SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 12, 2010
Emergent BioSolutions Inc.
(Exact Name of Registrant as Specified in Charter)
(State or Other Jurisdiction
(Commission File Number)
|2273 Research Boulevard, Suite 400, Rockville, Maryland
(Address of Principal Executive Offices)
Registrants telephone number, including area code: (301) 795-1800
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
|Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
The following information was prepared in connection with Emergent BioSolutions Inc.s
conference call held on August 12, 2010 to announce Emergents entry on August 12, 2010 into a
definitive agreement to acquire Trubion Pharmaceuticals, Inc.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
|Date: August 12, 2010
|EMERGENT BIOSOLUTIONS INC.
|/s/ R. Don Elsey
|R. Don Elsey
|Chief Financial Officer
Emergent Acquisition of Trubion
EBS Conference Call Script
Good afternoon ladies and gentlemen.
My name is Robert Burrows, Vice President of Investor Relations for Emergent. Thank you for
joining us today as we discuss our exciting announcement, Emergent BioSolutions acquisition of
Trubion Pharmaceuticals Inc.
As is customary, our call today is open to all participants. In addition, the call is being
recorded and is copyrighted by Emergent BioSolutions.
Joining me on the call this afternoon with prepared comments will be:
|Fuad El-Hibri, our chairman and chief executive officer;
|Don Elsey, our chief financial officer; and
|Dr. Jim Jackson, our chief scientific officer.
The agenda for todays call will be as follows:
|Fuad will discuss the high level rationale for why this deal makes sense;
|Jim will then discuss in greater detail the scientific perspective and why he is
excited about Trubions clinical and preclinical programs;
|Don will follow with a discussion of the deal terms; and
|Fuad will finish up with brief concluding comments.
|We then will segue to the question and answer session.
Additional members of Emergents senior management team will be present on the call for purposes of
the Q&A session.
Before we begin, I am compelled to remind everyone that during the call management may make
projections and other forward-looking statements regarding future events and the companys
prospects or future performance. These forward-looking statements reflect Emergents current
perspective on existing trends and information. Any such forward-looking statements are not
guarantees of future performance and involve substantial risks and uncertainties. Actual results
may differ materially from those projected in any forward-looking statements. You are encouraged
to review Emergents filings with the SEC on Forms 10K, 10Q and 8K for more information on the
risks and uncertainties that could cause actual results to differ.
For the benefit of those who may be listening to the replay, this call was held and recorded on
August 12, 2010. Since then, Emergent may have made announcements relating to topics discussed
during todays call, so again, please reference our most recent press releases and SEC filings.
Emergent BioSolutions assumes no obligation to update the
information in todays press release or as presented on this call except as may be required by
applicable laws or regulations. Todays press release may be found on our website at
www.emergentbiosolutions.com, under Investors slash Press Releases.
And, with that introduction, I would now like to turn the call over to Fuad El-Hibri, Emergent
BioSolutions chairman and ceo.
Thank you, Bob.
Good afternoon everyone and thank you for joining us on todays conference call.
As you know, earlier today we announced that we have entered into a definitive agreement to acquire
Trubion Pharmaceuticals. This transaction includes upfront consideration of 96.8 million dollars
of value and up to 38.7 million dollars of success-based milestones, resulting in a total
consideration of up to 135.5 million dollars. Trubion is a Seattle-based biotechnology company
focused on developing protein therapeutics targeting the key disease areas of oncology and
autoimmunity, using its novel platform technologies.
We are very excited about this acquisition.
To begin, I would like to provide some context for this acquisition. Specifically, I will review
our strategic vision, which will help you understand why Trubion is such a great fit for Emergent.
In pursuit of our mission to protect life, our strategic vision has always included the following
two fundamental components:
|One: to strike a balance between vaccines and therapeutics; and
|Two: to build a portfolio of programs targeting multiple disease areas.
Since our inception, M&A has been instrumental to our growth and has consistently been a critical
element of our strategy. In fact, including the Lansing, Michigan acquisition, we have completed
four acquisitions in the last twelve years.
respect to striking a balance between vaccines and therapeutics, as a biologics company, we
recognize the significant value potential in pursuing the development of therapeutics. A main
category of products in biologics are antibody-based therapeutics, which offer certain unique and
highly attractive advantages, specifically:
|the potential to achieve human proof-of-concept earlier and in smaller clinical
|the potential to share development costs over multiple indications; and,
|the potential to address multiple disease areas.
