Pfizer to Acquire Anacor – Business Wire (press release)

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NEW YORK & PALO ALTO, Calif.–()–Pfizer Inc. (NYSE:PFE) and Anacor Pharmaceuticals, Inc. (NASDAQ:ANAC)
today announced that they have entered into a definitive merger
agreement under which Pfizer will acquire Anacor for $99.25 per Anacor
share, in cash, for a total transaction value, net of cash, of
approximately $5.2 billion, which assumes the conversion of Anacor’s
outstanding convertible notes. The Boards of Directors of both companies
have unanimously approved the transaction. Anacor’s flagship asset,
crisaborole, a differentiated non-steroidal topical PDE4 inhibitor with
anti-inflammatory properties, is currently under review by the U.S. FDA
for the treatment of mild-to-moderate atopic dermatitis, commonly
referred to as eczema.

“We believe the acquisition of Anacor represents an attractive
opportunity to address a significant unmet medical need for a large
patient population with mild-to-moderate atopic dermatitis, which
currently has few safe topical treatments available,” said Albert
Bourla, Group President of Pfizer’s Global Innovative Pharma and Global
Vaccines, Oncology and Consumer Healthcare Businesses. “Crisaborole is a
differentiated asset with compelling clinical data that, if approved,
has the potential to be an important first-line treatment option for
these patients and the physicians who treat them.”

“Anacor will be a strong fit with Pfizer’s innovative business, further
supporting our strategic focus on Inflammation and Immunology, and is
expected to enhance near-term revenue growth for the innovative
business. Our dedicated Inflammation and Immunology group has strong
existing in-market franchises with Enbrel and Xeljanz, as well as a
robust mid-stage pipeline, and this acquisition has the potential to add
a near-term U.S. product launch. We believe we are well positioned to
maximize crisaborole’s commercial potential through our strong
relationships with pediatricians and primary care physicians,” continued
Bourla.

In both of its Phase 3 pivotal studies, crisaborole achieved
statistically significant results on all primary and secondary endpoints
and in March 2016, the FDA accepted for review Anacor’s New Drug
Application seeking approval of crisaborole for the potential treatment
of mild-to-moderate atopic dermatitis in children and adults. The
Prescription Drug User Fee Act (PDUFA) goal date for the completion of
the FDA’s review is January 7, 2017. If approved, Pfizer believes peak
year sales for crisaborole have the potential to reach or exceed $2.0
billion.

“Today marks the beginning of an exciting new chapter for Anacor, which
we believe will deliver significant value to our shareholders,” said
Paul L. Berns, Anacor’s Chairman and Chief Executive Officer. “We have a
deep respect for Pfizer, and it is clear that they share our commitment
to addressing the significant unmet medical needs in inflammatory
disease. We are proud of the innovative company that our team has built
and are confident that Pfizer will help accelerate Anacor’s important
mission given the strength of its global platform and resources.”

Atopic dermatitis is a common, relapsing, chronic, inflammatory skin
disorder, with patients displaying a chronic rash characterized by
inflammation and itching, often occurring in folds of the skin with
symptoms lasting up to 14 days or more. Approximately 18 to 25 million
people in the United States suffer from this condition, including
between 8 and 18% of infants and children. Atopic dermatitis has been
considerably underdiagnosed due to the lack of approved effective
systemic agents, and limitations of current topical agents. There have
been no new molecular entities for atopic dermatitis in the last 15
years.

Anacor also holds the rights to Kerydin, a topical treatment for
onychomycosis (toenail fungus) that is distributed and commercialized by
Sandoz Inc. in the U.S.

Pfizer anticipates financing the transaction through existing cash.
Pfizer does not expect the transaction to impact its current 2016
financial guidance. Pfizer expects the transaction to be slightly
dilutive to Adjusted Diluted Earnings Per Share (EPS)(1) in
2017 with accretion to Adjusted Diluted EPS(1) beginning in
2018 and increasing thereafter.

