Item 8.01. Other Events.
As previously disclosed, on August 7, 2022, Global Blood Therapeutics, Inc., a
Delaware corporation ("GBT", the "Company", "we", "our" or "us"), entered into
an Agreement and Plan of Merger (the "Merger Agreement") with Pfizer Inc., a
Delaware corporation ("Parent"), and Ribeye Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"). Pursuant to
the Merger Agreement, and upon the terms and subject to the conditions described
therein, Merger Sub will merge with and into the Company, with the Company
surviving the merger as a wholly owned subsidiary of Parent (the "Merger"). On
August 19, 2022, GBT filed a preliminary proxy statement (the "Preliminary Proxy
Statement") with the Securities and Exchange Commission ("SEC"), and on August
29, 2022, GBT filed a definitive proxy statement (the "Proxy Statement") with
the SEC, in each case in connection with the Merger.
Since the filing of the Preliminary Proxy Statement, seven complaints have been
filed in federal courts in New York, California and Delaware and a state court
in California by purported GBT stockholders against GBT and members of the GBT
board of directors in connection with the Merger: Wang v. Global Blood
Therapeutics, Inc., et al., Case No. 1:22-cv-07157 (filed August 22, 2022)
(S.D.N.Y.); Pepe v. Global Blood Therapeutics, Inc., et al., Case No.
3:22-cv-04895 (filed August 26, 2022) (N.D. Cal.); Lawrence v. Global Blood
Therapeutics, Inc., et al., Case No. 1:22-cv-07641 (filed September 8, 2022)
(S.D.N.Y.); Kent v. Global Blood Therapeutics, Inc., et al., Case No.
1:22-cv-01184-UNA (filed September 8, 2022) (D. Del.); Minzer v. Global Blood
Therapeutics, Inc., et al., Case No. 3:22-cv-05136 (filed September 9, 2022)
(N.D. Cal.); and Riley v. Global Blood Therapeutics, Inc., et al., Case No.
1:22-cv-07740 (filed September 11, 2022) (S.D.N.Y.) (collectively, the "Federal
Stockholder Litigation") and Berger v. Global Blood Therapeutics, Inc., et al.,
Case No. 22-CIV-03675 (filed September 8, 2022) (Cal. Sup. Ct., San Mateo Cnty.)
(the "State Stockholder Litigation" and, collectively with the Federal
Stockholder Litigation, the "Stockholder Litigation"). Each of the complaints
in the Federal Stockholder Litigation alleges that, among other things, the
Preliminary Proxy Statement and/or the Proxy Statement omitted certain material
information in violation of Sections 14(a) and 20(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and Rule 14a-9 promulgated
thereunder. The State Stockholder Litigation purports to allege securities
fraud under California Corporations Code Section 25401 and misrepresentation
claims under California common law relating to the Proxy Statement.
Additionally, on August 28, 2022, September 1, 2022, September 2, 2022,
September 2, 2022 and September 12, 2022, five purported GBT stockholders sent
demand letters alleging similar insufficiencies in the disclosures in the
Preliminary Proxy Statement and/or the Proxy Statement in violation of Sections
14(a) and 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder (such
letters, the "Demand Letters" and, collectively with the Stockholder Litigation,
the "Litigation Matters"). The plaintiffs in the Stockholder Litigation seek
various remedies, including an order enjoining the defendants from proceeding
with the Merger, requiring the defendants to disclose allegedly material
information that was allegedly omitted from the Proxy Statement, rescinding the
Merger in the event that it is consummated or granting rescissory damages,
declaring that the defendants violated Sections 14(a) and 20(a) of the Exchange
Act and Rule 14a-9 promulgated thereunder, awarding costs, including attorneys'
and expert fees and expenses, and granting such other and further relief as the
court may deem just and proper.
