Item 8.01 Other Events.
As previously disclosed, on December 12, 2020, Alexion Pharmaceuticals, Inc., a
Delaware corporation ("Alexion"), entered into an Agreement and Plan of Merger
(the "Merger Agreement") with AstraZeneca PLC, a public limited company
incorporated under the laws of England and Wales ("AstraZeneca"), Delta Omega
Sub Holdings Inc., a Delaware corporation and a wholly owned subsidiary of
AstraZeneca ("Bidco"), Delta Omega Sub Holdings Inc. 1, a Delaware corporation
and a direct, wholly owned subsidiary of Bidco ("Merger Sub I") and Delta Omega
Sub Holdings LLC 2, a Delaware limited liability company and a direct, wholly
owned subsidiary of Bidco ("Merger Sub II" and, together with Merger Sub I, the
"Merger Subs"). On the terms and subject to the conditions set forth in the
Merger Agreement, (1) Merger Sub I will merge with and into Alexion (the "First
Merger") with Alexion surviving the first merger as a wholly owned subsidiary of
Bidco, and (2) immediately following the effective time of the first merger,
Alexion will merge with and into Merger Sub II (the "Second Merger" and,
together with the First Merger, the "Transaction") with Merger Sub II surviving
the second merger as a direct wholly owned subsidiary of Bidco and an indirect
wholly owned subsidiary of AstraZeneca. On April 13, 2021, Alexion filed a
definitive proxy statement with the Securities and Exchange Commission (the
"SEC") in connection with the Transaction (the "Definitive Proxy Statement").
In connection with the Transaction, nine complaints have been filed by purported
Alexion stockholders against Alexion and its current or former directors, and,
in certain cases, AstraZeneca and the Merger Subs. The complaints are captioned
Votto v. Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-02067 (S.D.N.Y);
Wang v. Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-02095 (S.D.N.Y.); Wei
v. Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-02100 (S.D.N.Y.); Naquin
v. Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-02119 (S.D.N.Y.); Raul v.
Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-02238 (S.D.N.Y.); Parshall v.
Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-02670 (S.D.N.Y.); Davis v.
Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-01429 (E.D.N.Y.); Kent v.
Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-00441 (D. Del.); McKenzie v.
Alexion Pharmaceuticals, Inc., et al., No. 2:21-cv-01515 (E.D. Pa.)
(collectively, the "Transaction Litigation"). The complaints generally allege
that the preliminary registration statement filed with the SEC on February 19,
2021, omitted certain allegedly material information in connection with the
Transaction, and one of the complaints further alleges that the Alexion
directors breached their fiduciary duties in connection with the Transaction and
that AstraZeneca and the other entity defendants aided and abetted the alleged
breaches. The lawsuits seek various remedies, including enjoining the
consummation of the Transaction unless certain allegedly material information is
disclosed, directing dissemination of additional allegedly material disclosures,
rescission of the transaction, or rescissory damages in the event the
Transaction is consummated without such disclosures, and an accounting to the
plaintiffs for any damages allegedly suffered. Given the early stage of the
proceedings, it is impossible to predict the outcome or to estimate possible
loss or range of loss.
Alexion and AstraZeneca deny the allegations in the Transaction Litigation and
deny any alleged violations of law or any legal or equitable duty. The
defendants believe that the claims asserted in the Transaction Litigation are
without merit and no additional disclosures are required under applicable law.
However, in order to avoid the risk of the Transaction Litigation delaying or
adversely affecting the Transaction and to minimize the costs, risks and
uncertainties inherent in litigation, and without admitting any liability or
wrongdoing, the defendants have determined to voluntarily make the following
supplemental disclosures to the Proxy Statement, as described in this Current
Report on Form 8-K. Nothing in this Current Report on Form 8-K shall be deemed
an admission of the legal necessity or materiality under applicable laws of any
of the disclosures set forth herein. To the contrary, the defendants
specifically deny all allegations in the Transaction Litigation that any
additional disclosure was or is required.
