Ipsen Biopharmaceuticals, Inc. entered into a definitive merger agreement to acquire Epizyme, Inc. (NasdaqGS:EPZM) from RP Management LLC and others for approximately $250 million on June 27, 2022. Ipsen to commence all-cash tender offer to acquire all outstanding shares of Epizyme for $1.45 per share plus a contingent value right of $1.00 per share. Each CVR will entitle its holder to deferred cash payments of $0.30 per CVR payable upon the first achievement of $250 million in aggregate net sales of Tazverik (excluding sales in Japan and Greater China) in any period of four consecutive quarters, by December 31, 2026 and $0.70 per CVR payable upon receipt of U.S. regulatory approval necessary for the commercial marketing and sale of the combination of Tazverik and R² (rituximab and lenalidomide) in second-line follicular lymphoma by January 1, 2028. The transaction will be fully financed by Ipsen's existing cash and lines of credit. As part of the transaction, Ipsen will also acquire Epizyme's first-in-class, oral SETD2 inhibitor development candidate, EZM0414, which was granted FDA Fast Track status and is currently under evaluation in a recently initiated Phase I/Ib trial in adult patients with relapsed or refractory multiple myeloma and diffuse large B-cell lymphoma, as well as a portfolio of preclinical programs focusing on epigenetic targets. If the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, Epizyme will be required to pay Ipsen a termination fee of $9,900,000.
The closing of the tender offer will be subject to customary conditions, including the tender of shares representing at least one share more than 50% of Epizyme's outstanding shares, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions. Upon the successful completion of the tender offer, Ipsen would acquire all shares not acquired in the tender through a second-step merger for the same consideration as the tendering shareholders. The Board of Directors of Epizyme has unanimously recommended that the stockholders of Epizyme tender their shares in the tender offer and other conditions. The transaction was unanimously approved by both Ipsen and Epizyme Boards of Directors. Royalty Pharma, Epizyme's largest stockholder with approximately 20.5% of Epizyme's total shares of common stock outstanding has entered into a support agreement with Ipsen pursuant to which it has agreed to tender its shares in the tender offer. The Offer initially will remain open for 20 business days, subject to possible extension on the terms set forth in the Merger Agreement. Transaction is anticipated to close by the end of the third quarter of 2022. The offer is expected to expire on August 8, 2022. As of August 5, 2022, the expiration of the offer has been extended to August 11, 2022. As of August 9, 2022, the transaction is expected to close in third quarter of 2022. The acquisition of Epizyme will immediately provide incremental sales and will leverage the U.S. commercial infrastructure. Given the level of ongoing R&D expenses, the transaction is expected to be moderately dilutive on Ipsen's core operating income until the end of 2024. The dilutive impact on 2022 core operating margin will be limited, given the expected timing of the transaction.
Barclays PLC (LSE:BARC) acted as financial advisor and Tony Chan, Daniel Lopez, Lynne T. Hirata, Michael Wiesner, David Schulman, Gargi Talukder, Shannon Yavorsky, John Narducci, Craig Falls, Danielle Mangogna, Jennifer Clarke-Smith, Matthew Rose, Kristin Petersen, Lars Mesenbrink, Harry Clark, Jeanine P. McGuinness, Ramon Galvan, Alex Talarides, Jared Mark, Virginia Ong, Alexis Smith, Jim Riley, Carrie Barclay, Deborah Abernathy and Marsha Mogilevich of Orrick, Herrington & Sutcliffe LLP acted as legal advisors to Ipsen Biopharmaceuticals, Inc. Jefferies Financial Group Inc. (NYSE:JEF) and MTS Health Partners, L.P. acted as financial advisors and Stuart M. Falber and Hal J. Leibowitz of Wilmer Cutler Pickering Hale and Dorr LLP acted as legal advisors to Epizyme, Inc. MTS Securities, LLC provided an opinion to the Board of Directors of Epizyme regarding the fairness of the offer consideration to be received by the holders of Epizyme common stock in the transaction, subject to the qualifications and limitations set forth therein. Computershare Trust Company, National Association acted as Depositary and Paying Agent and Georgeson LLC acted as information agent to Ipsen.