Filed by a Party other than the Registrant ☐
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☐
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a‑6(e)(2))
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☐
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Definitive Proxy Statement
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☒
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Definitive Additional Materials
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☐
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Soliciting Material Pursuant to §240.14a‑2
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Arena Pharmaceuticals, Inc. |
(Name of Registrant as Specified In Its Charter) |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a‑6(i)(4) and 0‑11.
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1.
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Title of each class of securities to which transaction applies:
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2.
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Aggregate number of securities to which transaction applies:
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3.
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0‑11
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(Set forth the amount on which the filing fee is calculated and state how it was determined):
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4.
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Proposed maximum aggregate value of transaction:
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5.
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0‑11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its filing.
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6.
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Amount Previously Paid:
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7.
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Form, Schedule or Registration Statement No.:
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8.
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Filing Party:
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9.
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Date Filed:
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(dollars in millions)
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2022E
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2023E
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2024E
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2025E
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2026E
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2027E
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2028E
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2029E
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2030E
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2031E
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2032E
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2033E
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2034E
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2035E
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2036E
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2037E
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2038E
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2039E
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2040E
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Risk Adjusted Total Revenue
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$
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106
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$
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44
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$
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93
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$
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568
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$
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934
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$
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1,391
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$
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1,830
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$
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2,322
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$
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3,055
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$
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3,640
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$
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4,156
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$
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4,584
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$
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4,695
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$
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4,782
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$
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4,944
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$
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5,070
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$
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4,339
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$
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1,927
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$
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1,299
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EBIT(1)
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$
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(618
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)
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$
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(876
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)
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$
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(872
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)
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$
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(484
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)
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$
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(85
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)
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$
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360
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$
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758
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$
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1,231
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$
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1,864
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$
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2,356
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$
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2,777
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$
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3,114
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$
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3,184
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$
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3,232
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$
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3,388
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$
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3,470
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$
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2,871
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$
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1,068
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$
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591
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Unlevered Free Cash Flow(2)
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$
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(619
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)
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$
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(878
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)
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$
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(885
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)
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$
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(535
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)
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$
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(153
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)
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$
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295
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$
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660
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$
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1,094
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$
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1,670
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$
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1,931
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$
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2,007
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$
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2,274
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$
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2,367
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$
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2,406
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$
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2,513
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$
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2,581
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$
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2,235
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$
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1,161
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$
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535
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(1) |
EBIT calculated as total revenue minus total operating expenses and includes the impact of stock-based compensation.
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(2) |
Unlevered free cash flow calculated as EBIT less (i) taxes, less (ii) net working capital, less (iii) capital expenditures, plus (iv) depreciation and amortization.
Unlevered free cash flow reflects a long-term tax rate of 25% and utilization of Arena’s estimated net operating losses of $1,541 million as of December 31, 2021. In calculating unlevered free cash flow, Evercore did not offset Arena’s taxes
by net operating losses, resulting in a decrease to unlevered free cash flow of $90 million in 2027, $153 million in 2028, $246 million in 2029, $373 million in 2030 and $257 million in 2031. Evercore separately calculated the present value
of the tax savings from Arena’s estimated usage of net operating losses and included the result in its determination of estimated implied equity values
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Month and Year Announced
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Acquiror
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Target
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Enterprise Value
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T+5 Revenue Multiple
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November 2021
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Novo Nordisk A/S
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Dicerna Pharmaceuticals, Inc.
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$2.7 billion
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8.5x
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March 2021
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Amgen Inc.
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Five Prime Therapeutics, Inc.
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$1.6 billion
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4.2x
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August 2020
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Sanofi S.A.
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Principia Biopharma
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$3.4 billion
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6.7x
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January 2020
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Eli Lilly and Company
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Dermira, Inc.
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$1.1 billion
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2.1x
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November 2019
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Novartis AG
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The Medicines Company
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$9.4 billion
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5.6x
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October 2018
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Novartis AG
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Endocyte Inc.
