UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of Earliest Event Reported):
October 8, 2010
(Date of Earliest Event Reported):
October 8, 2010
Trubion Pharmaceuticals, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware (State or Other Jurisdiction of Incorporation) |
001-33054 (Commission File No.) |
52-2385898 (IRS Employer Identification No.) |
2401 Fourth Avenue, Suite 1050, Seattle, WA 98121
(Address of Principal Executive Offices, including Zip Code)
(Address of Principal Executive Offices, including Zip Code)
(206) 838-0500
(Registrants Telephone Number, Including Area Code)
(Registrants Telephone Number, Including Area Code)
None
(Former Name or Former Address, if Changed Since Last Report)
(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:
þ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 8.01. Other Events.
This Form 8-K is being filed pursuant to an agreement in principle regarding settlement of certain
litigation relating to the Agreement and Plan of Merger by and among Trubion Pharmaceuticals, Inc.
(Trubion) and Emergent BioSolutions Inc. (Emergent BioSolutions), 35406 LLC and 30333 Inc.,
dated as of August 12, 2010, as amended.
SETTLEMENT OF CERTAIN LITIGATION
As previously reported by Trubion and Emergent BioSolutions, most recently in a definitive proxy
statement/prospectus filed with the Securities and Exchange Commission (the SEC) on September 23,
2010 (the Proxy Statement/Prospectus), on August 17, 2010, two class action lawsuits were filed in the
Superior Court of Washington, King County (the State Court), against Trubion, its board of
directors, and Emergent BioSolutions (collectively, the Defendants). Those actions, captioned
Rajat Sharma v. Trubion Pharmaceuticals, Inc., et al. (Case Number: 10-2-29637-9-SEA), and Shirley
Harris v. Trubion Pharmaceuticals, Inc., et al. (Case Number: 10-2-29680-8 SEA) allege in summary
that, in connection with the proposed merger of Trubion with Emergent BioSolutions (the Merger),
the members of the Trubion board of directors breached their fiduciary duties by conducting an
unfair sale process and agreeing to an unfair price. Both complaints also claim that Trubion and
Emergent BioSolutions aided and abetted the Trubion board of directors in its breach of fiduciary
duties. On September 9, 2010, the actions were consolidated into the action entitled In re Trubion
Pharmaceuticals, Inc. Shareholder Litigation, Lead Case No. 10-2-29637-9 (the State Action).
On October 1, 2010, the plaintiffs in the State Action served on the Defendants a consolidated
amended class action complaint (the Amended Complaint). The Amended Complaint alleges, among
other things and in addition to the matters alleged in the initial complaints, that the Defendants
omitted material information from the Proxy Statement/Prospectus. The Amended Complaint seeks, among other
things, injunctive relief, and plaintiffs have indicated their intent to file a motion for a
preliminary injunction seeking to enjoin Trubion from holding the stockholder vote on the Merger,
which vote is currently scheduled for October 28, 2010. On October 4, 2010, a class action lawsuit
was filed in the U.S. District Court for the Western District of Washington against the Defendants
captioned Walter Sloboda v. Trubion Pharmaceuticals, Inc., et al. (Case No. C 10-1591 MJP) (the
Federal Action and, collectively with the State Action, the Actions), which makes allegations
related to the Merger that are substantially similar to those matters alleged in the Amended
Complaint, includes additional allegations regarding purported violations of the federal securities
laws and seeks substantially similar relief.
