Item 8.01 Other Events.
As previously reported, on February 20, 2020, Progenics Pharmaceuticals, Inc.
("Progenics") entered into an Amended and Restated Agreement and Plan of Merger
with Lantheus Holdings, Inc. ("Lantheus Holdings") and Plato Merger Sub, Inc., a
wholly owned subsidiary of Lantheus Holdings ("Merger Sub"), pursuant to which
Merger Sub will merge with and into Progenics, with Progenics surviving as a
wholly owned subsidiary of Lantheus Holdings (the "Merger"). In connection with
the Merger, Progenics filed a definitive proxy statement, dated March 19, 2020,
and a supplement to the definitive proxy statement, dated May 14, 2020 (as
supplemented, the "Proxy Statement"), with the Securities and Exchange
Commission (the "SEC"), relating to the special meeting of its stockholders to
be held on June 16, 2020 to vote on matters related to the Merger.
As of the date of this Current Report on Form 8-K, ten securities lawsuits-six
putative class actions and four individual actions-have been filed against
Progenics and the board of directors of Progenics (the "Progenics Board")
alleging inadequate disclosure by Progenics relating to the Merger, three of
which also name Lantheus Holdings and Merger Sub as defendants. Five of ten
lawsuits were voluntarily dismissed without prejudice by plaintiffs, with no
settlements from, or other agreed obligations by, the respective defendants
thereunder.
On November 22, 2019, a purported stockholder filed a putative class action
complaint in the United States District Court for the District of Delaware,
captioned Johnson v. Progenics Pharmaceuticals, Inc., et al., Civil Action No.
1:19-cv-02183 (the "Johnson Action"), against Progenics and members of the
Progenics Board. On March 5, 2020, the Johnson Action was voluntarily dismissed
without prejudice. On November 25, 2019, a second purported stockholder filed a
putative class action complaint in the United States District Court for the
District of Delaware, captioned Thompson v. Progenics Pharmaceuticals, Inc., et
al., Civil Action No. 1:19-cv-02194, against Progenics, certain members of the
Progenics Board, Lantheus Holdings, and Merger Sub. On March 10, 2020, the
Thompson Action was voluntarily dismissed without prejudice. On November 26,
2019, a third purported stockholder filed a complaint in the United States
District Court for the Southern District of New York, captioned Wang v.
Progenics Pharmaceuticals, Inc., et al., Civil Action No. 1:19-cv-10936 (the
"Wang Action"), against Progenics and members of the Progenics Board. On June 1,
2020, the Wang Action was voluntarily dismissed without prejudice. On
December 9, 2019, a fourth purported stockholder filed a putative class action
complaint in the United States District Court for the District of New Jersey,
captioned Michael A. Bernstein IRA v. Progenics Pharmaceuticals, Inc. et al.,
Civil Action No. 2:19-cv-21200 (the "Bernstein IRA Action"), against Progenics,
members of the Progenics Board, Lantheus Holdings, and Merger Sub. On April 21,
2020, an amended complaint was filed in the Bernstein IRA Action, and on May 6,
2020, the Bernstein IRA Action was transferred to the United States District
Court for the Southern District of New York under Civil Action No.
1:20-cv-03521. On December 12, 2019, a fifth purported stockholder filed a
putative class action complaint in the United States District Court for the
District of Delaware, captioned Pill v. Progenics Pharmaceuticals, Inc., et al.,
Civil Action No. 1:19-cv-02268, against Progenics and members of the Progenics
Board. The purported stockholder voluntarily dismissed this action without
prejudice and the court closed the case on March 10, 2020. On December 20, 2019,
a sixth purported stockholder filed a complaint in the United States District
Court for the Southern District of New York, captioned Hess v. Progenics
Pharmaceuticals, Inc., et al., Civil Action No. 1:19-cv-11683 (the "Hess
Action"), against Progenics, Progenics' Chief Executive Officer and Chief
Financial Officer, and members of the Progenics Board. On April 8, 2020, an
amended complaint was filed in the Hess Action. On June 4, 2020, the Hess Action
was voluntarily dismissed without prejudice. On April 2, 2020, a seventh
purported stockholder filed a putative class action complaint in the United
States District Court for the Southern District of New York, captioned Goldstone
v. Progenics Pharmaceuticals, Inc. et al., Civil Action No. 1:20-cv-02750 (the
"Goldstone Action"), against Progenics, members of the Progenics Board, Lantheus
Holdings, and Merger Sub. On April 6, 2020, the purported stockholder in the
Johnson Action filed a new putative class action complaint in the United States
District Court for the Southern District of New York, captioned Johnson v.
