Emergent Plans To Divide into Two Separate Companies
The board of directors of Emergent BioSolutions Inc. has authorized management to pursue a tax-free spin-off of the company’s biosciences business into a separate, stand-alone publicly traded company. The spin-off is expected to create two independent public companies with distinct strategic plans, growth strategies, and operational and development priorities.
The new biosciences company, to be named at a later date, will focus on providing oncology and hematology therapeutics using the company’s proprietary, modular protein technology, the Adaptir platform, applied to immuno-oncology. Emergent BioSolutions will continue to operate as a global specialty biopharmaceutical company focused on specialty products for civilian and military populations that address intentional and naturally emerging public health threats.
Emergent expects to provide the biosciences company with a fixed cash contribution of $50 million to $70 million. Additional sources of cash to support R&D investment will include commercial product sales and partnership funding. Emergent expects to incur transaction-related expenses of $2 million to $4 million in 2015 and additional costs in 2016 relating to the transaction.
Emergent will retain the biodefense marketed products and development programs, platform technologies, and manufacturing infrastructure. Emergent will maintain its headquarters in Gaithersburg, Maryland, biodefense product development facilities in Gaithersburg, Maryland and Munich, Germany, cGMP manufacturing facilities in Lansing, Michigan, Hattiesburg, Mississippi, and Winnipeg, Manitoba, Canada, as well as its contract manufacturing organization (CMO) fill/finish operations in its Camden site in Baltimore, Maryland. Emergent’s Bayview Campus, also in Baltimore, Maryland, will continue to operate as an US Department of Health and Human Services-designated Center for Innovation in Advanced Development and Manufacturing. Emergent’s Winnipeg manufacturing facility is expected to serve as primary CMO for some products of the biosciences company under an arm’s length, long-term manufacturing agreement.
As stand-alone public companies, Emergent and the new biosciences company will have separate management teams and boards of directors. Daniel J. Abdun-Nabi will remain as president and chief executive officer (CEO) and Robert G. Kramer will remain executive vice president and chief financial officer (CFO) of Emergent. Fuad El-Hibri will remain executive chairman of the board of directors.
Upon completion of the spin-off, Marvin L. White will serve as president and CEO of the new biosciences company. Mr. White is currently a member of Emergent’s board of directors. He is the former CFO of St. Vincent’s Health, a $2.8 billion multi-hospital health system. Mr. White previously served as executive director and CFO of Lilly USA, a subsidiary of Eli Lilly and Company, and held other positions in corporate finance at Eli Lilly and Company.
The transaction is intended to take the form of a tax-free distribution to Emergent’s shareholders of common stock of a new publicly traded biosciences company. The stock distribution ratio and other matters, including the stock exchange on which the new biosciences company’s stock will be listed, will be determined at a later date. Emergent will continue to be listed on the New York Stock Exchange.
The initial filing of the Form 10 registration statement with the US Securities and Exchange Comission is expected to occur in the first quarter of 2016. The transaction is expected to be completed in mid-2016, subject to certain conditions, including the receipt of a favorable opinion from outside tax counsel and private letter ruling from the Internal Revenue Service, execution of inter-company agreements by Emergent and the new biosciences company, the effectiveness of the Form 10 registration statement, and final approval of the transaction by Emergent’s board of directors.
Source: Emergent BioSolutions