GBT believes that the claims asserted in the Litigation Matters are without
merit and no additional disclosures are required under applicable laws. However,
in order to avoid the risk of the Litigation Matters delaying or adversely
affecting the Merger and to minimize the costs, risks and uncertainties inherent
in litigation, and without admitting any liability or wrongdoing, GBT has
determined to voluntarily make the following supplemental disclosures to the
Proxy Statement, as described in this Current Report on Form 8-K. Nothing in
this Current Report on Form 8-K shall be deemed an admission of the legal
necessity or materiality under applicable laws of any of the disclosures set
forth herein. To the contrary, GBT specifically denies all allegations in the
Litigation Matters that any additional disclosure was or is required.
These supplemental disclosures will not change the consideration to be paid to
GBT stockholders in connection with the Merger or the timing of the special
meeting of GBT stockholders (the "Special Meeting") to be held virtually via
live webcast on September 30, 2022, beginning at 8:00 a.m. Pacific Time. The
Special Meeting can be accessed by visiting
www.virtualshareholdermeeting.com/GBT2022SM. The GBT board of directors
continues to unanimously recommend that you vote "FOR" the proposals to be voted
on at the Special Meeting described in the Proxy Statement.
Supplemental Disclosures to the Proxy Statement in Connection with the
Litigation Matters
The following disclosures in this Current Report on Form 8-K supplement the
disclosures contained in the Proxy Statement and should be read in conjunction
with the disclosures contained in the Proxy Statement, which in turn should be
read in its entirety. All page references are to the Proxy Statement and terms
used below, unless otherwise defined, shall have the meanings ascribed to such
terms in the Proxy Statement.
The disclosure in the section entitled "Proposal 1: Adoption of the Merger
Agreement-Opinion of J.P. Morgan", beginning on page 40 of the Proxy Statement,
is hereby amended as follows:
--------------------------------------------------------------------------------
The fourth full paragraph on page 42 is amended and supplemented as follows
(with new text underlined and deleted text marked with a strikethrough):
Public Trading Multiples. Using publicly available information, J.P. Morgan
compared selected financial data of the Company with similar data for selected
publicly traded companies engaged in businesses which J.P. Morgan judged to be
analogous to the Company. The following table lists the companies selected by
J.P. Morgan were as followsand sets forth the FV/2026E Revenue Multiple (as
defined below) for each selected company:
Selected Companies FV/2026E Revenue Multiple
Apellis Pharmaceuticals, Inc. 3.6x
Crispr Therapeutics AG 2.1x
Intellia Therapeutics, Inc. 7.9x
Amicus Therapeutics, Inc. 3.6x
INSMED Inc. 3.3x
Biocryst Pharmaceuticals Inc. 4.6x
ChemoCentryx, Inc. 1.6x
Editas Medicine, Inc. 5.2x
Reata Pharmaceuticals Inc. 1.4x
Aurinia Pharmaceuticals Inc. 1.1x
Median FV/2026E Revenue Multiple = 3.5x
The second full paragraph on page 43 is amended and supplemented as follows
(with new text underlined):
Based on the above analysis, J.P. Morgan selected a FV/2026E Revenue Multiple
reference range for the Company of 1.1x to 5.2x. J.P. Morgan then applied such
reference range to the Company's projected revenue for the calendar year 2026 of
$1.293 billion provided in the Management Forecasts. The analysis indicated a
range of implied per share equity value for the GBT common stock (rounded to the
nearest $0.25) of approximately $21.25 to $88.50, which J.P. Morgan compared to
the implied per share equity value of the Merger Consideration to be paid to GBT
stockholders of $68.50.
The third full paragraph on page 43 is amended and supplemented as follows (with
new text underlined and deleted text marked with a strikethrough):
Selected Transaction Analysis. Using publicly available information, J.P. Morgan
examined selected transactions with respect to businesses which J.P. Morgan
judged to be similar to the Company's business (or aspects thereof) based on
J.P. Morgan's experience and familiarity with the industries in which the
Company operates. The following table lists the transactions were selected by
J.P. Morgan as relevant to the evaluation of the proposed Merger and sets forth
the FV/4-Year Forward Revenue Multiple (as defined below) for each selected
transaction:
FV/4-Year
Announcement Date Target Acquiror Forward Revenue
Multiple
January 19, 2022 Zogenix, Inc. UCB S.A. 2.6x
September 8, 2021 Kadmon Holdings, Sanofi 5.4x
Inc.