Supplemental Disclosures to the Proxy Statement in Connection with the
Transaction Litigation
The following disclosures in this Current Report on Form 8-K supplement the
disclosures contained in the Proxy Statement and should be read in conjunction
with the disclosures contained in the Proxy Statement, which in turn should be
read in its entirety. All page references are to the Proxy Statement and terms
used below, unless otherwise defined, shall have the meanings ascribed to such
terms in the Proxy Statement.
The section of the Definitive Proxy Statement entitled "THE MERGER
PROPOSAL-Opinion of Alexion's Financial Advisor-Summary of Material Financial
Analyses of Alexion" is amended and supplemented as follows:
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The last paragraph on page 66 and the first full paragraph on page 67 of the
Definitive Proxy Statement under the subheading "Selected Publicly Traded
Companies Analysis" are hereby amended and restated in their entirety to read as
follows:
BofA Securities reviewed publicly available financial and stock market
information of the seven selected publicly traded companies in the
biopharmaceutical industry set forth in the table below.
BofA Securities reviewed, among other things, the closing price per share for
each selected company as of December 11, 2020, as a multiple of Wall Street
analyst consensus estimates of calendar year 2021 and 2022 earnings per share
(''EPS'') for the applicable company unburdened by stock based compensation and
amortization of purchased intangibles (such EPS, unburdened by stock based
compensation and amortization of purchased intangibles, is referred to in this
section as ''Non-GAAP EPS,'' and such multiples are referred to in this section
as ''2021E Price/ Non-GAAP EPS'' and ''2022E Price/ Non-GAAP EPS''). Financial
data of the selected companies were derived from their public filings and
publicly available Wall Street research analysts' estimates published by FactSet
as of December 11, 2020. The overall low to high 2021E Price/ Non-GAAP EPS
multiples observed for the selected companies were 8.1x to 16.4x (with a mean of
11.1x and median of 9.6x). The results of this review were as follows:
Selected Company 2021E Price / Non-GAAP EPS 2022E Price / Non-GAAP EPS
AbbVie Inc. 8.4x 7.6x
Bristol-Myers Squibb 8.1x 7.4x
Company
Amgen, Inc. 13.3x 12.4x
Gilead Sciences, Inc. 9.2x 9.3x
Regeneron 12.9x 12.2x
Pharmaceuticals Inc.
Biogen Inc. 9.6x 9.8x
UCB SA 16.4x 14.3x
Mean 11.1x 10.4x
Median 9.6x 9.8x
The first table and second paragraph on page 68 of the Definitive Proxy
Statement under the subheading "Selected Precedent Transactions Analysis" are
hereby amended and restated in their entirety to read as follows:
For each of these transactions, BofA Securities reviewed the enterprise values
implied for each target company based on the consideration paid in the selected
transaction, as multiples of estimates of the target company's earnings before
interest, taxes, depreciation and amortization (''EBITDA'') (unburdened by
stock-based compensation), for the calendar year in which the applicable
transaction was announced if the transaction was announced prior to June 30, and
the calendar year following the calendar year in which the applicable
transaction was announced if the transaction was announced after June 30, or
''CY EBITDA,'' and based on publicly available information at that time.