Progenics Pharmaceuticals, et al., Civil Action No. 1:20-cv-02847 (the "Johnson
S.D.N.Y. Action"), against Progenics and members of the Progenics Board. On
April 8, 2020, an eighth purported stockholder filed a complaint in the United
States District Court for the Southern District of New York, captioned Krueger
v. Progenics Pharmaceuticals Inc., et al., Civil Action No. 1:20-cv-02913 (the
"Krueger Action"), against Progenics and members of the Progenics Board. On
June 3, 2020, a ninth purported stockholder filed a complaint in the United
States District Court for the Southern District of New York, captioned Sigrist
v. Progenics Pharmaceuticals, et al., Civil Action No. 1:20-cv-04238 (the
"Sigrist Action"), against Progenics and members of the Progenics Board.
The complaints in the Bernstein IRA, Goldstone, Johnson S.D.N.Y., Krueger and
Sigrist Actions (collectively, the "Merger Litigation") allege, among other
things, that Progenics and the members of the Progenics Board violated Sections
14(a) and 20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and 17 C.F.R. § 244.100 and Rule 14a-9 promulgated under the
Exchange Act, by misstating or omitting certain allegedly material information
in the registration statement filed with the SEC on November 12, 2019, the
amended registration statement filed with the SEC on March 16, 2020 and/or the
Schedule 14A proxy statement filed with the SEC on March 19, 2020 related to the
Merger. The Bernstein IRA Action also alleges that Lantheus Holdings and Merger
Sub violated Sections 14(a) and 20(a) of the Exchange
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Act. The Goldstone Action further alleges that the members of the Progenics
Board breached their fiduciary duties of care, loyalty, and good faith to the
stockholders of Progenics related to the Merger, that Progenics, Lantheus
Holdings and Merger Sub aided and abetted such breaches of fiduciary duty and
that Lantheus Holdings and Merger Sub violated Section 14(a) of the Exchange
Act. The complaints seek, among other things, injunctive relief preventing the
consummation of the Merger, damages in the event of consummation of the Merger,
declaratory relief related to disclosures in the registration statement, and
certain fees and expenses.
The parties to the Merger Litigation subsequently engaged in arm's-length
negotiations to attempt to resolve the claims asserted in the Merger Litigation,
and reached an agreement whereby the Company would file on this Current Report
on Form 8-K certain supplemental disclosures regarding the Merger. Progenics
believes that the Merger Litigation is without merit and that no supplemental
disclosure is required under applicable law. However, in order to avoid the risk
of such actions delaying or adversely affecting the Merger and to minimize the
costs, risks and uncertainties inherent in litigation, and without admitting any
liability or wrongdoing, Progenics has determined to voluntarily supplement
certain disclosures in the Proxy Statement with the supplemental disclosures set
forth below (the "Supplemental Disclosures").
Nothing in this Current Report on Form 8-K shall be deemed an admission of the
legal merit, necessity or materiality under applicable laws of any of the
disclosures set forth herein. To the contrary, Progenics specifically denies all
allegations in the complaints described above that any additional disclosure was
or is required or material.
Supplemental Disclosures In Connection with the Merger Litigation
In connection with the settlement of the Merger Litigation, Progenics has agreed
to make these supplemental disclosures to the Proxy Statement. The Supplemental
Disclosures should be read in conjunction with the disclosures contained in the
Proxy Statement, which in turn should be read in its entirety. To the extent
that information set forth in the Supplemental Disclosures differs from or
updates information contained in the Proxy Statement, the information in this
Current Report on Form 8-K shall supersede or supplement the applicable
information contained in the Proxy Statement. All page references to the Proxy
Statement and capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to such terms in the Proxy Statement.
