Item 1.01. Entry into a Material Definitive Agreement.
Purchase and Sale Agreement
On November 28, 2017,
Melinta Therapeutics, Inc., a Delaware corporation (
Melinta
or the
Company
), entered into a Purchase and Sale Agreement (the
Purchase Agreement
) with The Medicines Company, a Delaware
corporation (
Seller
). Pursuant to the terms of the Purchase Agreement, upon consummation of the transactions contemplated by the Purchase Agreement, and subject to the terms and conditions therein, the Company will acquire from
Seller the capital stock of certain subsidiaries of Seller (the
Transferred Subsidiaries
) and certain assets related to the infectious disease business, including the pharmaceutical products containing (i) meropenem and
vaborbactam as the active pharmaceutical ingredient and distributed under the brand name Vabomere
TM
(
Vabomere
), (ii) oritavancin as the active pharmaceutical ingredient and
distributed under the brand name Orbactiv
®
(
Orbactiv
) and (iii) minocycline as the active pharmaceutical ingredient and distributed under the brand name Minocin
®
(
Minocin
and, together with Vabomere and Orbactiv, the
Products
) and line extensions thereof. Certain businesses related to the Transferred Subsidiaries,
including the research and development of Oravance, Omnivance, the pre-clinical polymyxin programs and the programs being conducted at Sellers San Diego facilities are specifically excluded from the assets being purchased by the Company. The
purchase price payable under the Purchase Agreement consists of (i) a payment by the Company to Seller of $165 million in cash and the issuance to the Seller of a number of shares of the Companys common stock, par value $0.001 per
share (
Common Stock
) equal to $50 million, divided by 90% of the volume weighted average price of the Common Stock for the trailing 10 trading day period ending 3 trading days prior to closing; (ii) a payment by the
Company to Seller of $25 million following each of the twelve and eighteen month anniversaries of the closing date, (iii) the assumption of certain liabilities related to the acquired business and (iv) royalties on annual net sales of
the Products as follows:
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U.S. net sales of Vabomere:
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On net sales above $50 million and at or below $100 million = 5.0%
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On net sales above $100 million and at or below $200 million = 7.5%
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On net sales above $200 million and at or below $500 million = 15.0%
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On net sales above $500 million = 25%
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U.S. combined net sales of Minocin and Orbactiv
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On net sales at or below $100 million = 5.0%
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On net sales above $100 million = 15.0%
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Ex-U.S.
net sales of Vabomere, Orbactiv and Minocin
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On all net sales, including all milestone and royalty payments or other consideration received from
ex-U.S.
transfers of rights with respect to the products = 15.0%
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The Purchase Agreement contains certain representations and warranties made by Seller with respect to Seller, the Transferred Subsidiaries
and the purchased assets. The Purchase Agreement includes an indemnity from Seller for breaches of representations, warranties and covenants and in respect of the excluded assets and the excluded liabilities. Sellers indemnity obligations are
subject to specified limitations described in the Purchase Agreement.
The Purchase Agreement contains
pre-closing
covenants, including covenants of the Seller to conduct its business as it relates to the Products in the ordinary course during the interim period between the execution of the Purchase Agreement and consummation of the transactions contemplated
thereby and not to engage in certain types of transactions during such interim period without the prior written consent of the Company. Each of the Company and Seller agreed to use such partys respective reasonable best efforts to take all
action and to do all things necessary, proper or advisable to consummate and make effective the transactions contemplated by the Purchase Agreement and to ensure that the conditions to closing are satisfied. Each of the Company and Seller agreed to
file as soon as reasonably practicable, and in any event not later than December 5, 2017, any notifications required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
HSR Act
) and any comparable filing
required by any foreign competition laws. All fees and expenses with respect to such competition filings will be borne by the Company. The Company agreed to use reasonable best efforts to take all action and to do all things necessary to consummate
the Financing (as defined below). In connection with the Company Stockholder Approval (as defined below), the Company also agreed to prepare and file a preliminary proxy statement with the Securities and Exchange Commission no later than
December 5, 2017.
Consummation of the transactions contemplated by the Purchase Agreement is subject to certain conditions,
including (i) there being no law, order or pending proceeding preventing or making illegal the consummation of any of the transactions; (ii) all applicable waiting periods or necessary approvals or clearances under the HSR Act having
expired, been terminated or received; (iii) the approval by a majority of the Companys stockholders of the issuance of the Common Stock pursuant to the Purchase Agreement and in connection with the Financing (the
Company
Stockholder Approval
) shall have been obtained; (iv) the Common Stock being issued to Seller shall have been approved for listing on Nasdaq; (v) the truth and correctness of the other partys representations and warranties
in the Purchase Agreement subject to
agreed-on
materiality standards; and (vi) the performance by each party of all of its obligations and compliance with all of its covenants under the Purchase Agreement
in all material respects.
The Purchase Agreement contains termination rights, including the right of either the Company or Seller to terminate the
Purchase Agreement: (i) if the transactions contemplated thereby have not been consummated by 11:59 p.m., Eastern Time on May 28, 2018; (ii) if the other party breaches any of its representations, warranties or covenants under the Purchase
Agreement such that any of the conditions to closing would not be satisfied; or (iii) in the event that any final and nonappealable adverse law or order is issued by a governmental authority of competent jurisdiction in the United States.