With respect to building a portfolio targeting multiple disease areas, we have so far built a
pipeline of programs focused on infectious diseases only. However, we recently completed a
comprehensive review to determine where we could leverage our infectious disease capabilities
across other disease areas. In this review process, we took into account several criteria, which
|opportunities for biologics;
|short development timelines;
|clear approval paths; and
|degree of specialty focus.
these criteria and our core competencies in manufacturing and product
development, the two disease areas that ranked highest after
infectious disease were first oncology and then autoimmunity. In oncology, we are finding more and
more that infectious disease and cancer are related. Certain cancers, as you know, are actually
caused by viruses or bacteria.
I hope that by providing you with this brief strategic overview you now have sufficient insight
into why we have decided to acquire Trubion. With that as a backdrop, let me discuss the business,
scientific and financial perspectives related to this transaction.
From a business perspective, the acquisition of Trubion:
|Provides additional clinical-stage therapeutic candidates in the targeted disease
areas of oncology and autoimmunity;
|Leverages our financial strength to support the continued development of the
oncology lead candidate; and
|Leverages large pharma partnerships to provide sales and marketing infrastructure.
Let me take a moment to give you a brief description of Trubions product development pipeline.
|a clinical-stage, CD20 directed SMIP candidate, otherwise known as SBI-087, for the
treatment of Rheumatoid Arthritis, which is in Phase 2, and Lupus, which is in Phase
1/2; these are being developed in partnership with Pfizer;
|a clinical-stage, CD37 targeted SMIP candidate, otherwise known as TRU-016, for the
treatment of B-cell malignancies including CLL, which is in Phase 1/2, and NHL, which
is about to enter Phase 1; these are being developed in partnership with Abbott; and
|promising preclinical platform-based candidates for the treatment of selected
oncology and autoimmune diseases.
From a scientific perspective, the acquisition of Trubion:
|Provides access to two novel, protein therapeutic platformsSMIP, and SCORPION;
|Gives us access to scientific expertise for developing innovative, and what we
believe will be high-value therapeutic candidates; and
|Enables us to internally generate first-in-class candidates.
From a financial perspective, the acquisition of Trubion:
|Represents a minimal cash impact;
|Results in less than a 10 percent dilution; and
|Provides approximately 70 million dollars of NOLs.
Lastly, as stated in the press release, taking this transaction into account, we are reaffirming our
2010 guidance for revenues and net income.
Looking beyond 2010, we anticipate that we will remain profitable and, with proper R&D
prioritization, we may be able to achieve earnings growth in the future.
That concludes my comments on the overall rationale for the deal. I will now turn it over to Jim
who will provide greater detail on the scientific aspects of this acquisition.
Thank you, Fuad.
First as Fuad just mentioned:
The acquisition of TRBN with its two clinical stage therapeutic products, their portfolio of
preclinical candidates and their recombinant protein therapeutic platforms fit well with
Emergents growth strategy. [AND] broaden[s] our therapeutic pipeline beyond infectious disease
into autoimmunity AND oncology. Their proprietary SMIP and SCORPION platform technologies
provide Emergent with a means to develop new mono-specific and multi-specific therapeutic
candidates either alone OR through partnerships.
I would now like to spend a few moments discussing in more detail the Trubion clinical candidates
Trubions proprietary protein therapeutic platforms AND why we are excited about acquiring
TRBNs [is focused on] engineering and developing biologics-based, FIRST-IN-CLASS single-chain
recombinant protein therapeutics to serve unmet medical needs AND to provide SUPERIOR ALTERNATIVES
superior in terms of either greater efficacy and/or better safety profiles TO MARKETED
monoclonal antibody PRODUCTS.
TRBNs portfolio consists of two clinical stage products; SBI-087 an anti-CD20 molecule which
is in a phase 2 study as a treatment for rheumatoid arthritis or RA and TRU-016 a first-in-class
anti-CD37 protein therapeutic which is being evaluated in a phase 1 study as a treatment for
certain B-cell malignancies (CLL and NHL).
In collaboration with Pfizer, Trubion is developing SBI-087, a next generation CD20-directed
product candidate. SBI-087 is an improved form of AND builds on Trubion and Pfizers clinical
experience with TRU-015. SBI-087 is based on Trubions SMIP technology platform and has been
genetically modified to be a humanized and potentially more potent derivative of TRU-015.
