia therapies, nutritional therapies and renal therapies (hemodialysis)
Financial terms:
Latest news: * On April 21, 2016, Baxter International and Baxalta announced that Baxter has commenced an offer to exchange up to 12,800,000 shares of Baxalta common stock that are currently owned by Baxter, which represents approximately 1.9% of the outstanding common stock of Baxalta, for shares of Baxter common stock that are validly tendered and not validly withdrawn in the exchange offer. Following the completion of the exchange offer, if Baxter disposes of all of the remaining shares of Baxalta common stock held by it in the exchange offer, Baxalta will be wholly independent from Baxter, except that certain agreements between Baxter and Baxalta will remain in place. * On July 1, 2015, Baxalta was launched as a global biopharmaceutical company dedicated to delivering transformative therapies to patients with orphan diseases and underserved conditions. The company plans to launch 20 new products by 2020. Baxalta has pioneered several innovations in recombinant protein therapies for hemophilia and other rare blood disorders, and was the first to make human plasma available for treatment. Over the past two years, Baxalta has received seven new approvals and currently has four products under regulatory review across its three areas of focus. In hematology, the company is advancing its leadership position with sustainable growth of on-market products, including Advate® [Antihemophilic Factor (Recombinant)] and FEIBA [Anti-Inhibitor Coagulant Complex (Human)]. Baxalta is also bringing next-generation products, including BAX 855, an investigational extended half-life recombinant factor VIII (rFVIII) treatment for hemophilia A to be marketed in the United States under the brand name Adynovate® [Antihemophilic Factor (Recombinant), Pegylated]. * On June 9, 2015, Baxter International announced that the Registration Statement on Form 10 filed by Baxalta Incorporated has been declared effective by the Securities and Exchange Commission ( SEC ). The Registration Statement on Form 10 includes information regarding the business and spin-off of Baxalta , which is expected to be complete on July 1, 2015 . * On June 5, 2015, Baxter International announced that its board of directors has approved the planned separation of its biopharmaceuticals business, which will be known as Baxalta Incorporated , and declared a special dividend distribution of 80.5 percent of the outstanding shares of Baxalta common stock. Baxter will retain a 19.5 percent ownership stake in Baxalta immediately following the distribution. For each share of Baxter common stock held of record as of the close of business on June 17, 2015 , Baxter shareholders will receive one share of Baxalta common stock. Shareholders will receive cash in lieu of fractional shares. The special dividend is expected to be paid on July 1, 2015 . The distribution of Baxalta common stock will complete the proposed separation and Baxalta expects to begin trading "regular way" as an independent company beginning July 1, 2015 on the New York Stock Exchange (NYSE) under the ticker symbol BXLT. Baxter expects "when-issued" trading for both Baxter and Baxalta to begin on the NYSE on June 15, 2015 under the symbol "BAX WI" for Baxter and "BXLT WI" for Baxalta. Holders of Baxter common stock are encouraged to consult with their financial advisor regarding the specific implications of selling Baxter common stock on or before the distribution date. * On February 23, 2015, Baxter International announced that Baxalta Incorporated , the biopharmaceutical company that is expected to separate from Baxter in mid-2015, will be headquartered in Northern Illinois at 1200 Lakeside Drive , Bannockburn, Ill. The long-term lease agreement for the approximately 260,000 square foot facility extends for more than a decade. * On December 10, 2014, Baxter International announced the filing of an initial Form 10 Registration Statement with the U.S. Securities and Exchange Commission ( SEC ) in connection with the company's previously announced plan to spin off its biopharmaceutical business. The filing is an important step in creating two premier global healthcare companies: Baxter International Inc. , which will focus on lifesaving medical products; and Baxalta Incorporated , which will focus on developing and marketing innovative biopharmaceuticals. The Form 10 filing outlines Baxter's intent to spin off at least 80 percent of the outstanding common stock of Baxalta through a tax-free distribution to Baxter shareholders, with Baxter retaining the remaining shares. The retained equity stake by Baxter of up to 20 percent of Baxalta's shares provides additional flexibility in the capital structures of the two new companies and enhanced value for shareholders. Baxter plans to dispose of the Baxalta common stock in a disciplined manner over a period of time not to exceed five years. The Form 10 filing provides information related to Baxalta's business, as well as historical financial statements for fiscal years 2011, 2012 and 2013 and the nine months ended September 30, 2014 . Historical financial results may not necessarily reflect what Baxalta's results from operations would have been had it been a separate, independent company. Baxalta will operate as a wholly-owned subsidiary of Baxter until the planned separation. The transaction is expected to be completed by mid-year 2015, subject to market, regulatory and certain other conditions, including final approval by the Baxter Board of Directors, receipt of a favorable opinion and/or rulings with respect to the tax-free nature of the transaction, and the effectiveness of the Form 10 registration statement filed with the Securities and Exchange Commission
Key elements of the exchange offer:
Tendering Baxter stockholders are expected to receive approximately $107.52 of Baxalta common stock for every $100 of Baxter common stock tendered and accepted in the exchange offer, subject to the upper limit described below.
