MISSISSAUGA, Ontario,
April 11, 2011 /PRNewswire/ --
Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX)
today filed with the Securities and Exchange Commission a
presentation in connection with its written consent solicitation to
stockholders of Cephalon, Inc. (NASDAQ: CEPH) for removal of
Cephalon's current Board of Directors and election of its seven
nominees in their place.
Valeant compares its $73.00 per
share all-cash offer, which would deliver immediate and certain
value to Cephalon stockholders, to the uncertainty of Cephalon's
standalone plan, which relies on the successful commercialization
of a risky pipeline portfolio. Valeant reaffirms its position
that it would be willing to increase its offer price modestly if
Cephalon's Board of Directors would allow Valeant to conduct due
diligence and the results of such due diligence support a higher
offer. However, given Cephalon's rejection of Valeant's offer
and refusal to engage in discussions, completing a transaction may
only be possible following the written consent solicitation with a
new Board of Directors in place.
Valeant is concerned that Cephalon's stockholders are not
receiving a balanced message from the current Cephalon Board of
Directors regarding the company's status or Valeant's offer.
- Cephalon's pipeline is risky and represents uncertain
value. Cephalon has not developed a major novel product
through actual launch since the U.S. launch of Provigil in 1998,
which had already been launched in France by another company in 1994. All
of Cephalon's other large drugs, including Actiq, Treanda, Nuvigil,
Fentora and Amrix, were all either already marketed or based off of
marketed products. The current strategy of developing
untested biotech products departs dramatically from Cephalon's
historical focus of marketing products other companies have
primarily developed and taken through the regulatory process.
- Cephalon is not a high-growth biotechnology company.
Provigil, which accounted for approximately 41% of its
net sales in fiscal year 2010, will face generic competition next
year. Based on IBES consensus equity research estimates, from
2011-2013, Cephalon's revenues and EPS are expected to fall by 20%
and 42%, respectively.
- Cephalon's share price performance prior to Valeant's offer
reflected its declining fundamental value. Repeated pipeline
failures and an inability to fill the impending loss of Provigil
have negatively impacted Cephalon's valuation. In fact,
Cephalon's 52-week high was following rumors of a sale process and
dropped off sharply after Cephalon was unable to attain approval
for Nuvigil for the treatment of jet lag. Concern over
Cephalon's business model was demonstrated by 68% of Wall Street
analysts having ratings equivalent to "sell" or "hold" prior to
Valeant's offer.
- Valeant's offer represents a full and fair premium.
Valeant's $73 per share all cash
offer represents a 29% premium to Cephalon's 30-day trading average
at announcement. The median premium to 30-day trading
averages in all U.S. acquisitions since 2006 was 25%, and 60% of
those acquisitions were completed at a premium of less than 30% to
30-day trading averages. In addition, Valeant's offer already
accounts for the substantial value leakage due to change of control
costs for Cephalon's convertible debt and call spread.
Timing is critical to Valeant. Wall Street analysts
project Cephalon's earnings to decline by more than 40% after
Provigil loses patent protection in 2012. Cephalon's value to
Valeant erodes each day Valeant is delayed in implementing its
business strategy as Provigil's patent expiration approaches.
Cephalon's Board has presided over a loss of value for its
stockholders over the last five years and Valeant believes
Cephalon's current Board's incentives are not aligned with
stockholders. Over the past 5 years, Cephalon's share
price has declined by a compound annual growth rate of -0.5%.
The decline was even more rapid in the year leading up to
Valeant's' offer, with the share price declining 19%.(1)
Additionally, Valeant believes the current Board's interests
are not fully aligned with shareholders as the Board and management
own only 0.25% of basic shares outstanding, and 4 of 9 Board
members hold no common shares of Cephalon at all.
We ask that stockholders vote for the new Board slate in the
consent solicitation. The proposed Board slate is comprised of
highly qualified and well-respected professionals that have the
right experience, skills, and qualifications to effectively govern
Cephalon at this critical juncture:
- In-depth understanding of the pharmaceutical business model and
pipeline valuation through executive positions and directorships at
leading companies, such as GlaxoSmithKline, Quintiles, Meda and
Valeant
- Experience in transformative acquisitions, including Novartis /
Alcon, OSI / Astellas, Valeant / Biovail and Glaxo Wellcome /
SmithKline Beecham
- Exceptional corporate governance record, including one winner
of the National Association of Corporate Directors Lifetime
Achievement Award and another former Director of the Year of the
National Association for Corporate Directors
Valeant believes this vote is a referendum on whether
stockholders want to pursue Valeant's offer and as such we expect
the new Board will enter into negotiations and/or remove the poison
pill to facilitate a tender in which the stockholders can make a
decision for themselves.