ADDITIONALLY SBI-087 has been FORMULATED for both intravenous infusion AND s.c. administration.
Patient dosing has commenced and recruitment is currently underway in a Phase 2 trial of SBI-087
for RA evaluating the safety and efficacy of subcutaneous administration of 200mg of SBI-087.
In addition, patient recruitment is ongoing in an additional Phase 1 trial of SBI-087 for RA in
Japan. Finally, Pfizer is also conducting a Phase 1 clinical trial of SBI-087 in systemic lupus
erythematosus, or SLE, in which patient dosing has commenced and recruitment is ongoing.
SBI-087 is licensed to Pfizer and [will be a future source for] future milestone payments and
The second very exciting clinical stage product is TRU-016 a fully human FIRST-IN-CLASS
- anti-CD37 protein therapeutic. TRU-016 is the only anti-CD37 currently in clinical development.
As you are aware CD37 is a cell surface marker present at high levels on B-cells and lower levels
on certain types of T cells and myeloid cells. Experiments suggest CD37 may play a role in B-cell
regulation. In addition, CD37 is known to be over-expressed in patients with CLL. Importantly
CD37 is a clinically validated target for the treatment of B-cell malignancies.
Trubion is currently conducting an open label Phase 1 clinical trial with TRU-016 in individuals
with relapsed chronic lymphocytic leukemia or CLL. Based on the results obtained thus far Trubion
has filed an amendment to this study to allow the treatment of BOTH naïve CLL patients AND
subjects with relapsed NHL. Expansion of the clinical development program to other indications in
oncology and autoimmune disorders is planned. TRU-016 is being developed as part of a 50:50
co-development partnership with Abbott.
Turning to TRBNs proprietary SMIP and SCORPION technology platforms.
First, SMIPs. These genetically engineered Small Modular ImmunoPharmaceuticals or SMIPs
- are recombinant protein therapeutic molecules that can be designed to overcome many of the
limitations inherent to traditional monoclonal antibody products. SMIP therapeutics are
expressed as single chain polypeptides and are comprised of a specific binding domain, a
flexible hinge region allowing dimerization in vivo and an effector function domain designed to
elicit predetermined therapeutic effects beneficial for specific diseases. SMIP proteins are
mono-specific therapeutics that is they are
drugs that recognize and bind only to a single target molecule a soluble protein or cell
surface protein through the binding domain and initiate a biological activity through
the effector domain. Thus SMIP therapeutics while similar to classic monoclonal antibodies
possess unique structural design and effector characteristics compared to MAbs. SMIPs are
also smaller than whole antibodies, which may allow for better in vivo penetration.
SMIPs like traditional MAbs are produced using standard cell culture expression and
manufacturing technologies; SMIPs can be formulated for both infusion and injectable delivery
and have been shown to be stable under standard storage conditions.
Both TRU-016 and SBI-087 are SMIPs as mentioned TRU-016 targets CD37 and promotes both ADCC
and apoptosis. SBI-087 recognizes CD20 and has been designed to elicit a FcDCC response.
Next, the SCORPION platform. This is a novel platform for the development of bi-specific OR
multi-specific recombinant protein therapeutics. Like SMIPs, SCORPION proteins are expressed
as single-chain polypeptides that spontaneously dimerize in cell culture HOWEVER unlike
SMIPs which recognize only one target given their unique structural characteristics SCORPION
molecules can recognize and bind multiple targets simultaneously AGAIN either soluble
molecules or cell surface-associated molecules. SCORPIONS can also be designed to contain
immunoglobulin effector function domains like the SMIP therapeutics BUT UNLIKE SMIPS -
SCORPION therapeutics have the potential to also carry certain cell signaling moieties (such as
cytokine ECDs). Thus, SCORPIONS can be engineered to bind multiple targets on the same or
different targets on diverse cell types and modulate cell signaling by multiple pathways.
By utilizing different binding domains in various combinations the scorpion platform allows
the development of multiple first-in-class product candidates for autoimmune and inflammatory
diseases (AIID), transplant, oncology, and other high unmet need areas
Using these platform technologies TRBNs scientists have identified and initiated development of
several promising, potentially high value preclinical candidates, which we plan to move into
clinical studies in the near term.
While TRBN has thus far focused their SMIP and SCORPION technologies on the development of new
products for autoimmunity and oncology these platforms can also be leveraged for developing
new candidates for infectious disease targets including biodefense.