Enterprise
Value /
Date CY
Announced Target Acquiror EBITDA
06/25/19 Allergan plc AbbVie Inc. 10.9x
01/03/19 Celgene Corporation Bristol-Myers Squibb 8.7x
Company
05/08/18 Shire plc Takeda 11.6x
Pharmaceutical
Company Limited
01/26/17 Actelion Ltd Johnson & Johnson 28.2x
01/11/16 Baxalta Incorporated Shire plc 14.5x
11/17/14 Allergan plc Actavis plc 16.6x
02/16/11 Genzyme Corporation Sanofi-aventis 6.9x
03/12/09 Genentech, Inc. Roche Holdings, Inc. 14.4x
03/09/09 Schering-Plough Merck & Co., Inc. 10.6x
Corporation
01/25/09 Wyeth Pfizer Inc. 8.0x
Top Quartile: 14.5x
Median: 11.3x
Bottom Quartile: 9.8x
The third full paragraph on page 68 of the Definitive Proxy Statement under the
subheading "Selected Precedent Transactions Analysis" is hereby amended and
supplemented as follows (with new text underlined and bold):
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Based on BofA Securities' review of the enterprise values to EBITDA multiples
for the selected transactions and on its professional judgment and experience,
BofA Securities applied an enterprise value to EBITDA multiple reference range
of 9.5x to 14.5x to Alexion management's estimate of Alexion's calendar year
2021 EBITDA (unburdened by stock-based compensation), as reflected in the
Alexion management unaudited PTRS Alexion projections, to calculate a range of
implied enterprise values for Alexion. BofA Securities then calculated an
implied equity value reference range per share of Alexion common stock (rounded
to the nearest $1.00) for Alexion by subtracting from this range of implied
enterprise values the net debt of Alexion as of September 30, 2020 of $295
million, as reflected in Alexion public filings, and dividing the result by a
number of fully-diluted shares of Alexion common stock outstanding as of
December 9, 2020 (calculated on a treasury stock method basis, based on
information provided by the management of Alexion). This analysis indicated the
following approximate implied equity value reference ranges per share of Alexion
common stock (rounded to the nearest $1.00), as compared to the implied merger
consideration value:
The first full paragraph on page 69 of the Definitive Proxy Statement under the
subheading "Discounted Cash Flow Analysis" is hereby amended and supplemented as
follows (with new text underlined and bold):
BofA Securities performed a discounted cash flow analysis of Alexion to
calculate a range of implied present values per share of Alexion common stock
utilizing estimates of the standalone, unlevered, after-tax free cash flows
Alexion was expected to generate over the period from September 30, 2020 through
December 31, 2040 based on the Alexion management unaudited PTRS Alexion
projections. Per Alexion management guidance, the analysis assumed no cash flows
and terminal value for Alexion beyond 2040. The cash flows were discounted to
present value as of September 30, 2020, utilizing mid-year discounting
convention, and using a discount rate range of 7.0% to 9.5%, which was based on
an estimate of Alexion's weighted average cost of capital, derived using the
capital asset pricing model. BofA Securities then calculated implied equity
value reference ranges per share of Alexion common stock (rounded to the nearest
$1.00) for Alexion by deducting from this range of present values, Alexion's net
debt as of September 30, 2020 of $295 million, as reflected in Alexion public
filings and dividing the result by a number of fully-diluted shares of Alexion
common stock outstanding (calculated on a treasury stock method basis, based on
information provided by the management of Alexion). This analysis indicated the
following approximate implied equity value reference range per share of Alexion
common stock (rounded to the nearest $1.00) for Alexion, as compared to the
implied merger consideration value:
The second and third bullet points on page 70 of the Definitive Proxy Statement
under the subheading "Other Factors" are hereby amended and supplemented as
follows (with new text underlined and bold and deleted text struck through):
• Wall Street Analysts Price Targets. BofA Securities reviewed certain publicly
available equity research analyst price targets of twenty Wall Street research
analysts for the shares of Alexion common stock available as of December 11,
2020, and noted that the range of such price targets discounted by one year at
Alexion's estimated mid-point cost of equity of 8.25% and rounded to the
nearest $1.00) was $110 to $165.
• Premia Paid Analysis. BofA Securities reviewed, among other things, the premia
paid in twenty two selected public company pharmaceutical and biopharmaceutical
acquisitions in relation to each target company's (i) closing share price on
the day prior to announcement of the applicable transaction, and (ii) highest
closing share price during the 52-week period prior to announcement of the
applicable transaction (referred to in this section as the ''52-Week High'').
