Allos, AMAG see straight A's in merger deal
07-20-2011
by Kelsey Kaustinen  |  Email the author

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LEXINGTON, Mass. & WESTMINSTER, Colo.óAllos Therapeutics, Inc. and AMAG Pharmaceuticals, Inc. have announced that the two companies have entered into a definitive merger agreement by which they will combine in an all-stock merger with a total equity value of approximately $686 million. It is anticipated that the merger will result in annual cost savings synergies in the range of $55 million to $60 million, most of which are expected to be realized within the first fiscal year after the deal closes.  
 
Per the terms of the agreement, Allos stockholders will receive a fixed ratio of 0.1282 shares of AMAG common stock for each one share of Allos common stock that they hold. After the merger, AMAG stockholders will own approximately 61 percent of the combined company, while Allos stockholders will own the remaining approximately 39 percent of the combined company. The merger has been approved by both companies' boards of directors, and the deal is expected to close in the fourth quarter of this year.
 
"We are very excited about this merger as it creates a combined company with an enhanced commercial presence in attractive market segments supported by a more efficient organizational structure," said Brian J.G. Pereira, M.D., CEO of AMAG, in a press release regarding the merger. "As a new company, we will remain committed to the development and commercialization of innovative therapies for the treatment of serious and life-threatening diseases."  
 
The combined company's board of directors will consist of nine members, with five nominated by AMAG's board of directors and four nominated by Allos' board. Pereira will be the President and CEO of the combined company, while Paul Berns, President and CEO of Allos, will have a seat on the combined company's board of directors. AMAG's current chairman, Michael Narachi, will be the chairman of the combined company's board of directors. The company, which will be renamed, will be headquartered in Lexington, Mass.  
 
The merger is a strong move for both companies, due to both their compatibility and the combined strength that their portfolios of commercial products will offer. AMAG brings to the table FERAHEME (ferumoxytol injection), indicted for the treatment of iron deficiency anemia (IDA) in adult patients with chronic kidney disease. Allos, for its part, brings FOLOTYN (pralatrexate injection), indicated for use as a single agent for patients with relapsed or refractory peripheral T-cell lymphoma (PTCL).  
 
"This merger provides Allos and AMAG stockholders with a unique opportunity to benefit from a new company with a diversified portfolio of commercial products and significantly improved operating leverage," said Berns in a press release. "We believe that Allos' product development and commercial experience in oncology will be a valuable asset for the combined company and will help both brands achieve their full market potential while improving the lives of patients."
 
Both drugs have significant commercial potential, as the U.S. non-dialysis IV iron market and the U.S. market for second line peripheral T-cell lymphoma are both estimated at $400 million. Additionally, both drugs have marketing applications under review in the European Union, with regulatory decisions expected either this year or in 2012. The companies' combined unaudited cash, cash equivalents and investments totaled $373.7 million at the end of June.  
 
"Together, we will have a stronger balance sheet with the resources to further expand our portfolio through the in-licensing or acquisition of new products, providing new opportunities for employees, effective treatments for patients and enhanced value for stockholders," said Pereira.  
 
The merger is subject to approval from both companies' stockholders, as well as other customary closing conditions and clearance under the Hart-Scott-Rodino Act.
 
AMAG brought on Morgan Stanley as its financial advisor for the merger, and Cooley LLP as its legal counsel. Allos brought on J.P. Morgan Securities LLC as its financial advisor, and Latham & Watkins LLP as its legal counsel.    
 
 
SOURCE: Allos press release
Code: E07201101

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