February 1, 2021 Viela Bio, Inc. Horizon Therapeutics 8.3x
plc
August 31, 2020 Aimmune Nestlé S.A. 3.5x
Therapeutics, Inc.
Portola Alexion
May 5, 2020 Pharmaceuticals Pharmaceuticals, Inc. 2.9x
Inc.
Dova Swedish Orphan
September 30, 2019 Pharmaceuticals Biovitrum AB 2.9x
Inc.
Raptor Horizon Therapeutics
September 12, 2016 Pharmaceutical plc 3.5x
Corp.
July 21, 2016 Relypsa Inc. Galenica 3.4x
Pharmaceuticals Inc.
March 30, 2015 Hyperion Horizon Therapeutics 4.3x
Therapeutics Inc. plc
Median FV/4-Year Forward Revenue Multiple = 3.5x
--------------------------------------------------------------------------------
The last sentence of the sixth full paragraph on page 43 is amended and
supplemented as follows (with new text underlined):
The analysis indicated a range of implied per share equity value for the GBT
common stock (rounded to the nearest $0.25) of approximately $44.25 to $83.75,
which J.P. Morgan compared to the implied per share equity value of the Merger
Consideration to be paid to GBT stockholders of $68.50.
The last paragraph on page 43 and carry over paragraph on page 44 is amended and
supplemented as follows (with new text underlined):
Discounted Cash Flow Analysis. J.P. Morgan conducted a discounted cash flow
analysis for the purpose of determining the fully diluted equity value per share
for the GBT common stock. J.P. Morgan calculated the unlevered free cash flows
that the Company is expected to generate from October 1, 2022 through December
31, 2042, including the impact of certain net operating losses based upon the
Management Forecasts. J.P. Morgan also calculated a range of terminal values of
the Company at the end of this period by applying perpetual growth rates ranging
from (50.0%) to (30.0%) for Oxbryta, GBT601 and inclacumab, 5.0% for research
assets and 2.0% for corporate overhead and other unallocated expenses based on
guidance provided by the Company's management and J.P. Morgan's professional
judgment and experience, to estimates of the unlevered free cash flow of the
Company during calendar year 2042 as set forth in the Management Forecasts. The
unlevered free cash flows and the range of terminal values were then discounted
to present values as of September 30, 2022 using a range of discount rates from
10.5% to 13.5%, which were chosen by J.P. Morgan based upon an analysis of the
weighted average cost of capital of the Company, taking into account
macro-economic assumptions, estimates of risk, the Company's capital structure
and other factors that J.P. Morgan deemed appropriate. The present value of the
unlevered free cash flow estimates and the range of terminal values were then
adjusted by adding net cash as of September 30, 2022, $351 million, which
estimate was provided by the management of the Company. This analysis indicated
a range of implied equity values for the Company, which J.P. Morgan divided by
the number of outstanding shares of GBT common stock, calculated on a
fully-diluted basis and adjusted for the Company's assumed future equity raise
of $200 million in gross proceeds in 2023, to derive a range of implied per
share equity value for the GBT common stock (rounded to the nearest $0.25) of
approximately $52.25 and $65.50, which J.P. Morgan compared to the implied per
share equity value of the Merger Consideration to be paid to GBT stockholders of
$68.50.
The first full paragraph on page 44 is amended and supplemented as follows (with
new text underlined):
Certain Other Information. J.P. Morgan also reviewed certain publicly available
equity research analyst price targets, focusing on the Company's 52 week
historical trading and analyst price targets, in each case as of August 3, 2022
(the last trading day prior to the date on which the trading price of GBT common
stock was perceived by J.P. Morgan to be affected by a potential transaction)
which ranged from $22.30 to $40.26 and $31.00 to $102.00, respectively. J.P.
Morgan noted that historical stock trading and analyst price targets analyses
are not valuation methodologies but were presented merely for informational
purposes.