The 25th percentile, median and 75th percentile premia to the closing price on
the day prior to announcement of the selected transactions were observed to be
38%, 47% and 65%, respectively. The 25th percentile, median and 75th percentile
premia to the 52-Week High closing share price of the selected transactions
were observed to be 10%, 32% and 57%, respectively. The 25th percentile, median
and 75th percentile premia to the closing price on the day prior to
announcement of the selected mixed consideration transactions were observed to
be 34%, 39% and 54%, respectively. The 25th percentile, median and 75th
percentile premia to the 52-Week High closing share price of the selected mixed
consideration transactions were observed to be 1%, 6% and 36%, respectively.
Based on this review, BofA Securities applied (i) an illustrative premia
reference range of 30% to 55% to the closing price per share of Alexion common
stock on December 11, 2020, and (ii) an illustrative premia reference range of
5% to 35% to the 52-Week High of the shares of Alexion common stock as of
December 11, 2020, to derive approximate implied equity value reference ranges
per share of Alexion common stock (rounded to the nearest $1.00) for Alexion,
of $157 to $188 and $134 to $173, respectively.
The section of the Definitive Proxy Statement entitled "THE MERGER
PROPOSAL-Opinion of Alexion's Financial Advisor-Summary of Material Financial
Analyses of AstraZeneca" is amended and supplemented as follows:
The first and second paragraphs on page 71 of the Definitive Proxy Statement
under the subheading "Selected Publicly Traded Companies Analysis" are hereby
amended and restated in its entirety to read as follows:
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BofA Securities reviewed publicly available financial and stock market
information of ten selected publicly traded companies in the pharmaceutical and
biopharmaceutical industry set forth in the table below.
BofA Securities reviewed, among other things, the closing price per share for
each selected company as of December 11, 2020, as a multiple of Wall Street
analyst consensus estimates of calendar year 2021 and 2022 EPS for the
applicable company (burdened by stock-based compensation and unburdened by
amortization of purchased intangibles). Financial data of the selected companies
were derived from their public filings and publicly available Wall Street
research analysts' estimates published by FactSet as of December 11, 2020. The
results of this review were as follows:
Selected Company 2021E Price / EPS 2022E Price / EPS
Johnson & Johnson 17.8x 16.3x
Roche Holding AG 15.1x 14.2x
Pfizer Inc. 14.4x 14.0x
Merck & Co., Inc. 14.4x 13.8x
Novartis AG 15.0x 13.9x
Novo Nordisk A/S 21.6x 19.6x
Eli Lilly and Company 19.9x 18.5x
Sanofi-aventis 12.8x 11.4x
GlaxoSmithKline plc 13.0x 12.1x
Vertex, Inc. 23.5x 20.8x
Mean 16.8x 15.5x
Median 15.0x 14.1x
The first full paragraph on page 72 of the Definitive Proxy Statement under the
subheading "Discounted Cash Flow Analysis" is hereby amended and supplemented as
follows (with new text underlined and bold):
BofA Securities performed a discounted cash flow analysis of AstraZeneca to
calculate a range of implied present values per AstraZeneca ADS utilizing
estimates of the standalone, unlevered, after-tax free cash flows AstraZeneca
was expected to generate over the period from September 30, 2020 through
December 31, 2030 based on the Alexion management unaudited AstraZeneca
projections. BofA Securities calculated terminal values for AstraZeneca by
applying a range of perpetuity growth rates of negative 3.0% to positive 1.0%
based on Alexion management guidance, to the terminal year cash flows. The cash
flows and the terminal year values were discounted to present value as of
September 30, 2020, utilizing mid-year discounting convention, and using
discount rates ranging from 6.0% to 7.5%, which were based on an estimate of
AstraZeneca's weighted average cost of capital, derived using the capital asset
pricing model. BofA Securities then calculated implied equity value reference
ranges per AstraZeneca ADS (rounded to the nearest $1.00) for AstraZeneca by
deducting from this range of present values AstraZeneca's net debt as of
September 30, 2020 of $15,185 million, as reflected in AstraZeneca public
filings and dividing the result by a number of fully-diluted AstraZeneca
ordinary shares outstanding (calculated on a treasury stock method basis, based