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$1.8 billion
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3.3x
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May 2018
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Eli Lilly and Company
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Armo Biosciences, Inc.
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$1.5 billion
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4.3x
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January 2018
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Celgene Corporation
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Juno Therapeutics, Inc.
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$10.0 billion
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4.4x
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July 2015
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Celgene Corporation
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Receptos Inc.
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$7.2 billion
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7.1x
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• |
Specifically, with respect to (i) the Projections utilized in Guggenheim Securities’ analyses, (a) Guggenheim Securities was advised by Arena’s senior management, and
Guggenheim Securities assumed, that the Projections (including the probability adjustments reflected therein and the expected development and commercialization of Arena’s products and product candidates), had been reasonably prepared on bases
reflecting the best then-currently available estimates and judgments of Arena’s senior management as to the expected future performance of Arena on a stand-alone basis and (b) Guggenheim Securities assumed that the Projections had been
reviewed by the Board of Directors with the understanding that such information would be used and relied upon by Guggenheim Securities in connection with rendering its opinion and (ii) any financial projections/forecasts, other estimates
and/or other forward-looking information obtained by Guggenheim Securities from public sources, data suppliers and other third parties, Guggenheim Securities assumed that such information was reasonable and reliable. Guggenheim Securities
noted that the Projections were the only non-public financial projections relied upon by Guggenheim Securities in connection with its opinion.
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Guggenheim Securities based its financing-adjusted discounted cash flow analysis of Arena on the Projections.
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Guggenheim Securities used a discount rate range of 8.00% - 9.75% based on its estimate of Arena’s weighted average cost of capital (which was
estimated based on Guggenheim Securities’ (i) investment banking and capital markets judgment and experience in valuing companies similar to Arena and (ii) application of the capital asset pricing model, which requires certain (a) general
inputs such as the prospective US equity risk premium and the corresponding risk-free rate and (b) company specific inputs such as the subject company’s forward looking equity beta reference range, the subject company’s assumed
forward-looking capital structure and the corresponding blended cost of debt, the subject company’s prospective marginal cash income tax rate and, as applicable, the appropriate size/liquidity premium for the subject company).
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In estimating Arena’s terminal/continuing value, Guggenheim Securities used a perpetual growth rate of negative 70% (as provided and approved for
Guggenheim Securities’ use by Arena’s senior management) applied to Arena’s terminal year normalized after-tax unlevered free cash flow based on 2040 net operating profit after tax ($443 million).
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Date
Announced
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Acquiror
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Target Company
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T+5 Revenue
Multiple
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Enterprise
Value
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09/30/21
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Merck & Co.
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Acceleron Pharma Inc.
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6.5x
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$10.8 billion
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10/05/20
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Bristol-Myers Squibb Company
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MyoKardia, Inc.
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14.8
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$12.2 billion
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08/19/20
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Johnson & Johnson
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Momenta Pharmaceuticals, Inc.
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8.5
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$6.1 billion
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03/02/20
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Gilead Sciences, Inc.
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Forty Seven, Inc.
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7.0
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$4.6 billion
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11/24/19
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Novartis AG
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The Medicines Co.
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6.2
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$6.4 billion
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01/07/19
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Eli Lilly and Company
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Loxo Oncology, Inc.
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10.3
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$7.3 billion
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01/29/18
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Sanofi S.A.
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Ablynx NV
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6.7
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$4.4 billion
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01/22/18
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Celgene Corporation
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Juno Therapeutics, Inc.
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4.0
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$10.0 billion
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05/16/16
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Pfizer Inc.
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Anacor Pharmaceuticals, Inc.
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4.1
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$5.2 billion
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08/24/14
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Roche Holding AG
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InterMune, Inc.
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5.0
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$8.4 billion
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Arena/Pfizer Merger
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6.4x
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$0.9 billion
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