1. The section of the Proxy Statement entitled "Lantheus Holdings Proposal I:
Approval of the Stock Issuance and Progenics Proposal I: Adoption of the
Merger Agreement-Background of the Merger and Certain Other Developments" is
hereby supplemented as follows:
A. The disclosure in the second full paragraph on page 96 is hereby amended
and restated as follows (with the new text in underline):
On April 26, 2019, the Progenics Board held a special meeting. Also present was
Mr. Fabbio. Mr. Crowley provided an update regarding recent activities with
Velan. Mr. Crowley also discussed the potential engagement of Jefferies LLC,
which is referred to in this joint proxy statement/prospectus as Jefferies,
relating to the activities of Velan and the Progenics Board's review and
consideration of potential strategic transactions, including a potential
strategic transaction with Lantheus Holdings or Party A. Following discussion
and to assist the Progenics Board as it relates to the Velan matter and the
consideration of potential strategic transactions, the Progenics Board approved
the engagement of Jefferies on substantially the same terms as were provided to
the Progenics Board. Pursuant to the terms of Jefferies' engagement and based on
the revised terms of the merger that were subsequently agreed to in February
2020, Progenics has agreed to pay Jefferies for its financial advisory services
in connection with the merger a fee in the amount of approximately $7.4 million,
excluding certain additional amounts described below that may be payable to
Jefferies based on the aggregate consideration paid to Progenics stockholders in
the merger, including payments under the CVRs. As of the date of this joint
proxy statement/prospectus, approximately $5.1 million remains payable to
Jefferies contingent upon completion of the merger. Jefferies' fee will also
include 1.5% of any amounts paid to Progenics stockholders under the CVRs, which
portion of Jefferies' fee will be paid if and when such amounts are paid in
respect of the CVRs. Notwithstanding the foregoing, if the aggregate
consideration ultimately paid to Progenics stockholders in the merger, including
payments under the CVRs, is (i) at least $8.25 and less than or equal to $9.25
per share of Progenics common stock, Jefferies' fee will be increased by
approximately $1.1 million and 2.5% of any such amount in excess of $8.25 per
share of Progenics common stock; (ii) greater than $9.25 and less than or equal
to $10.25 per share of Progenics common stock, Jefferies' fee will be increased
by an additional amount equal to 3.5% of any such amount in excess of $9.25 per
share of Progenics common stock; and (iii) greater than $10.25 per share of
Progenics common stock, Jefferies' fee will be increased by an additional amount
equal to 4.5% of any such amount in excess of $10.25 per share of Progenics
common stock.
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B. The disclosure in the last full paragraph beginning on page 99 is hereby
amended and restated as follows (with the new text in underline):
Between June 30, 2019 and July 8, 2019, representatives of Jefferies, at the
Progenics Board's instruction, contacted representatives of five potential
strategic acquirers regarding potentially acquiring Progenics (none of which
were Party A or Party B). By July 17, 2019, all such potential strategic
acquirers had declined to pursue the opportunity to bid to acquire Progenics,
except that one potential strategic acquirer expressed interest in potentially
acquiring a specific development program of Progenics. None of those potential
strategic acquirers (nor any other potential strategic acquirers other than
Party A and Lantheus Holdings) entered into a confidentiality agreement with
Progenics."
C. The disclosure in the eighth full paragraph on page 118 is hereby amended
and restated as follows (with the new text in underline):
Commencing on November 19, 2019, the Progenics Board began interviewing
financial advisors and Progenics, on the recommendation of the Progenics Board,
eventually retained BofA Securities as a financial advisor to Progenics. The
reconstituted Progenics Board believed that it was appropriate to engage a new
financial advisor at this point in time to assist the Board in its independent
assessment of the value of Progenics, the prospects for seeking additional value
from Lantheus Holdings and, in that event, assisting Progenics in negotiations
with Lantheus Holdings. The Company selected BofA Securities to act as its
financial advisor in connection with the merger on the basis of BofA Securities'
experience in transactions similar to the merger, its reputation in the
investment community and its familiarity with the Company and its business.