And, finally, Trubions TRU-ADhanCe, which is an elegant, proprietary, manufacturing
technology that can be employed to increase the antibody-dependent cellular cytotoxicity, or
ADCC, potency of product candidates by as much as 10-fold.
Trubions core protein therapeutic platforms have the potential to generate multiple new
FIRST-IN-CLASS therapeutic candidates and, as a result, additional value to our R&D pipeline.
Post-closing, in addition to our licensed product Emergent will have a substantial product
pipeline, consisting of both vaccines and therapeutics with 5 products in clinical development
AND several very promising preclinical stage candidates in the areas of both ID and oncology.
That concludes my prepared comments and I will now turn it over to Don who will provide greater
detail on the deal terms.
Thank you, Jim.
As Fuad stated we are really excited about this acquisition. With the experience of the Trubion
organization and the product candidates in process we believe that we have a combination that will
result in significant financial returns for our shareholders.
As was stated earlier, we are acquiring Trubion for an upfront consideration of $96.8 million of
value and up to $38.7 million of success-based milestones, resulting in a total consideration of up
to $135.5 million.
Under the terms of the agreement, each share of Trubion Pharmaceuticals common stock will be
converted into the right to receive an upfront payment of $1.365 per share in cash and 0.1641
shares of Emergent BioSolutions common stock. The upfront payment represents a value of $4.55 per
share, or approximately $96.8 million, based on Trubions total common shares outstanding, the net
value of dilutive stock options, and the trading average of Emergents common stock for the five
days prior to the signing of the definitive agreement. In the
aggregate, Emergent will issue approximately 3.35 million shares
of its common stock as part of the upfront consideration, which after
the closing of the merger will represent approximately 9.2 percent of
Emergents total shares outstanding. Certain of these shares
will be subject to lockup provisions.
Trubion Pharmaceuticals stockholders will also receive one Contingent Value Right (CVR) per share,
which will entitle the holder to receive cash payments based upon achievement of five predefined
Phase 2 and Phase 3 clinical study initiation milestones and one manufacturing-related
milestone. The total potential aggregate value of the CVRs is $38.7 million over a 36-month
period, following the closing of the merger.
Upon closing we anticipate that Trubion will have approximately $20 million in cash and $70 million
of NOLs that we expect to be able to use over the next ten years. Additionally there are a number
of milestone payments from the Abbott and Pfizer partnerships we expect to receive over the next
The acquisition of Trubion is expected to close in the fourth quarter of 2010.
Trubions research facilities in Seattle, Washington will be maintained and the location will
become a therapeutics-focused product development site for the combined company. We also expect to
retain the majority of Trubion employees.
In terms of current year impact, we again re-affirm the 2010 guidance of $275 to $300 million
and $40 to $50 million of net income. As you may realize the financial statements for 2010 will
reflect the consolidation of EBS and Trubion only for the time between deal closing and the end of
Looking beyond 2010, we will focus carefully on pipeline optimization and identifying opportunities
to realize financial synergies across the combined company both R&D as well as G&A synergies.
This entails evaluation of not only the Trubion programs but the EBS programs as well to ensure
that we are targeting those candidates with the greatest probability of success from both a
technical and financial perspective.
That concludes my prepared comments and I will now turn it back over to Fuad who will provide some
Thank you, Don.
In conclusion, the acquisition of Trubion furthers our position as a leading, fully integrated
biopharmaceutical company focused on the manufacture, development and commercialization of vaccines
and antibody therapeutics.
that the combination will allow the combined company to extract
substantially more value from the Trubion pipeline and platform than
would be possible had Trubion remained a stand-alone company.
Trubions clinical and preclinical stage programs as well as its leading edge science will expand
our product development pipeline and will significantly broaden our antibody-based capabilities.
acquisition brings us into oncology through a co-development arrangement with Abbott and a
licensing arrangement with Pfizer.
Emergents stable vaccine franchise, substantial capital resources, and expertise in biologics
combined with Trubions world-class protein therapeutic platform technologies and clinical-stage
development programs should translate into significant value over the near and long term.
also excited about the potential for additional newsflow in the near
term that the acquisition brings.
I look forward to sharing more information with you as the transaction moves to completion.
That concludes our prepared comments. I will now turn the call over to the operator, so that we
can begin the question-and-answer portion of the call.
Operator, please proceed.
