Firm would gain access to antibodies for inflammatory diseases and cancer as well as protein engineering technology.
Cephalon plans on acquiring Arana Therapeutics for approximately AU$318 million, or $202.7 million, in cash. The company is offering to pay AU$1.40 cash for each Arana ordinary share cum dividends and other rights. This represents a 69% premium to the closing price on February 25.
To support its bid, Cephalon acquired a 19.9% ownership position in Arana. Cephalon has acquired this stake from Arana’s two largest shareholders, Start-up Australia Ventures and Rockwell Securities Limited.
Furthermore, Cephalon says that if it obtains a relevant interest in 90% of Arana shares and the offer conditions are satisfied or waived, Cephalon will increase its offer price by AU$0.05 per share. This will be payable to all shareholders no matter when their acceptances are received.
Arana has a pipeline of biologic compounds for inflammatory diseases and cancer at various stages of discovery and development. “Arana would bolster our burgeoning inflammatory disease pipeline as well as our oncology pipeline,” remarks Frank Baldino Jr., Ph.D., 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.” Cephalon believes that it is “better equipped to take Arana’s lead compound, ART621, through clinical development and pending the success of clinical trials, to international markets,” according to Kevin Buchi, CFO at Cephalon.
Arana has a strong patent portfolio related to anti-TNF alpha antibodies and receives royalties from Abbott Laboratories and Johnson & Johnson related to Humira and Remicade, respectively. Cephalon expects these royalties largely to offset costs of development in the near term. Therefore, it is not changing its 2009 adjusted net income guidance.
Earlier this month, Cephalon exercised its option to acquire exclusive, worldwide rights to ImmuPharma’s treatment of systemic lupus erythematosus with an overall payment of $45 million. In January, the company paid $100 million for the option to buy Ception Therapeutics for its mAb treatment of pediatric eosinophilic esophagitis.