D. The disclosure in the third full paragraph on page 119 is hereby amended
and restated as follows (with the new text in underline):
Between December 9, 2019 and December 20, 2019, the Progenics Board held four
meetings to discuss, among other things, the progress of Korn Ferry's search for
a Chief Executive Officer, the business of Progenics, the Progenics Board's
fiduciary duties with respect to the merger, communications with stockholders
and employees, the engagement and work of BofA Securities, pre-merger
integration planning, corporate governance matters and communications with
Lantheus Holdings. The Progenics Board did not conduct another market check
because such action was not permitted under the no-solicitation provision of the
original merger agreement with Lantheus Holdings (which provision the Progenics
Board agreed to following the thorough market check conducted by Jefferies
throughout June and July 2019, which did not result in any potential strategic
acquirers other than Lantheus). Also, after the announcement of the transaction
when Progenics could respond to an unsolicited proposal under certain
circumstances, no other potential acquirer approached Progenics.
2. The section of the Proxy Statement entitled "Lantheus Holdings Proposal I:
Approval of the Stock Issuance and Progenics Proposal I: Adoption of the
Merger Agreement-Opinion of Lantheus Holdings' Financial Advisor" is hereby
supplemented as follows:
A. The disclosure in the third full paragraph on page 144 under the heading
"Lantheus Holdings Stand-Alone Valuation Analyses-Discounted Cash Flow
Analysis" is hereby amended and restated as follows (with the new text in
underline and the stricken language removed):
A discounted cash flow analysis is a traditional valuation methodology used to
derive a valuation of an asset or set of assets by calculating the "present
value" of estimated future cash flows of the asset or set of assets. "Present
value" refers to the current value of future cash flows or amounts and is
obtained by discounting those future cash flows or amounts by a discount rate
that takes into account macroeconomic assumptions and estimates of risk, the
opportunity cost of capital, expected returns and other appropriate factors. SVB
Leerink performed a discounted cash flow analysis to calculate the estimated
present value of the stand-alone, unlevered, after-tax free cash flows that
Lantheus Holdings was forecasted to generate from December 31, 2019 through
fiscal year 2023, which unlevered, after-tax free cash flows were derived from
the Lantheus Management Forecasts. SVB Leerink calculated terminal values for
Lantheus Holdings by applying perpetuity growth rates of between 0.0% to 1.0%,
which SVB Leerink based on its experience and professional judgment, given the
nature of Lantheus Holdings and its business and the industries in which it
operates, to estimated 2023 unlevered, after-tax free cash flows. The cash flows
and terminal values were then discounted to present value as of December 31,
2019 using discount rates ranging from 8.0% to 10.0%. This range of discount
rates was derived from a based on SVB Leerink's analysis of Lantheus Holdings'
weighted average cost of capital calculation for Lantheus Holdings, which SVB
Leerink performed utilizing the capital asset pricing model with inputs that SVB
Leerink determined were relevant based on publicly available data and SVB
Leerink's professional judgment, including estimated after-tax cost of debt,
derived from analyzing the cost of capital for Lantheus Holdings' comparable
companies and taking into account certain metrics including the comparable
companies' levered and unlevered betas for certain companies deemed by SVB
Leerink to be comparable to Lantheus Holdings, a historical and the equity
market risk premium, size premia and yields for U.S. treasury notes (which
inputs SVB
--------------------------------------------------------------------------------
Leerink determined based on publicly available data and SVB Leerink's
professional judgment). In performing its discounted cash flow analysis, SVB
Leerink adjusted for (i) cash balances, including cash and cash equivalents,
estimated by Lantheus Holdings management to equal approximately $93.0 million
as of December 31, 2019, (ii) term loans, estimated by Lantheus Holdings
management to equal approximately $195.0 million as of December 31, 2019, and
(iii) the estimated cash flow impact of Lantheus Holdings' available net
operating loss carryforwards and other tax attributes.