"We remain committed to the consent solicitation process we have
outlined," said J. Michael Pearson,
chairman and chief executive officer. "Cephalon's
stockholders own the company and should decide whether they prefer
to engage in discussions for our $73
cash offer or continue with the risks and uncertainties associated
with Cephalon's research-dependent standalone strategy. We
believe the choice is clear and if stockholders agree with us, we
will move forward as quickly as possible. If not, we will
move on."
Valeant expects to mail its consent solicitation materials to
Cephalon stockholders during the week of April 18, 2011 and has set a May 12, 2011 deadline for delivery of
consents.
About Valeant
Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX:
VRX) is a multinational specialty pharmaceutical company that
develops, manufactures and markets a broad range of pharmaceutical
products primarily in the areas of neurology, dermatology and
branded generics. More information about Valeant can be found at
www.valeant.com.
Forward-looking Statements
This press release may contain forward-looking statements,
including, but not limited to, statements regarding Valeant's offer
to acquire Cephalon, Valeant's intent to commence a consent
solicitation process and its financing of the proposed transaction.
Forward-looking statements may be identified by the use of the
words "anticipates," "expects," "intends," "plans," "should,"
"could," "would," "may," "will," "believes," "estimates,"
"potential," or "continue" and variations or similar expressions.
These statements are based upon the current expectations and
beliefs of management and are subject to certain risks and
uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. These risks
and uncertainties include, but are not limited to, risks and
uncertainties discussed in the company's most recent annual or
quarterly report filed with the Securities and Exchange Commission
("SEC") and risks and uncertainties relating to the proposed
merger, as detailed from time to time in Valeant's filings with the
SEC and the Canadian Securities Administrators ("CSA"), which
factors are incorporated herein by reference. Readers are cautioned
not to place undue reliance on any of these forward-looking
statements. Valeant undertakes no obligation to update any of these
forward-looking statements to reflect events or circumstances after
the date of this press release or to reflect actual outcomes.
CERTAIN INFORMATION CONCERNING POTENTIAL PARTICIPANTS IN A
SOLICITATION; ADDITIONAL INFORMATION AND WHERE TO FIND IT
This communication may be deemed to be solicitation material in
respect of the proposed removal of directors from, and election of
directors to, the Board of Directors of Cephalon, as well as the
repeal of any changes to Cephalon's Bylaws. On April 5, 2011, Valeant filed a preliminary
consent solicitation statement with the SEC. THAT DOCUMENT SETS
FORTH THE IDENTITY OF THE PARTICIPANTS IN THE SOLICITATION AND A
DESCRIPTION OF THEIR DIRECT OR INDIRECT INTERESTS, BY SECURITY
HOLDINGS, OR OTHERWISE, AND IS AVAILABLE AT THE WEB SITE MAINTAINED
BY THE SEC AT WWW.SEC.GOV. OR FROM VALEANT'S WEBSITE AT
WWW.VALEANT.COM UNDER THE TAB "INVESTOR RELATIONS" AND THEN UNDER
THE HEADING "SEC FILINGS," OR , FOR FREE, BY DIRECTING A REQUEST TO
VALEANT, 7545 IRVINE CENTER DRIVE, CALIFORNIA, 92618, ATTENTION: CORPORATE
SECRETARY.
This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities. No tender offer
for the shares of Cephalon has commenced at this time.
In connection with any tender offer or consent solicitation,
Valeant will file relevant materials, which may include a tender
offer statement, and a definitive consent solicitation statement
and/or other documents, with the SEC. The definitive consent
solicitation statement filed by Valeant with the SEC will include
the form of gold consent card to be completed and delivered by each
Cephalon stockholder that desires to provide written consent in
connection with the consent solicitation. ALL INVESTORS AND
SECURITY HOLDERS OF CEPHALON ARE URGED TO READ ANY SUCH DOCUMENTS
FILED WITH THE SEC BY VALEANT CAREFULLY AND IN THEIR ENTIRETY,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ANY SUCH
TRANSACTION. Investors and security holders will be able to obtain
free copies of documents filed with the SEC by Valeant (when they
become available) in the same manner as set forth above with
respect to the preliminary consent solicitation statement.
(1) Share price calculated off of 29-Mar-2011 closing price, prior to Valeant's
public offer.
Contact Information:
Investors:
Laurie W. Little
Valeant Pharmaceuticals International, Inc.
949-461-6002
laurie.little@valeant.com
Media:
Renee E. Soto
Sard Verbinnen & Co.
212-687-8080
rsoto@sardverb.com
Cassandra Bujarski
Sard Verbinnen & Co.
212-687-8080
cbujarski@sardverb.com
(Logo:
http://photos.prnewswire.com/prnh/20101025/LA87217LOGO)
SOURCE Valeant Pharmaceuticals International, Inc.