On
October 8, 2010, the Defendants reached agreement in principle with the plaintiffs in the
Actions regarding the settlement of the Actions. In connection with the settlement contemplated by
that agreement in principle, the Actions will be stayed pending approval of the settlement of the
State Action by the State Court. Thereafter, the State Action and all claims asserted therein will
be dismissed with prejudice and counsel for the plaintiff in the Federal Action will take all
necessary steps to dismiss the Federal Action and all claims asserted therein with prejudice. The
terms of the settlement contemplated by that agreement in principle require that Trubion and
Emergent BioSolutions make certain additional disclosures related to the Merger, which are
contained in this Current Report on Form 8-K. The parties also agreed that the plaintiffs in
the Actions may seek attorneys fees and costs in an aggregate amount up to $475,000, with Trubion to pay such
fees and costs if such fees and costs are approved by the State Court. There will be no other
payment by Trubion, any of the members of the Trubion board of directors or Emergent BioSolutions
to the plaintiffs or their respective counsels in connection with the settlement and dismissal of
the Actions. The agreement in principle further contemplates that the parties will enter into a
stipulation of settlement, which will be subject to customary conditions, including State Court
approval following notice to Trubions shareholders. In the event that the parties enter into a
stipulation of settlement, a hearing will be scheduled at which the State Court will consider the
fairness, reasonableness and adequacy of the settlement. There can be no assurance that the parties
will ultimately enter into a stipulation of settlement, that the State Court will approve any
proposed settlement, or that any eventual settlement will be under the same terms as those
contemplated by the agreement in principle.
SUPPLEMENT TO PROXY STATEMENT/PROSPECTUS
In connection with the settlement of certain outstanding shareholder litigation as described in
this Current Report on Form 8-K, Emergent BioSolutions and Trubion have agreed to make these
supplemental disclosures to the Proxy Statement/Prospectus.
The supplemental information set forth below must be read in conjunction with the Proxy
Statement/Prospectus, which should be read in its entirety.
Summary Trubions Reasons for the Merger
The following disclosure is inserted after the third bullet on page 5 of the Proxy
Statement/Prospectus.
| Trubions inability to secure the services of a full time principal executive officer, and the resulting negative impact that the related uncertainty regarding senior leadership has had on the ability of Trubion to execute its long-term strategy; |
Background of the Merger
The 11th paragraph on page 93 of the Proxy Statement/Prospectus is supplemented by adding the
following sentence immediately following the second sentence of such paragraph.
Concurrently with his retirement, Dr. Thompson entered into a consulting agreement with Trubion,
which expires on November 16, 2010, and agreed to make himself available to advise Trubion on
various matters.
The second full paragraph on page 94 of the Proxy Statement/Prospectus is supplemented by adding
the following sentence immediately following the third sentence of such paragraph.
Of the eight companies that entered into nondisclosure agreements with Trubion, one remains subject
to a standstill agreement, which precludes that company from, among other things, commencing a
tender offer for Trubions common stock, but would not preclude that company from making a
proposal, directly to the Trubion board of directors or its management, for a strategic transaction
involving Trubion.
The seventh full paragraph on page 94 of the Proxy Statement/Prospectus is supplemented by adding
the following sentences immediately following the first sentence of such paragraph.
Ms. Burris and the representative from Wedbush had previously met from time to time to discuss
various matters related to the pharmaceutical, biotechnology and life sciences industries. In this
instance, they met in person while both were attending the Life Science Innovation Northwest
Conference in Seattle, Washington, although no formal agenda or discussion topics had been proposed
prior to the meeting.
The fifth full paragraph on page 95 of the Proxy Statement/Prospectus is supplemented by adding the
following sentence immediately following the first sentence of such paragraph.
Despite the fact that TRU-015 had higher than usual biological and clinical activity and no
significant safety concerns, Pfizer decided to pursue SBI-087, a humanized and subcutaneous product
candidate, citing its perception of SBI-087s potential to be a more differentiated product.
The eighth full paragraph on page 95 of the Proxy Statement/Prospectus is supplemented by adding
the following sentence immediately following the second sentence of such paragraph.
The June 21 proposal did not purport to set forth a per share value for Trubion stockholders, nor
is it possible to postulate one, as the proposal contemplated aggregate upfront and contingent
consideration but did not include a discussion regarding the treatment of outstanding Trubion stock
options.
The fifth paragraph on page 96 of the Proxy Statement/Prospectus is supplemented by adding the
following sentence immediately following the first sentence of such paragraph.
Like the June 21 proposal, the June 29 proposal did not purport to set forth a per share value for
Trubion stockholders, nor is it possible to postulate one, as the proposal contemplated aggregate
upfront and contingent consideration but did not include a discussion regarding the treatment of
outstanding Trubion stock options.
The third paragraph on page 97 of the Proxy Statement/Prospectus is supplemented by adding the
following sentence immediately following the second sentence of such paragraph.