The disclosure in the section entitled "Proposal 1: Adoption of the Merger
Agreement-Opinion of Centerview", beginning on page 45 of the Proxy Statement,
is hereby amended as follows:
The fourth full paragraph on page 48 is amended and supplemented as follows
(with new text underlined and deleted text marked with a strikethrough):
The selected companies and results of this analysis are summarized below:
Selected Company EV/2026E Revenue Trading Multiple
Amicus Therapeutics, Inc. 4.2x
Apellis Pharmaceuticals, Inc. 3.6x
Aurinia Pharmaceuticals Inc. 1.1x
BioCryst Pharmaceuticals, Inc. 4.6x
Insmed Incorporated 3.4x
Median EV/2026E Revenue Trading Multiple = 3.6x
The last paragraph on page 48 and carry over paragraph on page 49 is amended and
supplemented as follows (with new text underlined):
--------------------------------------------------------------------------------
Based on this analysis and other considerations that Centerview deemed relevant
in its professional judgment and experience, Centerview selected a reference
range of EV/2026E Revenue Trading Multiples of 2.00x to 4.25x to apply to the
Company's estimated calendar year risk-adjusted 2026 net revenue of $1.293
billion as set forth in the Management Forecasts and to Wall Street research
analyst consensus estimated net revenue for the Company for calendar year 2026
of $912 million. In selecting these ranges of EV/2026E Revenue Trading
Multiples, Centerview made qualitative judgments based on its experience and
professional judgment concerning differences between the business, operational
and/or financial characteristics of the Company and the selected companies that
could affect their public trading values in order to provide a context in which
to consider the results of the quantitative analysis. Applying this range of
EV/2026E Revenue Trading Multiples to the Company's estimated calendar year
risk-adjusted 2026 net revenue as set forth in the Management Forecasts of
$1.293 billion under the Management Forecasts, and to Wall Street research
analyst consensus estimated net revenue for the Company for calendar year 2026
of $912 million, and adding to such amounts the Company's estimated net cash as
of September 30, 2022 of $351 million (adjusted for the conversion of the
Convertible Notes, if applicable), provided by the Company management as set
forth in the Internal Data, and dividing the results of the foregoing
calculations by the number of fully diluted outstanding shares of GBT common
stock (determined using the treasury stock method and taking into account
outstanding in-the-money options, restricted stock units, performance stock
units and shares issuable upon conversion of the Convertible Notes (as
defined in the section of this proxy statement entitled "Proposal 1: Adoption of
the Merger Agreement-Capped Call Transactions"), if applicable), based on
information provided by the Company management as of August 4, 2022 as set forth
in the Internal Data. For the purposes of Centerview's analysis, net cash and
fully diluted outstanding shares of GBT common stock varied depending on whether
the Convertible Notes were deemed to be in-the-money (at implied equity values
per share above $31.75) or out-of-the-money (at implied equity values per share
at or below $31.75). This analysis resulted in an implied per share equity value
range for shares of GBT common stock of approximately $35.85 to $71.65 and
$25.45 to $52.90, respectively, rounded to the nearest $0.05. Centerview then
compared these ranges to the Merger Consideration of $68.50 per share to be paid
to the holders of shares of GBT common stock (other than Excluded Shares)
pursuant to the Merger Agreement.
The third full paragraph on page 49 is amended and supplemented as follows (with
new text underlined and deleted text marked with a strikethrough):
The selected transactions considered inand results of this analysis are
summarized below:
Transaction
Value/4-Year Forward
Date Announced Target Acquiror Revenue Multiple
August 4, 2022 ChemoCentryx, Inc. Amgen Inc. 4.7x
January 19, 2022 Zogenix, Inc. UCB S.A. 2.6x
September 8, 2021 Kadmon Holdings, Inc. Sanofi 5.4x
Horizon 8.3x
February 1, 2021 Viela Bio, Inc. Therapeutics plc
Nestle Health
Aimmune Therapeutics, Science US 3.5x
August 31, 2020 Inc. Holdings, Inc.
Alexion
Portola Pharmaceuticals, 3.4x
May 5, 2020 Pharmaceuticals, Inc. Inc.