Under the terms of the merger agreement, a subsidiary of Pfizer will
commence a cash tender offer to purchase all of the outstanding shares
of Anacor common stock for $99.25 per share in cash. The closing of the
tender offer is subject to customary closing conditions, including U.S.
antitrust clearance and the tender of a majority of the outstanding
shares of Anacor common stock. The merger agreement contemplates that
Pfizer will acquire any shares of Anacor that are not tendered into the
offer through a second-step merger, which will be completed promptly
following the closing of the tender offer. Pfizer expects to complete
the acquisition in the third-quarter 2016.

Pfizer’s financial advisors for the transaction were Centerview Partners
and Guggenheim Securities, and Wachtell, Lipton, Rosen & Katz acted as
its legal advisor. Citi served as Anacor’s financial advisor, and Davis
Polk & Wardwell, LLP served as its legal advisor.

About Pfizer:

At Pfizer, we apply science and our global resources to bring therapies
to people that extend and significantly improve their lives. We strive
to set the standard for quality, safety and value in the discovery,
development and manufacture of health care products. Our global
portfolio includes medicines and vaccines as well as many of the world’s
best-known consumer health care products. Every day, Pfizer colleagues
work across developed and emerging markets to advance wellness,
prevention, treatments and cures that challenge the most feared diseases
of our time. Consistent with our responsibility as one of the world’s
premier innovative biopharmaceutical companies, we collaborate with
health care providers, governments and local communities to support and
expand access to reliable, affordable health care around the world. For
more than 150 years, Pfizer has worked to make a difference for all who
rely on us. For more information, please visit us at www.pfizer.com.
In addition, to learn more, follow us on Twitter at @Pfizer and
@Pfizer_News, LinkedIn, YouTube and like us on Facebook at
Facebook.com/Pfizer.

About Anacor Pharmaceuticals:

Anacor is a biopharmaceutical company focused on discovering, developing
and commercializing novel small-molecule therapeutics derived from its
boron chemistry platform. Anacor’s first approved product, KERYDIN®
(tavaborole) topical solution, 5%, is an oxaborole antifungal approved
by the U.S. Food and Drug Administration in July 2014 for the topical
treatment of onychomycosis of the toenails. In July 2014, Anacor entered
into an exclusive agreement with Sandoz Inc., a Novartis company,
pursuant to which PharmaDerm, the branded dermatology division of
Sandoz, distributes and commercializes KERYDIN in the United States. In
September 2014, PharmaDerm launched KERYDIN. Anacor’s lead product
development candidate is crisaborole topical ointment, 2%, a novel
non-steroidal topical anti-inflammatory PDE-4 inhibitor in development
for the potential treatment of mild-to-moderate atopic dermatitis and
psoriasis. Beyond KERYDIN and crisaborole, Anacor has discovered three
investigational compounds that it has out-licensed for further
development. Anacor also has a pipeline of other internally discovered
topical and systemic boron-based compounds in early stages of research
and development. For more information, visit www.anacor.com.

    (1)   Pfizer calculates these projections regarding the expected accretive
impact of the potential acquisition based on internal forecasts of
its Adjusted Diluted Earnings Per Share (Adjusted Diluted EPS),
which forecasts are non-Generally Accepted Accounting Principles
(GAAP) financial measures derived by excluding certain amounts that
would be included in GAAP calculations. These accretion projections
should not be considered a substitute for GAAP measures. The
determinations of the amounts that are excluded from the accretion
calculations are a matter of management judgment and depend upon,
among other factors, the nature of the underlying expense or income
amounts. Pfizer is unable to present quantitative reconciliations
because management cannot reasonably predict with sufficient
reliability all of the necessary components of the comparable GAAP
measure. Pfizer has excluded from the accretion calculations the
impact of purchase accounting adjustments, acquisition-related
costs, discontinued operations and certain significant items. For
more information on the Adjusted Diluted EPS measure see Pfizer’s
2015 Financial Report, which was filed as exhibit 13 to Pfizer’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2015.