Seller also has the right to terminate the Purchase Agreement if the Company Stockholder Approval is not received at a special meeting of Company stockholders.
Pursuant to the terms of the Purchase Agreement and certain ancillary agreements that the parties intend to enter into upon the closing of the transaction,
Seller will provide certain transition services to the Company following the closing to facilitate the transition of the supply, sale and distribution of the Products in exchange for agreed upon compensation.
The representations, warranties and covenants of the Company and Seller contained in the Purchase Agreement have been made solely for the benefit of the
parties thereto. In addition, such representations, warranties and covenants (a) have been made only for purposes of the Purchase Agreement, (b) are subject to materiality qualifications contained in the Purchase Agreement which may differ
from what may be viewed as material by investors, (c) were made only as of the date of the Purchase Agreement or such other date as is specified in the Purchase Agreement, (d) may be subject to important limitations and qualifications
agreed to by the contracting parties and (e) have been included in the Purchase Agreement for the purpose of allocating risk between the contracting parties rather than establishing matters as fact. Accordingly, the Purchase Agreement is
included with this filing only to provide investors with information regarding the terms of the Purchase Agreement and not to provide investors with any other factual information regarding the Company, Seller or their respective businesses.
Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Seller or any of their respective subsidiaries or affiliates.
Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Companys or Sellers
public disclosures.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to
the Purchase Agreement attached hereto as
Exhibit 2.1
and is incorporated herein by reference.
Voting Agreements
Concurrently with the execution of the Purchase Agreement, certain Company stockholders, beneficially owning in the aggregate, as of November 28, 2017,
approximately 52% of the Common Stock, entered into voting agreements with the Seller (the
Voting Agreements
). Pursuant to the Voting Agreements, among other things, the stockholders party thereto will vote their shares of Common
Stock in favor of the transactions contemplated by the Purchase Agreement.
The foregoing description of the Voting Agreements does not purport to be complete and is qualified in its
entirety by reference to the Voting Agreements attached hereto as
Exhibit 4.1
and
Exhibit 4.2
and is incorporated herein by reference.
Deerfield Commitment Letter
In connection with the
Purchase Agreement, the Company entered into a commitment letter (the
Deerfield Commitment Letter
) with Deerfield Management Company, L.P. and certain funds managed by Deerfield (collectively, the
Deerfield
Funds
), pursuant to which Deerfield Funds have committed to provide up to $190 million (less the amount of the Deerfield equity investment described below) of senior secured loans to finance the acquisition (the
Closing Date
Loan
), together with up to $50 million in a senior secured delayed draw term loan facility. Under the Deerfield Commitment Letter, the Deerfield Funds have committed to purchase Common Stock equal to 9.985% of the number of shares of
Common Stock outstanding immediately following the closing of the transactions contemplated in the Purchase Agreement (inclusive of such shares) for a purchase price per share of $13.50, representing 90% of the closing price of Common Stock on
November 28, 2017. The Deerfield Commitment Letter provides that the Company will issue to the Deerfield Funds on the closing date of the transactions contemplated in the Purchase Agreement a warrant (the
Warrant
) to purchase a
number of shares of Common Stock equal to 38.5% of the principal amount of the Closing Date Loan, divided by $15.00, representing the closing price for the Common Stock on November 28, 2017. The Warrant will be exercisable for a duration of 7
years at a strike price of $16.50 per share.
The foregoing description of the Deerfield Commitment Letter does not purport to be complete and is
qualified in its entirety by reference to the Deerfield Commitment Letter attached hereto as
Exhibit 10.1
and is incorporated herein by reference.
Equity Commitment Letters
In connection with the
Purchase Agreement, the Company entered into equity commitment letters (the
Equity Commitment Letters
and together with the Deerfield Commitment Letter, the
Financing
) with Vatera Healthcare Partners, LLC
(
Vatera
) and JWC
RIB-X,
LLC (
JWC
). Pursuant to the Vatera equity commitment letter, Vatera has committed to purchase 2,000,000 shares of Common Stock for an aggregate
purchase price of $27 million or $13.50 per share, representing 90% of the closing price for the Common Stock on November 28, 2017. In addition, the Company has granted Vatera or its assignees an option, exercisable in Vateras sole
discretion, to purchase up to $10 million of shares of Common Stock at a price per share equal to 90% of the volume weighted average price for the trailing 10 trading day period ending 3 trading days prior to closing. Pursuant to the JWC equity
commitment letter, JWC has committed to purchase 222,222 shares of Common Stock, for an aggregate purchase price of $3 million or approximately $13.50 per share, representing approximately 90% of the closing price for the Common Stock on
November 28, 2017. Each of Vateras and JWCs obligation to fund its respective equity commitment under its equity commitment letter is subject to customary conditions.
The foregoing description of the Equity Commitment Letters does not purport to be complete and is qualified in its entirety by reference to the Equity
Commitment Letters attached hereto as
Exhibit 4.3
and
Exhibit 4.4
and is incorporated herein by reference.