on information provided by the management of AstraZeneca and Alexion). This
analysis indicated the following approximate implied equity value reference
range per AstraZeneca ADS (based on there being 0.5 of an AstraZeneca ordinary
share underlying each AstraZeneca ADS and rounded to the nearest $1.00) for
AstraZeneca, as compared to the closing price of the AstraZeneca ADSs on
December 11, 2020 of $54.27:
The second bullet point on page 72 of the Definitive Proxy Statement under the
subheading "Other Factors" is hereby amended and supplemented as follows (with
new text underlined and bold and deleted text struck through):
• Wall Street Analysts Price Targets. BofA Securities reviewed certain publicly
available equity research analyst price targets of twenty Wall Street research
analysts for the AstraZeneca ordinary shares available as of December 11, 2020,
and noted that the range of such price targets (discounted by one year at
AstraZeneca's estimated mid-point cost of equity of 6.75% and assuming 0.757
GBP / USD exchange rate and rounded to the nearest $1.0) was $45 to $74.
Additional Information and Where to Find It
In connection with AstraZeneca's proposed acquisition of Alexion (the "proposed
transaction"), AstraZeneca filed with the SEC a registration statement on Form
F-4 which includes a proxy statement of Alexion and a prospectus of AstraZeneca.
The registration statement was declared effective by the SEC on April 12, 2021,
and mailing of the definitive joint proxy statement/prospectus to the
shareholders of Alexion occurred on or about April 12, 2021. Each of Alexion and
AstraZeneca may also file other relevant documents with the SEC regarding the
proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS
THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO
THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME
AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION. Investors and security holders will be able to obtain free
copies of the registration statement and the definitive proxy
statement/prospectus and other documents containing important information about
Alexion, AstraZeneca and the proposed transaction through the website maintained
by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by
Alexion will be available free of charge on Alexion's website at
http://www.alexion.com or by contacting Alexion's Investor Relations Department
by email at InvestorRelations@alexion.com. Copies of the documents filed with
the SEC by AstraZeneca will be available free of charge on AstraZeneca's website
at https://www.astrazeneca.com/investor-relations.html or by contacting
AstraZeneca's Investor Relations department by email at
global-mediateam@astrazeneca.com.
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Participants in the Solicitation
Alexion, AstraZeneca, their respective directors and certain of their executive
officers and other employees may be deemed to be participants in the
solicitation of proxies from Alexion's shareholders in connection with the
proposed transaction. Information about Alexion's directors and executive
officers is available in Alexion's proxy statement for its 2020 annual meeting
of shareholders, which was filed with the SEC on March 26, 2020, Alexion's
Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, which
was filed with the SEC on February 16, 2021, and other documents subsequently
filed by Alexion with the SEC. Information about AstraZeneca's directors and
executive officers is available in AstraZeneca's Form 20-F filed with the SEC on
February 16, 2021, and other documents subsequently filed by AstraZeneca with
the SEC. Other information regarding the participants in the proxy solicitations
and a description of their direct and indirect interests, by security holdings
or otherwise, are contained in the definitive joint proxy statement/prospectus
filed with the SEC on April 12, 2021 and other relevant materials to be filed
with the SEC regarding the proposed transaction when they become available. Free
copies of these documents may be obtained as described in the paragraphs above.
No Offer Or Solicitation
This communication is not intended to and shall not constitute an offer to buy
or sell or the solicitation of an offer to buy or sell any securities, or a
solicitation of any vote or approval, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made, except by means of a
prospectus meeting the requirements of Section 10 of the U.S. Securities Act of
1933, as amended.