Dova Pharmaceuticals, Swedish Orphan 2.9x
September 30, 2019 Inc. Biovitrum AB
Raptor Pharmaceutical Horizon 3.5x
September 12, 2016 Corp. Therapeutics plc
July 21, 2016 Relypsa, Inc. Galenica AG 3.8x
Hyperion Therapeutics, Horizon 4.3x
March 30, 2015 Inc. Therapeutics plc
Median Transaction Value/4-Year Forward Revenue Multiple = 3.6x
The last paragraph on page 49 and carry over paragraph on page 50 is amended and
supplemented as follows (with new text underlined):
Based on this analysis and other considerations that Centerview deemed relevant
in its experience and professional judgment, related to, among other things,
differences in the business, operational and/or financial conditions and
prospects of the Company and the companies included in the selected precedent
transactions analysis, Centerview selected a reference range of Four-Year
Forward Revenue Multiples of 3.00x to 4.50x derived from the selected precedent
transactions. Centerview applied this reference range of Four-Year Forward
Revenue Multiples to Wall Street research analyst consensus estimated four-year
forward net revenue of $874 million, and added to it the Company's estimated net
cash as of September 30, 2022 of $351 million (adjusted for conversion of the
Convertible Notes, if applicable), adjusted for an estimated $77 million in
change of control payments and prepayment penalties under the Company's
outstanding term loan payable in connection with the Transaction, provided by
the Company management as set forth in the Internal Data, and divided the result
of the foregoing calculations by the Company's fully diluted outstanding shares
of GBT common stock (determined using the treasury stock method and taking into
account outstanding in-the-money options, restricted stock units, performance
stock units and shares issuable upon conversion of the Convertible Notes,
including additional shares of GBT common stock issued as a result of the
make-whole with respect to the Convertible Notes, if applicable) based on
information provided by the Company management as of August 4, 2022 as set forth
in the Internal Data. For the purposes of Centerview's analysis, net cash and
fully diluted shares varied depending on whether the Convertible Notes were
deemed to be in-the-money (at implied equity values per share above $31.75) or
out-of-the-money (at implied equity values per share at or below $31.75). This
analysis resulted in an implied per share equity value range for shares of GBT
common stock of approximately $34.55 to $50.35, rounded to the nearest $0.05.
Centerview then compared this range to the Merger Consideration of $68.50 per
share to be paid to the holders of shares of GBT common stock (other than
Excluded Shares) pursuant to the Merger Agreement.
--------------------------------------------------------------------------------
The second full paragraph on page 50 is amended and supplemented as follows
(with new text underlined):
In performing this analysis, Centerview calculated a range of equity values for
shares of GBT common stock by (a) discounting to present value as of September
30, 2022 using discount rates ranging from 10.5% to 12.5% (reflecting
Centerview's analysis of the Company's weighted average cost of capital based on
considerations that Centerview deemed relevant in its professional judgment and
experience, taking into account certain metrics, including yields for U.S.
treasury notes, levered and unlevered betas for comparable group companies,
market risk and size premia) and using a mid-year convention: (i) the forecasted
risk-adjusted, after-tax unlevered free cash flows of the Company over the
period beginning on October 1, 2022 and ending on December 31, 2042, utilized by
Centerview based on the Management Forecasts, (ii) an implied terminal value of
the Company, calculated by Centerview by applying a perpetuity growth rate of
(40%) assuming that unlevered free cash flows would decline in perpetuity after
December 31, 2042 (with the exception of cash flows associated with research
assets (perpetuity growth rate of 5%) and corporate overhead and other
unallocated expenses (perpetuity growth rate of 2%)), based on guidance provided
by the Company management, and (iii) tax savings from usage of the Company's
federal net operating losses of $1.081 billion as of September 30, 2022 and the
Company's future losses and (b) adding to the foregoing results the Company's
estimated net cash as of September 30, 2022, $351 million (adjusted for the
conversion of the Convertible Notes, if applicable), which amount was provided
by the Company management as set forth in the Internal Data, and an assumed
equity raise of $200 million in 2023 as set forth in the Internal Data.