Trubions due diligence examination of Emergent BioSolutions business and operations focused on,
among other things, its corporate and capital structure, its third-party contracts, including its
agreements with governmental entities, its manufacturing facilities and capabilities, and its
intellectual property portfolio.
The third paragraph on page 97 of the Proxy Statement/Prospectus is supplemented by adding the
following parenthetical phrase to the third sentence of such paragraph immediately following the
words whether certain third-party consents or approvals would be required by Emergent
BioSolutions as a condition to closing.
(with the parties ultimately agreeing not to require any such consents or approvals other than
antitrust and stockholder approvals)
The sixth paragraph on page 97 of the Proxy Statement/Prospectus is supplemented by adding the
following phrase to the third sentence of such paragraph immediately following the words
substantial reduction in force.
...of approximately 50% of Trubions then-current employees, including the elimination of certain
existing positions across its research and administrative functions
The following disclosure is inserted after the third full paragraph on page 98 of the Proxy
Statement/Prospectus.
At the time that the Trubion board of directors approved the merger agreement, none of its
directors or executive officers had been employed by, or had been offered or entered into any
employment or consulting agreement with, Emergent BioSolutions or any of its current affiliates.
The merger agreement does not require or contemplate any such arrangement as a condition to
completion of the merger. None of the members of the Trubion board of directors will become a
member of the Emergent BioSolutions board of directors, or the board of directors of any of its
affiliates, in connection with completion of the merger.
Trubions Reasons for the Merger; Recommendation of Trubion Board of Directors
The following disclosure is inserted after the second bullet on page 99 of the Proxy
Statement/Prospectus.
| Trubions inability to secure the services of a full time principal executive officer and the resulting negative impact that the related uncertainty regarding senior leadership has had on the ability of Trubion to execute its long-term strategy; |
Opinion of Trubions Financial Advisor
The subsection entitled Discounted Cash Flow Analysis on pages 103-104 of the Proxy
Statement/Prospectus is amended and restated in its entirety as follows.
MTS performed a sum-of-the-parts discounted cash flow analysis on Trubion based on Trubion
management forecasts through 2024 and applying base discount rates of 10%, 11% and 12% to all
product-related cash flows. Corporate overhead was discounted at a rate of 20% to reflect the
early stage nature of Trubion. The cash flows from tax savings associated with net operating
losses were discounted at a non-probability adjusted rate of 13%, which assumes a high likelihood
of utilization but also takes into account the early stage nature of Trubion. No terminal values
were assumed because of the long forecast periods associated with the early stage of development of
Trubions products and the extended period of time before Trubion was expected to become cash flow
positive. In this analysis, a probability of success adjustment, as provided by Trubions
management to MTS, was applied to the projected cash flows for Trubions products. The cumulative
probability of success to approval of the Pfizer program in major indications was assumed to be 5%
and the cumulative probability of success to approval for TRU-016 in first and second indications
was assumed to be 26%. The analysis was also based on the following key assumptions:
| Trubion would hire a new chief executive officer and undertake a reduction in force; | ||
| based on Trubions anticipated cash needs and prevailing market terms for equity financings for comparable companies, Trubion would raise $6.4 million in equity financing at a 20% discount to the current stock price with 50% warrant coverage; and | ||
| Trubion would enter into a research collaboration with a third-party pharmaceutical company with an upfront payment of $5 million, based on estimates from Trubion management. |
MTS conducted a sensitivity analysis on the probability of success of TRU-016 by state of
development at a range of -10.0% to +10.0%. MTS also conducted a sensitivity analysis on the
probability of success of the Pfizer program and determined that it had an immaterial impact on the
overall discounted cash flow valuation of Trubion. MTSs discounted cash flow analysis resulted in
an illustrative value range for the Trubion common stock, rounded to the nearest quarter, of $2.25
to $7.00 per share.
The following sentence is inserted after the first sentence of the second paragraph of the
subsection entitled Comparable Companies Analysis on page 104 of the Proxy
Statement/Prospectus.
MTS noted that some of these comparable companies were at a further stage of development than
Trubion because they had more products in development and/or data from more advanced phases of
clinical trials.