Baxter will determine the ratio at which shares of Baxter common stock and Baxalta common stock will be exchanged by reference to the simple arithmetic average of the daily volume-weighted average prices of shares of Baxter common stock and Baxalta common stock on the New York Stock Exchange over a three consecutive trading day averaging period ending on and including the second trading day preceding the expiration date of the exchange offer.
The number of shares of Baxter common stock that will be accepted in the exchange offer will depend on the final exchange ratio and the number of shares of Baxter common stock tendered.
The exchange offer and withdrawal rights are scheduled to expire at 11:59 p.m., New York City time, on May 18, 2016, unless the exchange offer is extended or terminated.
Baxter currently holds 30,506,097 shares of Baxalta common stock, which represents approximately 4.5% of the outstanding common stock of Baxalta. If Baxter does not exchange all of the shares of Baxalta common stock owned by it in the exchange offer, Baxter intends to, prior to or following the completion of the exchange offer, make a contribution to Baxter's U.S. pension fund or distribute as a special dividend to all Baxter stockholders, on a pro rata basis, some or all of its remaining shares of Baxalta common stock.
If Baxalta’s proposed merger with Shire plc (“Shire”) is consummated, each share of Baxalta common stock will be converted into the right to receive both (i) $18.00 in cash and (ii) 0.1482 of an American Depositary Share of Shire. Although Shire has agreed to permit a Baxalta stockholder to elect to receive 0.4446 of a Shire ordinary share in lieu of such fraction of an American Depositary Share of Shire, the deadline for such election is expected to have passed before the exchange offer is completed. The merger transaction with Shire, which will result in a taxable gain or loss for each Baxalta stockholder, has been approved by the boards of directors of both Shire and Baxalta. Closing of the transaction is subject to approval by Baxalta and Shire shareholders, certain regulatory approvals, receipt of certain tax opinions and other customary closing conditions. The transaction is expected to close in early June 2016.
The exchange offer is designed to permit Baxter stockholders to exchange their shares of Baxter common stock for shares of Baxalta common stock at a 7% discount in value, calculated as set forth in the exchange offer materials sent to Baxter stockholders, subject to an upper limit as described below. This discount means that tendering Baxter stockholders are expected to receive approximately $107.52 of Baxalta common stock for every $100 of Baxter common stock tendered and accepted in the exchange offer, subject to an upper limit. The upper limit in the exchange offer will be 1.4026 shares of Baxalta common stock for each share of Baxter common stock tendered and accepted in the exchange offer. If the upper limit is in effect, then the exchange ratio will be fixed at that limit.
The final exchange ratio determining the number of shares of Baxalta common stock participating stockholders will receive for each share of Baxter common stock accepted in the exchange offer will be announced in a press release no later than 9:00 a.m., New York City time, on the trading day preceding the expiration date of the exchange offer (unless the exchange offer is extended). The exchange offer will expire at 11:59 p.m., New York City time, on May 18, 2016, unless terminated or extended.
The exchange offer will be subject to proration if the exchange offer is oversubscribed, and the number of shares accepted in the exchange offer may be fewer than the number of shares tendered.
Baxter is not required to complete the exchange offer unless, among other things, the private letter ruling from the Internal Revenue Service (IRS), regarding certain U.S. federal income tax consequences of the distribution by Baxter on July 1, 2015 of approximately 80.5% of the shares of Baxalta common stock to stockholders of Baxter and certain related transactions, remains in full force and effect and has not been revoked in whole or in part. The exchange offer is also subject to customary closing conditions.
As a result of the completion of the exchange offer, the number of outstanding shares of Baxter common stock will be reduced.
In oncology, the company’s late-stage pipeline capitalizes on its expertise and capabilities in rare diseases and complex therapeutics to address patients with high unmet need and difficult-to-treat cancers including myelofibrosis, a rare blood cancer, and metastatic pancreatic cancer. Baxalta recently announced the acquisition of the Oncaspar® (pegaspargase) product portfolio for acute lymphoblastic leukemia (ALL), which is expected to close in the second half of 2015.
The company also recently acquired novel technology platforms in the fields of immunology and hematology, including the acquisition of SuppreMol for autoimmune and allergic diseases and AesRx for sickle cell disease. Baxalta continues to expand its oncology pipeline through strategic partnerships, such as its partnership with Merrimack Pharmaceuticals, Inc. Merrimack’s New Drug Application for MM-398 (irinotecan liposome injection) or “nal-IRI” for the treatment of patients with metastatic adenocarcinoma of the pancreas who have been previously treated with gemcitabine-based therapy was recently accepted for review by the FDA and granted Priority Review status, and in parallel, an application for European approval is under review by the European Medicines Agency.
