Item 1.01. Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On July 10, 2022, Innoviva, Inc., a Delaware corporation ("Innoviva"), Innoviva
Acquisition Sub, Inc., a Delaware corporation and wholly-owned subsidiary of
Innoviva (the "Purchaser"), and La Jolla Pharmaceutical Company ("La Jolla")
entered into a definitive Agreement and Plan of Merger (the "Merger Agreement"),
pursuant to which the Purchaser will commence a tender offer (the "Offer") to
acquire all of the outstanding shares of La Jolla's common stock, par value
$0.0001 per share (the "Shares"), at a purchase price of $6.23 per share in cash
(the "Offer Price"), without interest and subject to any applicable withholding
taxes, on the terms and conditions set forth in the Merger Agreement. The Offer
Price represents Innoviva's agreement to pay $5.95 per share for La Jolla,
representing a premium of approximately 70% to the 30-day volume-weighted
average price (VWAP), and an incremental $0.28 per share for additional cash
proceeds received in connection with the divestiture of a non-core asset.
Completion of the Offer is subject to several conditions, including: (i) the
number of Shares validly tendered in the Offer and not validly withdrawn,
together with any Shares beneficially owned by Innoviva or any subsidiary of
Innoviva, equals at least one Share more than 50% of all Shares then
outstanding; (ii) the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 in respect of the transactions contemplated
by the Merger Agreement have expired or been terminated and the absence of any
injunction or legal restraint which has the effect of prohibiting the
consummation of the Offer or making the Offer or the Merger (as defined below)
illegal; and (iii) certain other customary conditions.
As soon as practicable following the consummation of the Offer, and subject to
the satisfaction or waiver of certain customary conditions, the Purchaser will
merge with and into La Jolla, with La Jolla surviving as a wholly-owned
subsidiary of Innoviva, pursuant to the provisions of Section 251(h) of the
General Corporation Law of the State of Delaware (the "DGCL"), with no
stockholder vote required to consummate the Merger (the "Merger"). Each Share
issued and outstanding immediately prior to the effective time of the Merger
(the "Effective Time"), other than (i) any Shares and shares of La Jolla's
Series C-12 Convertible Preferred Stock, par value $0.0001 per share (the
"Preferred Shares"), that are owned by or held in the treasury of La Jolla, or
owned by Innoviva, Purchaser or any other wholly-owned subsidiary of Innoviva or
(ii) any Shares in respect of which appraisal rights were perfected in
accordance with Section 262 of the DGCL, will be automatically converted into
the right to receive an amount in cash equal to the Offer Price, in cash,
without interest (the "Merger Consideration") and subject to any applicable
withholding taxes. Additionally, each Preferred Share will be automatically
converted into the right to receive an amount in cash equal to 1,724.04 times
the Offer Price, in cash, without interest and subject to any applicable
withholding taxes.
Prior to the consummation of the Effective Time, each option to purchase Shares
(each, a "La Jolla Option"), whether vested or unvested, will be terminated and
cancelled immediately prior to the Effective Time in exchange for the right of
the holder thereof to receive a lump-sum amount in cash, without interest, equal
to the excess, if any, of the Offer Price over the exercise price per share
thereof, net of any taxes withheld pursuant to the Merger Agreement. With
respect to each La Jolla Option with an exercise price that is less than or
equal to the Offer Price, such termination and cancellation will be for no
consideration.
Innoviva, the Purchaser and La Jolla have made customary representations,
warranties and covenants in the Merger Agreement, including using reasonable
best efforts to promptly consummate and make effective the transactions
contemplated by the Merger Agreement. La Jolla has agreed to (i) cause each of
the Target Companies (as defined in the Merger Agreement) to conduct, its
business and operations in the ordinary course and in accordance in all material
respects with past practice and to pay its debt and payables, as they come due
and (ii) cause each of the Target Companies to preserve intact the material
components of its current business organization and maintain its relations and
goodwill with all material suppliers, material customers, material licensors and
governmental bodies.