Centerview divided the result of the foregoing calculations by the Company's
fully diluted outstanding shares of GBT common stock (determined using the
treasury stock method and taking into account outstanding in-the-money options,
restricted stock units, performance stock units and shares issuable upon
conversion of the Convertible Notes, if applicable), based on information
provided by the Company management as of August 4, 2022 as set forth in the
Internal Data. This analysis resulted in a range of implied equity values per
share of GBT common stock of $56.35 to $65.25, rounded to the nearest $0.05.
Centerview then compared this range to the Merger Consideration of $68.50 per
share to be paid to the holders of shares of GBT common stock (other than
Excluded Shares) pursuant to the Merger Agreement.
Cautionary Statement Regarding Forward-Looking Statements
This communication contains forward looking statements, within the meaning of
the Private Securities Litigation Reform Act of 1995, related to Parent, GBT and
the acquisition of GBT by Parent that are subject to risks, uncertainties and
other factors. All statements other than statements of historical fact are
statements that could be deemed forward-looking statements, including all
statements regarding the intent, belief or current expectation of the companies
and members of their senior management team. Readers can generally identify
forward-looking statements by the use of forward-looking terminology such as
"outlook", "potential", "continue", "may", "seek", "approximately", "predict",
"believe", "expect", "plan", "intend", "poised", "estimate" or "anticipate" and
similar expressions or the negative versions of these words or comparable words,
as well as future or conditional verbs such as "will", "should", "would",
"likely" and "could". Forward-looking statements include, without limitation,
statements regarding the transactions and related matters; prospective
performance and opportunities; post-closing operations and the outlook for the
companies' businesses; filings and approvals relating to the transactions; the
expected timing of the transactions; the ability to complete the transactions
considering the various closing conditions; and any assumptions underlying any
of the foregoing. Investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties and are cautioned not to place undue reliance on these
forward-looking statements. We can give no assurance that the plans, intentions,
expectations or strategies will be attained or achieved, and, furthermore,
actual results may differ materially from those described in the forward-looking
statements and will be affected by a variety of risks and factors that are
beyond our control, including, without limitation, uncertainties as to the
timing of the transactions; the risk that the transactions may not be completed
in a timely manner or at all; risks and uncertainties related to receiving the
approval of GBT's stockholders; the possibility that competing offers or
acquisition proposals for GBT will be made; the possibility that any or all of
the various conditions to the consummation of the transactions may not be
satisfied or waived, including the failure to receive any required regulatory
approvals from any applicable governmental entities (or any conditions,
limitations or restrictions placed on such approvals); the risks that
drug-related adverse events may be observed during commercialization or clinical
development; the risk that data and results may not meet regulatory requirements
or otherwise be sufficient for further development, regulatory review or
approval; risks related to clinical trials and other studies (including the
anticipated timing of clinical data, the funding therefor, anticipated patient
enrollment, trial outcomes, timing or associated costs)? the occurrence of any
event, change or other circumstance that could give rise to the termination of
the definitive agreement for the transactions, including in circumstances which
would require GBT to pay a termination fee; the effect of the announcement or
pendency of the transactions on GBT's ability to retain and hire key personnel,
its ability to maintain relationships with its third-party payors, customers,
distributors, suppliers and others with whom it does business or its operating
results and business generally; risks related to diverting management's
attention from GBT's ongoing business operations; the risk that stockholder
litigation in connection with the transactions may result in significant costs
of defense, indemnification and liability; difficulties or unanticipated
expenses in connection with integrating the companies; and other factors
discussed in the "Risk Factors" and the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" sections of GBT's Annual Report
on Form 10-K for the year ended December 31, 2021, filed with the SEC on
February 23, 2022, and in our most recent Quarterly Report on Form 10-Q filed
with the SEC, as well as discussions of potential risks, uncertainties and other
important factors in our subsequent Current Reports on Form 8-K and other
filings with the SEC. In addition to the risks described above, other unknown or
unpredictable factors also could affect GBT's results. As a result of these
factors, we cannot assure you that the forward looking statements in this
communication will prove to be accurate. Furthermore, if our forward looking
statements prove to be inaccurate, the inaccuracy may be material. In light of
. . .
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