B. The disclosure in the fifth full paragraph on page 146 under the heading
"Progenics Stand-Alone Valuation Analysis-Sum-of-the-Parts Discounted
Cash Flow Analysis" is hereby amended and restated as follows (with the
new text in underline and the stricken language removed):
SVB Leerink calculated terminal values for the foregoing items by applying
perpetuity growth rates of between (10.0%) to 0.0%, which SVB Leerink estimated
based on its professional judgment and experience, given the nature of Progenics
and its business, the industries in which it operates, and the risk of generic
entry, to 2036 projected revenue, except that no terminal value was ascribed to
RELISTOR or PyL. The cash flows and terminal values were then discounted to
present value as of December 31, 2019 using discount rates ranging from 10.0% to
12.0%. This range of discount rates was derived from a based on SVB Leerink's
analysis of Progenics' weighted average cost of capital calculation for
Progenics, which SVB Leerink performed utilizing the capital asset pricing model
with inputs that SVB Leerink determined were relevant based on publicly
available data and SVB Leerink's professional judgment, including estimated
after-tax cost of debt, derived from analyzing the cost of capital for
Progenics' comparable companies and taking into account certain metrics
including the comparable companies' levered and unlevered betas for certain
companies deemed by SVB Leerink to be comparable to Progenics, a historical and
the equity market risk premium, size premia and yields for U.S. treasury notes
(which inputs SVB Leerink determined based on publicly available data and SVB
Leerink's professional judgment). From the foregoing analyses, SVB Leerink
derived a range of illustrative equity values for each product candidate and for
Progenics' share of partnership revenues, and a range of negative illustrative
present values for Progenics' unallocated corporate costs. In performing its
sum-of-the-parts discounted cash flow analysis, SVB Leerink adjusted for
(i) cash balances, including cash and cash equivalents, estimated by Progenics
management to equal approximately $42 million as of December 31, 2019, (ii)
royalty loans, estimated by Progenics management to equal approximately
$39 million as of December 31, 2019, and (iii) the estimated cash flow impact of
Progenics' available net operating loss carryforwards and other tax attributes.
3. The section of the Proxy Statement entitled "Lantheus Holdings Proposal I:
Approval of the Stock Issuance and Progenics Proposal I: Adoption of the
Merger Agreement-Opinion of Progenics' Financial Advisor" is hereby
supplemented as follows:
A. The first full paragraph and the list immediately following the first
full paragraph under the heading "Summary of Material Financial Analyses
of Progenics-Selected Publicly Traded Companies Analysis" on page 151 is
hereby amended and restated as follows (with the new text in underline
and the stricken language removed):
In performing a selected publicly traded companies analysis of Progenics, BofA
Securities reviewed publicly available financial and stock market information
for Progenics and the following eleven publicly traded companies in the
pharmaceuticals industry. The selected publicly traded companies and their
respective calendar year 2021 and calendar year 2022 observed revenue multiples
were as follows:
EV / EV /
2021E 2022E
Progenics Selected Companies Revenue Revenue
Agios Pharmaceuticals, Inc. 8.06x 6.20x
Amicus Therapeutics, Inc. 7.62x 5.16x
Clovis Oncology, Inc. 3.10x 2.26x
Corcept Therapeutics Incorporated 3.74x 4.07x
Insmed Incorporated 7.61x 4.22x
Karyopharm Therapeutics Inc. 4.12x 3.08x
Lexicon Pharmaceuticals, Inc. 1.54x 1.44x
PTC Inc. 3.58x 3.14x
Rigel Pharmaceuticals, Inc. 2.06x 1.44x
Stemline Therapeutics, Inc. 1.28x 0.87x
Y-mAbs Therapeutics, Inc. 8.15x 5.78x
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B. The disclosure in the third full paragraph on page 152 under the heading
"Summary of Material Financial Analyses of Progenics-Selected Publicly
Traded Companies Analysis" is hereby amended and restated as follows
(with the new text in underline):
The overall low to high calendar year 2021 and calendar year 2022 revenue
multiples observed for the Progenics selected companies were 1.28x to 8.15x
(with a median of 3.74x) and 0.87x to 6.20x (with a median of 3.14x),
respectively.
C. The disclosure in the sixth full paragraph on page 152 under the heading
"Summary of Material Financial Analyses of Progenics-Discounted Cash Flow
Analysis" is hereby amended and restated as follows (with the new text in
underline):
BofA Securities performed a discounted cash flow analysis of Progenics by
calculating the estimated present value as of December 31, 2019 of the
stand-alone, unlevered, after-tax free cash flows that Progenics was forecasted
to generate, based on the Progenics financial projections, during the fiscal
year ending December 31, 2020 through the fiscal year ending December 31, 2033.