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Furthermore, La Jolla and the other Target Companies have agreed not to, and to
cause their respective officers, directors, employees and their respective
Representatives (as defined in the Merger Agreement) not to, directly or
indirectly; (i) solicit, initiate or knowingly facilitate or knowingly encourage
any inquiries or the making of any proposal or offer that constitutes, or would
reasonably be expected to lead to, an Acquisition Proposal (as defined in the
Merger Agreement); (ii) engage in, continue or otherwise participate in any
discussions or negotiations regarding, or furnish to any other person any
non-public information in connection with an Acquisition Proposal or any
proposal or offer that would reasonably be expected to lead to an Acquisition
Proposal; (iii) adopt any resolution for the purpose of exempting any person
(other than Innoviva and its subsidiaries) from the restriction on "business
combinations" or any similar provision contained in applicable Anti-Takeover Law
or La Jolla's organizational or other governing documents; (iv) approve,
endorse, recommend or enter into any agreement in principle, letter of intent,
merger agreement, acquisition agreement or other similar agreement relating to
any Acquisition Proposal; or (v) resolve to propose, agree or publicly announce
an intention to do any of the foregoing. Subject to the satisfaction of certain
conditions, La Jolla and its board of directors, as applicable, are permitted to
take certain actions which may, as more fully described in the Merger Agreement,
include changing the board of directors' recommendation following receipt of an
unsolicited proposal, if the board of directors of La Jolla concludes in good
faith, after consultation with La Jolla's independent financial advisors and
outside legal counsel, that such unsolicited proposal constitutes a superior
proposal and that the failure to change its recommendation would be inconsistent
with its fiduciary duties under applicable law.
The Merger Agreement contains customary termination rights for both the Innoviva
and the Purchaser, on the one hand, and La Jolla, on the other hand, including,
among others, for failure to consummate the Offer on or before October 9, 2022
(the "End Date"). If the Merger Agreement is terminated under certain
circumstances specified in the Merger Agreement (including under specified
circumstances in connection with La Jolla's entry into an agreement with respect
to a Superior Offer (as defined in the Merger Agreement)), La Jolla will be
required to pay Innoviva a termination fee of $7,225,078.81. In addition, if
the Merger Agreement is terminated by Innoviva or La Jolla because the
acceptance time for the tender offer did not occur prior to the End Date or the
tender offer expires in accordance with its terms without the Purchaser
purchasing any Shares, La Jolla will be required to reimburse Innoviva for
certain transaction expenses, not to exceed $1,500,000.
The Merger Agreement has been unanimously approved by the board of directors of
each of Innoviva, the Purchaser and La Jolla. The board of directors of La Jolla
unanimously recommends that stockholders of La Jolla tender their Shares in the
Offer.
The foregoing description of the Offer, the Merger and the Merger Agreement does
not purport to be complete and is qualified in its entirety by reference to the
Merger Agreement, which is attached hereto as Exhibit 2.1. The Merger Agreement
has been incorporated herein by reference to provide information regarding the
terms of the Merger Agreement and is not intended to modify or supplement any
factual disclosures about La Jolla, Innoviva or the Purchaser in any public
reports filed with the U.S. Securities and Exchange Commission ("SEC") by La
Jolla or Innoviva. In particular, the assertions embodied in the
representations, warranties and covenants contained in the Merger Agreement were
made only for the purposes of the Merger Agreement, were solely for the benefit
of the parties to the Merger Agreement and may be subject to limitations agreed
upon by the contracting parties, including being qualified by information in
confidential disclosure schedules provided by La Jolla in connection with the
signing of the Merger Agreement. These confidential disclosure schedules contain
information that modifies, qualifies and creates exceptions to the
representations and warranties set forth in the Merger Agreement. Moreover, the
representations and warranties in the Merger Agreement were used for the purpose
of allocating risk between La Jolla, Innoviva and the Purchaser, rather than
establishing matters of fact. Accordingly, the representations and warranties in
the Merger Agreement may not constitute the actual state of facts about La
Jolla, Innoviva or the Purchaser. The representations and warranties set forth
in the Merger Agreement may also be subject to a contractual standard of
materiality different from that generally applicable to investors under federal
securities laws. Therefore, the Merger Agreement is included with this filing
. . .
Item 8.01. Other Events.
On July 11, 2022, Innoviva and La Jolla issued a joint press release announcing
the execution of the Merger Agreement. A copy of the joint press release is
attached hereto as Exhibit 99.1 and is incorporated by reference herein.
Important Information about the Tender Offer
The Offer has not yet commenced. This document is for informational purposes
only and is neither an offer to purchase nor a solicitation of an offer to sell
any shares of La Jolla's common stock or any other securities. At the time the
Offer is commenced, a tender offer statement on Schedule TO, including an offer
to purchase, a letter of transmittal and related documents, will be filed by
Innoviva and the Purchaser with the SEC, and a solicitation/recommendation
statement on Schedule 14D-9 will be filed by La Jolla with the SEC. The Offer
will only be made pursuant to the offer to purchase, the letter of transmittal
and related documents filed as a part of the Schedule TO.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ BOTH THE TENDER OFFER STATEMENT
AND THE SOLICITATION/ RECOMMENDATION STATEMENT REGARDING THE OFFER, AS THEY MAY
BE AMENDED FROM TIME TO TIME, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION.