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. You can generally identify
forward-looking statements by the use of forward-looking terminology such as
"anticipate," "believe," "continue," "could," "estimate," "expect," "explore,"
"evaluate," "intend," "may," "might," "plan," "potential," "predict," "project,"
"seek," "should," or "will," or the negative thereof or other variations thereon
or comparable terminology. These forward-looking statements are only predictions
and involve known and unknown risks and uncertainties, many of which are beyond
Alexion's and AstraZeneca's control. Statements in this communication regarding
Alexion, AstraZeneca and the combined company that are forward-looking,
including anticipated benefits of the proposed transaction, the impact of the
proposed transaction on Alexion's and AstraZeneca's businesses and future
financial and operating results, the amount and timing of synergies from the
proposed transaction, the terms and scope of the expected financing for the
proposed transaction, the aggregate amount of indebtedness of the combined
company following the closing of the proposed transaction, are based on
management's estimates, assumptions and projections, and are subject to
significant uncertainties and other factors, many of which are beyond Alexion's
and AstraZeneca's control. These factors include, among other things, market
factors, competitive product development and approvals, pricing controls and
pressures (including changes in rules and practices of managed care groups and
institutional and governmental purchasers), economic conditions such as interest
rate and currency exchange rate fluctuations, judicial decisions, claims and
concerns that may arise regarding the safety and efficacy of in-line products
and product candidates, changes to wholesaler inventory levels, variability in
data provided by third parties, changes in, and interpretation of, governmental
regulations and legislation affecting domestic or foreign operations, including
tax obligations, changes to business or tax planning strategies, difficulties
and delays in product development, manufacturing or sales including any
potential future recalls, patent positions and the ultimate outcome of any
litigation matter. Additional information concerning these risks, uncertainties
and assumptions can be found in Alexion's and AstraZeneca's respective filings
with the SEC, including the risk factors discussed in Alexion's most recent
Annual Report on Form 10-K, as updated by its Quarterly Reports on Form 10-Q, in
AstraZeneca's most recent Annual Report on Form 20-F and in each company's
future filings with the SEC. Important risk factors could cause actual future
results and other future events to differ materially from those currently
estimated by management, including, but not limited to, the risks that: a
condition to the closing the proposed acquisition may not be satisfied? a
regulatory approval that may be required for the proposed acquisition is
delayed, is not obtained or is obtained subject to conditions that are not
anticipated? AstraZeneca is unable to achieve the synergies and value creation
contemplated by the proposed acquisition? AstraZeneca is unable to promptly and
effectively integrate Alexion's businesses? management's time and attention is
diverted on transaction related issues? disruption from the transaction makes it
more difficult to maintain business, contractual and operational relationships?
the credit ratings of the combined company declines following the proposed
acquisition? legal proceedings are instituted against Alexion, AstraZeneca or
the combined company? Alexion, AstraZeneca or the combined company is unable to
retain key personnel? and the announcement or the consummation of the proposed
acquisition has a negative effect on the market price of the capital stock of
Alexion or AstraZeneca or on Alexion's or AstraZeneca's operating results. No
assurances can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of them do occur,
what impact they will have on the results of operations, financial condition or
cash flows of Alexion or AstraZeneca. Should any risks and uncertainties develop
into actual events, these developments could have a material adverse effect on
the proposed transaction and/or Alexion or AstraZeneca, AstraZeneca's ability to
successfully complete the proposed transaction and/or realize the expected
benefits from the proposed transaction. You are cautioned not to rely on
Alexion's and AstraZeneca's forward-looking statements. These forward-looking
statements are and will be based upon management's then-current views and
assumptions regarding future events and operating performance, and are
applicable only as of the dates of such statements. Neither Alexion nor
. . .
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ALEXION PHARMACEUTICALS, INC. 