BofA Securities calculated terminal values for Progenics by applying to
Progenics' stand-alone, unlevered, after-tax normalized free cash flows of
$20 million in the terminal year a selected range of perpetuity growth rates of
(10.0%) to 0.0%, which range was based on input from Progenics management. The
cash flows and terminal values were discounted to present value as of
December 31, 2019 using a selected range of discount rates of 10.50% to 14.00%,
which was based on an estimate of Progenics' weighted average cost of capital.
Progenics' implied equity value was calculated (based on information provided by
the management of Progenics) by reducing the Progenics' implied enterprise value
by the Progenics' net debt as of December 31, 2019 (based on cash and cash
equivalents of $42 million and royalty loans of $39 million as provided by
Progenics management). BofA Securities also calculated the estimated present
value (as of December 31, 2019) of the NOLs that Progenics management forecasted
would be utilized during calendar years 2019 through 2033 (with and without
change of control limitations on Progenics NOL carryforwards per section 382 of
the Internal Revenue Code). The NOLs were then discounted to present value as of
December 31, 2019 using a discount rate range of 10.50% to 14.00%. This analysis
indicated an approximate implied per share equity value reference range for the
Progenics common stock ranging from $7.01 to $9.15 without change of control
limitations on Progenics NOL carryforwards and $6.55 to $8.65 with change of
control limitations on Progenics NOL carryforwards (calculated based on
86.8 million shares of Progenics common stock and 5.7 million Progenics options
outstanding (using the treasury stock method with a weighted average strike
price of $6.26) as provided by Progenics management as of February 14, 2020).
D. The first full paragraph and the list immediately following the first
full paragraph under the heading "Summary of Material Financial Analyses
of Lantheus Holdings-Selected Publicly Traded Companies Analysis" on page
153 is hereby amended and restated as follows (with the new text in
underline and the stricken language removed):
In performing a selected publicly traded companies analysis of Lantheus
Holdings, BofA Securities reviewed publicly available financial and stock market
information for Lantheus Holdings and the following eight publicly traded
companies in the pharmaceuticals industry. The selected publicly traded
companies and their respective calendar year 2021 and calendar year 2022
observed revenue multiples were as follows:
EV / EV /
2021E 2022E
Lantheus Holdings Selected Companies Revenue Revenue
Eagle Pharmaceuticals, Inc. 2.98x 2.58x
Eckert & Ziegler Strahlen- und Medizintechnik AG 4.16x NA
Emergent BioSolutions Inc. 3.16x 3.01x
Flexion Therapeutics, Inc. 3.44x 2.37x
Guerbet SA 0.80x NA
Pacira Biosciences, Inc. 3.99x 3.62x
Supernus Pharmaceutics, Inc. 1.77x 1.52x
Vanda Pharmaceutics, Inc. 1.38x 1.22x
E. The disclosure in the fourth full paragraph on page 153 under the heading
"Summary of Material Financial Analyses of Lantheus Holdings-Selected
Publicly Traded Companies Analysis" is hereby amended and restated as
follows (with the new text in underline):
The overall low to high calendar year 2021 and calendar year 2022 revenue
multiples observed for the Lantheus Holdings selected companies were 0.80x to
4.16x (with a median of 3.07x) and 1.22x to 3.62x (with a median of 2.47x),
respectively.
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F. The disclosure in the first full paragraph on page 154 under the heading
"Summary of Material Financial Analyses of Lantheus Holdings-Discounted
Cash Flow Analysis" is hereby amended and restated as follows (with the
new text in underline):
BofA Securities performed a discounted cash flow analysis of Lantheus Holdings
by calculating the estimated present value as of December 31, 2019 of the
stand-alone, unlevered, after-tax free cash flows that Lantheus Holdings was
forecasted to generate, based on the Progenics management Lantheus financial
projections, during the fiscal year ending December 31, 2020 through the fiscal
year ending December 31, 2024. BofA Securities calculated terminal values for
Lantheus Holdings by applying to Lantheus Holdings' stand-alone, unlevered,
after-tax normalized free cash flows in the terminal year, a selected range of
. . .
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