Investors and security holders may obtain a free copy of these statements (when
available) and other documents filed with the SEC at the website maintained by
the SEC at www.sec.gov or by directing such requests to the Information Agent
for the Offer, which will be named in the tender offer statement. Additional
copies may be obtained at no charge by contacting Innoviva at 1350 Old Bayshore
Highway Suite 400, Burlingame, CA 94010 or (650) 238-9600 or by contacting La
Jolla at 201 Jones Road, Suite 400, Waltham, MA 02451 or (617) 715-3600. In
addition, Innoviva and La Jolla file annual, quarterly and current reports and
other information with the SEC, which are also available to the public at the
SEC's website at www.sec.gov.
Cautionary Statement Regarding Forward-Looking Statements
This document includes statements that are not statements of historical fact, or
"forward-looking statements," including with respect to Innoviva's proposed
acquisition of La Jolla. Such forward-looking statements include, but are not
limited to: the ability of Innoviva and La Jolla to complete the transactions
contemplated by the Merger Agreement, including the parties' ability to satisfy
the conditions to the consummation of the Offer contemplated thereby and the
other conditions set forth in the Merger Agreement; statements about the
expected timetable for completing the transaction; Innoviva's and La Jolla's
beliefs and expectations and statements about the benefits sought to be achieved
in Innoviva's proposed acquisition of La Jolla; the potential effects of the
acquisition on both Innoviva and La Jolla; the possibility of any termination of
the Merger Agreement; and the expected benefits and success of La Jolla's
product candidates. Many of these risks and uncertainties are beyond Innoviva's
control. Investors are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties. There
can be no guarantees that the conditions to the closing of the proposed
transaction will be satisfied on the expected timetable or at all, or with
respect to pipeline products that the products will receive the necessary
regulatory approvals or that they will prove to be commercially successful. If
underlying assumptions prove inaccurate or risks or uncertainties materialize,
actual results may differ materially from those set forth in the forward-looking
statements.
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Risks and uncertainties include, but are not limited to, uncertainties as to the
timing of the Offer and the subsequent Merger; uncertainties as to how many of
La Jolla's stockholders unaffiliated with Innoviva will tender their shares in
the Offer; the risk that competing offers or acquisition proposals will be made;
the possibility that various conditions to the consummation of the Merger and
the Offer contemplated by the Merger Agreement may not be satisfied or waived;
the effects of disruption from the transactions contemplated by the Merger
Agreement and the impact of the announcement and pendency of the transactions on
La Jolla's business; the risk that stockholder litigation in connection with the
offer or the merger may result in significant costs of defense, indemnification
and liability, and diversion of management time and attention from managing La
Jolla's affairs; general industry conditions and competition; general economic
factors, including interest rate and currency exchange rate fluctuations; the
impact of pharmaceutical industry regulation and health care legislation in the
United States and internationally; global trends toward health care cost
containment; technological advances, new products and patents attained by
competitors; challenges inherent in new product development, including obtaining
regulatory approval; manufacturing difficulties or delays; financial instability
of international economies and sovereign risk; dependence on the effectiveness
of La Jolla's and Innoviva's patents and other protections for innovative
products; and the exposure to litigation, including patent litigation, and/or
regulatory actions.
La Jolla and Innoviva undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information, future events
or otherwise, except to the extent required by law. Additional factors that
could cause results to differ materially from those described in the
forward-looking statements can be found in La Jolla's and Innoviva's respective
2021 Annual Reports on Form 10-K and 2022 Quarterly Reports on Form 10-Q and La
Jolla's and Innoviva's other filings with the SEC available on the SEC's website
at www.sec.gov.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
EXHIBIT
NO. DESCRIPTION
2.1 Agreement and Plan of Merger, dated as of July 10, 2022, by and among
Innoviva, Inc., Innoviva Acquisition Sub, Inc., and La Jolla
Pharmaceutical Company.†
10.1 Support Agreement, dated July 10, 2022, by and among Innoviva, Inc.,
Innoviva Acquisition Sub, Inc., Tang Capital Partners, LP and the Kevin
C. Tang Foundation.
99.1 Joint Press Release, dated July 11, 2022, issued by Innoviva and La
Jolla.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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† Schedules and exhibits omitted pursuant to item 601(b)(2) of
Regulation S-K. Innoviva agrees to furnish supplementally a copy
of any omitted schedule or exhibit to the Securities and Exchange Commission
upon its request.
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