Pennsylvania-based Cephalon Inc on Friday said that its wholly-owned subsidiary, Cephalon International Holdings Inc, plans to make a takeover offer for Arana Therapeutics Limited of Australia, a biopharmaceutical company focused on developing next generation antibody based drugs.
Attracted by Arana's pipeline of biologic compounds for inflammatory diseases and cancer, Cephalon intends to offer A$1.40 cash for each Arana ordinary share.
The total offer value is approximately A$318 million ($207 million). The offer price represents a 69 per cent premium to Arana's closing price on 25 February, 2009.
Arana independent directors recommend shareholders to accept the offer in the absence of a superior proposal.
''Arana would bolster our burgeoning inflammatory disease pipeline as well as our oncology pipeline,'' said Frank Baldino Jr, chairman and CEO of Cephalon.
''Arana has an established protein engineering technology platform that transforms proteins, including antibodies, into potent drug candidates. Its lead candidate, ART621, is a domain antibody currently in phase II trials for both psoriasis and rheumatoid arthritis. TNFs are well established targets with a high probability of success," he added.
To support its bid, Cephalon has acquired approximately 19.9 per cent stake in Arana, at A$1.40 per share from Arana's two largest shareholders, Start-up Australia Ventures Pty Ltd and Rockwell Securities Limited.
"Cephalon is offering Arana shareholders the opportunity to de-risk their investment portfolios by taking cash for their shares at a time when cash provides certainty and stability," said Kevin Buchi, chief financial officer at Cephalon.
"We are better equipped to take Arana's lead compound, ART621, through clinical development, and pending the success of clinical trials, to international markets," the CFO said.
Arana's chairman, Robin Beaumont, also supported the offer saying that ''The Cephalon offer is an attractive cash offer and provides Arana shareholders with liquidity, certainty and a substantial premium to the current share price. The independent directors of Arana, being myself and Chris Harris, unanimously recommend the offer, in the absence of a superior proposal,'' he said.
Over the past four months, Cephalon has been on a buying spree to boost its presence in inflammatory diseases.
Earlier this month, Cephalon acquired exclusive worldwide rights to the ImmuPharma investigational compound, Lupzor, which is in development for the treatment of systemic lupus erythematosus.
In January, the company announced an option to acquire privately-held Ception Therapeutics Inc, whose lead humanised monoclonal antibody compound, reslizumab, is in development for the treatment of pediatric eosinophilic esophagitis.
Founded in 1987, Cephalon is involved in research, development, and commercialisation of many unique products mainly in central nervous system, inflammatory diseases, pain, and oncology.
The company's proprietary products in the US include Amrix, Treanda, Fentora, Trisenox, Gabitril, Nuvigil and Actiq.
Cephalon's offer will be subject to certain basic conditions, including a 50.1 percent minimum acceptance condition.
Decline in Q4 net profits
Cephalon last week reported FY08 fourth quarter net earnings of $11.59 million or $0.15 per share, down from $41.76 million or $0.53 per share in the same quarter last year due to a one time charge $99 million impairment charge and higher research and development costs.
However, adjusted net income for the quarter was $113.67 million or $1.46 per share, compared to $63.11 million or $0.80 per share in the year ago quarter.
Revenues for the quarter were $540.14 million, compared to $449.97 million in the prior year quarter.
Cephalon expects first quarter 2009 sales guidance of $510-530 million, adjusted net income guidance of $89.7-96.6 million and basic adjusted income per common share guidance of $1.30-1.40.
Analysts expect the company to report earnings of $1.34 per share on revenues of $533.52 million for the first quarter.
For the full year 2009, the company reiterated its guidance total sales of $2.18-2.23 billion, adjusted net income of $452-459 million and basic adjusted income per common share guidance of $6.50 - $6.60.
Analysts expect the company to report earnings of $5.66 per share on revenues of $2.25 billion for fiscal 2009.
CEPH's shares closed Friday's trade at $65.59, down 3.74 per cent from $67.40 on the previous day, on a volume of 2.46 million shares.