Additional Information and Where to Find It
This communication is being made in connection with the proposed merger (the Merger) among
Emergent BioSolutions Inc. (Emergent), Trubion Pharmaceuticals, Inc. (Trubion) and certain of
Emergents direct and indirect wholly-owned subsidiaries. Emergent intends to file with the
Securities and Exchange Commission (the SEC) a registration statement on Form S-4, which will
contain a prospectus relating to the securities Emergent intends to issue in the proposed Merger.
Trubion intends to file a preliminary proxy statement in connection with the proposed Merger and to
mail a definitive proxy statement and other relevant documents to Trubions stockholders.
Stockholders of Emergent and Trubion and other interested persons are advised to read, when
available, the registration statement and Trubions preliminary proxy statement, and amendments
thereto, and definitive proxy statement in connection with Trubions solicitation of proxies for
the special meeting to be held to approve the Merger because these documents will contain important
information about Trubion, Emergent and the proposed Merger. The definitive proxy statement will
be mailed to stockholders as of a record date to be established for voting on the Merger.
Stockholders will also be able to obtain a copy of the documents filed with the SEC, without
charge, once available, at the SECs website at http://www.sec.gov or by directing a request to:
Emergent BioSolutions Inc., Attn: Investor Relations, 2273 Research Boulevard, Suite 400,
Rockville, Maryland 20850, or Trubion Pharmaceuticals, Inc., Attention: Investor Relations, 2401
4th Avenue, Suite 1050, Seattle, Washington, 98121.
Participants in Solicitation
Emergent, Trubion and their respective directors and officers may be deemed participants in the
solicitation of proxies from Trubions stockholders. Information regarding Emergents directors
and officers is available in Emergents proxy statement for its 2010 annual meeting of stockholders
and its 2009 annual report on Form 10-K, which were filed with the SEC and are available at the
SECs website at http://www.sec.gov. Information regarding Trubions directors and officers is
available in Trubions proxy statement for its 2010 annual meeting of stockholders and its 2009
annual report on Form 10-K, which were filed with the SEC and are available at the SECs website at
http://www.sec.gov. Information regarding Trubions directors and officers will also be contained
in Trubions proxy statement in connection with the Merger when it becomes available. Emergents
and Trubions stockholders may obtain additional information about the interests of Trubions
directors and officers in the Merger by reading Trubions proxy statement when it becomes
Emergent BioSolutions Forward-Looking Statement
This press release includes forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Any statements, other than statements of historical fact, including
statements regarding our strategy and how the acquisition of Trubion will impact that strategy, the
financial impact of the merger on Emergents 2010 forecast, the provision of expected cash and
NOLs, the anticipated timing for the transaction and anticipated future operations, and any other
statements containing the words believes, expects, anticipates, plans, estimates and
similar expressions, are forward-looking statements. There are a number of important factors that
could cause the companys actual results to differ materially from those indicated by such
forward-looking statements, including the parties ability to consummate the transaction; the
conditions to the completion of the transaction, including the effectiveness of Emergents
registration statement on Form S-4 or the regulatory approvals required for the transaction may not
be obtained on the terms expected or on the anticipated schedule; and the parties ability to meet
expectations regarding the timing, completion and financial and tax treatments of the merger; the
possibility that the parties may be unable to achieve expected synergies and operating efficiencies
in the merger within the expected time-frames or at all and to successfully integrate Trubions
operations into those of Emergent; such integration may be
more difficult, time-consuming or costly than expected; operating costs, partner loss and business
disruption (including, without limitation, difficulties in maintaining relationships with
employees, partners, licensors and others) may be greater than expected following the transaction;
the retention of certain key employees of Trubion may be difficult; the parties are subject to
intense competition and increased competition is expected in the future; the failure to protect
either partys intellectual property rights may weaken its competitive position; third parties may
claim that either partys products infringe their intellectual property rights; the rate and degree
of market acceptance and clinical utility of the parties products; the success of ongoing and
planned development programs, preclinical studies and clinical trials; the ability to identify and
acquire or in license products and product candidates that satisfy Emergents selection criteria;
the potential benefits of the parties existing collaboration agreements and the ability to enter
into selective additional collaboration arrangements; the timing of and ability to obtain and
maintain regulatory approvals for other product candidates; commercialization, marketing and
manufacturing capabilities and strategy; and other factors identified in Emergents Quarterly
Report on Form 10-Q for the quarter ended June 30, 2010 and subsequent reports filed with the SEC.
The company disclaims any intention or obligation to update any forward-looking statements as a
result of developments occurring after the date of this press release.