Collegium Pharmaceutical, Inc. (NasdaqGS:COLL) entered into an agreement to acquire BioDelivery Sciences International, Inc. (NasdaqGS:BDSI) for approximately $580 million on February 14, 2022. Under the terms of the transaction, Collegium Pharmaceutical will commence a cash tender offer to acquire to acquire all of the outstanding shares of BioDelivery Sciences International at an offer price of $5.6 per share in cash, subject to any applicable withholding taxes and without interest, which implies a fully diluted equity value of approximately $604 million using the treasury stock method. Following the closing of the tender offer, Collegium will acquire any shares of BDSI that are not tendered in the tender offer through a second-step merger at the same consideration as paid in the tender offer. The transaction will be funded by a combination of Collegium existing cash on hand and a new $650 million secured financing from funds managed by Pharmakon Advisors, LP. The proceeds from the financing, in addition to BDSI's estimated cash at close which is expected to be $100 million, will also be used to repay the outstanding debt of both Collegium and BDSI. Upon closing of the transaction, BDSI will operate as a wholly owned subsidiary of Collegium. BDSI will pay a termination fee of $18.12 million to Collegium, in case BDSI terminates the transaction. Collegium will pay a termination fee of $12.08 million to BDSI, in case Collegium terminates the transaction.

The transaction is subject to customary closing conditions, including receipt of required regulatory approvals, waiting period (or any extension thereof) applicable to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, have expired or been terminated, the tender of more than 50% of outstanding shares of BDSI's common stock and Collegium shall have irrevocably accepted for payment all of the shares validly tendered pursuant to the offer. The offer is not subject to a financing condition. The transaction has been unanimously approved by the Board of Directors of both BDSI and Collegium. Certain stockholders of BDSI, including BDSI's executive officers and members of the BDSI Board, who beneficially own an aggregate of approximately 9.59% of the outstanding shares, have entered into Tender and Support Agreements if favor of the transaction. The offer will initially remain open for 20 business days from the date of commencement of the offer, subject to extension under certain circumstances. On February 18, 2022, Collegium commenced the offer pursuant to the merger agreement. The initial waiting period under the HSR Act with respect to the Offer expired, effective March 3, 2022. The transaction is expected to close late in the first quarter 2022. As of February 18, 2022, the tender offer will expire on March 18, 2022.

The transaction is expected to be highly accretive to earnings in 2022 and 2023. Jennifer Porter, Barbara Sicalides, Michael Crumbock, Tracey Diamond, Brad Boericke, Judy O'Grady, Stefanie Brennan and Joan Arnold of Troutman Pepper Hamilton Sanders LLP acted as legal advisors to Collegium. Jefferies LLC acted as financial advisor to Collegium. Robert E. Puopolo, Blake Liggio, Stephanie Barbanell, Arman Oruc, Paul Jin, Sarah Bock, Christina Lewis, Dylan Brown, Julie Tibbetts and Morgan Mordecai of Goodwin Procter LLP acted as legal advisors to BDSI. Moelis & Company LLC acted as financial advisor to BDSI and provided fairness opinion to BDSI Board. American Stock Transfer & Trust Company, LLC acted as transfer agent to BDSI. D.F. King & Co., Inc. acted as information agent and American Stock Transfer & Trust Company, LLC acted as depositary to Collegium. BDSI has agreed to pay Moelis & Company a transaction fee that is equal to approximately $13.6 million, of which $1.5 million was payable upon delivery of its fairness opinion and the remainder is contingent upon the closing of the Transactions, for its financial advisory services.