DISCLOSURE NOTICE: This release contains forward-looking
information related to Pfizer, Anacor and the acquisition of Anacor by
Pfizer that involves substantial risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied by such statements. Forward-looking statements in this release
include, among other things, statements about the potential benefits of
the proposed acquisition, anticipated accretion and growth rates,
Pfizer’s and Anacor’s plans, objectives, expectations and intentions,
the financial condition, results of operations and business of Pfizer
and Anacor, crisaborole and potential peak year sales of crisaborole,
and the anticipated timing of closing of the acquisition. Risks and
uncertainties include, among other things, risks related to the
satisfaction of the conditions to closing the acquisition (including the
failure to obtain necessary regulatory approvals) in the anticipated
timeframe or at all, including uncertainties as to how many of Anacor’s
stockholders will tender their shares in the tender offer and the
possibility that the acquisition does not close; risks related to the
ability to realize the anticipated benefits of the acquisition,
including the possibility that the expected benefits from the proposed
acquisition will not be realized or will not be realized within the
expected time period; the risk that the businesses will not be
integrated successfully; disruption from the transaction making it more
difficult to maintain business and operational relationships; negative
effects of this announcement or the consummation of the proposed
acquisition on the market price of Pfizer’s common stock and on Pfizer’s
operating results; significant transaction costs; unknown liabilities;
the risk of litigation and/or regulatory actions related to the proposed
acquisition; other business effects, including the effects of industry,
market, economic, political or regulatory conditions; future exchange
and interest rates; changes in tax and other laws, regulations, rates
and policies; future business combinations or disposals; the
uncertainties inherent in research and development; whether and when the
FDA may approve the new drug application for crisaborole, which will
depend on its assessment of the benefit-risk profile suggested by the
totality of the efficacy and safety information submitted; decisions by
the FDA regarding labeling and other matters that could affect the
availability or commercial potential of crisaborole; and competitive
developments.

A further description of risks and uncertainties relating to Pfizer
and Anacor can be found in their respective Annual Reports on Form 10-K
for the fiscal year ended December 31, 2015 and in their subsequent
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of
which are filed with the U.S. Securities and Exchange Commission (the
“SEC”) and available at
www.sec.gov.

The information contained in this release is as of May 16, 2016.
Neither Pfizer nor Anacor assumes any obligation to update
forward-looking statements contained in this release as the result of
new information or future events or developments.

Additional Information and Where to Find It

The tender offer referenced in this press release has not yet commenced.
This announcement is for informational purposes only and is neither an
offer to purchase nor a solicitation of an offer to sell shares, nor is
it a substitute for the tender offer materials that Pfizer and its
acquisition subsidiary will file with the SEC. At the time the tender
offer is commenced, Pfizer and its acquisition subsidiary will file a
tender offer statement on Schedule TO and Anacor will file a
Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC
with respect to the tender offer. THE TENDER OFFER MATERIALS (INCLUDING
AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER
TENDER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT
WILL CONTAIN IMPORTANT INFORMATION. ANACOR STOCKHOLDERS ARE URGED TO
READ THESE DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF ANACOR SECURITIES
SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR
SECURITIES. The Offer to Purchase, the related Letter of Transmittal and
certain other tender offer documents, as well as the
Solicitation/Recommendation Statement, will be made available to all
holders of Anacor stock at no expense to them. The tender offer
materials and the Solicitation/Recommendation Statement will be made
available for free at the SEC’s website at www.sec.gov.
Additional copies may be obtained for free by contacting Pfizer or
Anacor. Copies of the documents filed with the SEC by Anacor will be
available free of charge on Anacor’s internet website at http://www.anacor.com
or by contacting Anacor’s Investor Relations Department at (650)
543-7575. Copies of the documents filed with the SEC by Pfizer will be
available free of charge on Pfizer’s internet website at http://www.pfizer.com
or by contacting Pfizer’s Investor Relations Department at (212)
733-8160. In addition to the Offer to Purchase, the related Letter of
Transmittal and certain other tender offer documents, as well as the
Solicitation/Recommendation Statement, Pfizer and Anacor each file
annual, quarterly and current reports and other information with the
SEC. You may read and copy any reports or other information filed by
Pfizer or Anacor at the SEC public reference room at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference room. Pfizer and Anacor’s
filings with the SEC are also available to the public from commercial
document-retrieval services and at the website maintained by the SEC at http://www.sec.gov.

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