The last sentence of the third paragraph of the subsection entitled Comparable Companies
Analysis on page 104 of the Proxy Statement/Prospectus is amended and restated in its entirety as
follows.
Taking into account Trubions stage of development relative to the comparable companies and
adjusting for Trubions net cash balance of $34.5 million as of June 30, 2010, the comparable
companies analysis resulted in an illustrative value range for the Trubion common stock, rounded to
the nearest dollar, of $4.00 to $8.00 per share.
The following sentence is inserted after the first sentence of the second paragraph of the
subsection entitled Comparable Acquisitions Analysis on page 105 of the Proxy
Statement/Prospectus.
MTS noted that some of these comparable companies were at a further stage of development than
Trubion because they had more products in development and/or data from more advanced phases of
clinical trials.
The last sentence of the third paragraph of the subsection entitled Comparable Acquisitions
Analysis on page 105 of the Proxy Statement/Prospectus is amended and restated in its entirety as
follows.
Taking into account Trubions stage of development relative to the target companies in the
comparable acquisitions and adjusting for Trubions net cash balance of $34.5 million as of June
30, 2010, the comparable acquisitions analysis resulted in an illustrative value range for the
Trubion common stock, rounded to the nearest dollar, of $5.00 to $12.00 per share.
The following phrase is inserted after the words for the mature companies in the first sentence
of the third paragraph of the subsection entitled Forward P/E Analysis (Management Case) on
page 106 of the Proxy Statement/Prospectus.
...in the comparable company group...
The following clause is inserted after the words discount rate of 20% in the second sentence of
the third paragraph of the subsection entitled Forward P/E Analysis (Management Case) on page
106 of the Proxy Statement/Prospectus.
..., which was the midpoint of the discount rates used in the discounted cash flow analyses
The following clause is inserted after the words discount rate of 20% in the first sentence of
the first paragraph of the subsection entitled Forward P/E Analysis (Wall Street Case) on page
106 of the Proxy Statement/Prospectus.
..., which was the midpoint of the discount rates used in the discounted cash flow analyses
The following words are inserted after the words range, reflective of in the first sentence of
the first paragraph of the subsection entitled Comparable Companies Analyses on page 106 of
the Proxy Statement/Prospectus.
...the moderate-growth...
The word biotech following the words multiples of 20.0x 25.0x, in line in the third sentence
of the first paragraph of the subsection entitled Discounted Cash Flow Analysis (Wall Street
Case) on page 107 of the Proxy Statement/Prospectus is replaced as follows.
...with higher growth commercial biotechnology...
The following phrase is inserted after the word Finally, in the third sentence of the second
paragraph of the subsection entitled Comparable Companies Analysis on page 107 of the Proxy
Statement/Prospectus.
...by probability adjusting the expected milestone payments and applying discount rates of 10%, 11%
and 12%,...
Forward-Looking Statements
This communication contains certain forward-looking statements, including, among others, statements
related to the proposed settlement of the Actions, that involve known and unknown risks, delays,
uncertainties and other factors not under the control of Trubion or Emergent BioSolutions. Such
risk factors include the risk that the acquisition of Trubion by Emergent BioSolutions may not be consummated
for various reasons, including that the conditions precedent to the completion of the acquisition
may not be satisfied, the risk that the State Court may not approve of the proposed settlement of
the State Action and other risks that are discussed in Trubions and Emergent BioSolutions
respective filings with the SEC, such as their Form 10-K, 10-Q and 8-K reports. Given these risks
and uncertainties, you are cautioned not to place undue reliance on the forward-looking statements.
Additional Information and Where to Find It
This
communication is being made in connection with the Merger. Emergent
BioSolutions has filed with the SEC a
registration statement on Form S-4, which contains a prospectus relating to the securities Emergent
BioSolutions intends to issue in the proposed Merger. Trubion has filed a definitive proxy statement in
connection with the proposed Merger and mailed the definitive proxy statement and other relevant
documents to Trubions stockholders. Stockholders of Emergent
BioSolutions and Trubion and other interested
persons are advised to read the Proxy Statement/Prospectus because this document contains important
information about Trubion, Emergent BioSolutions and the proposed Merger. The Proxy
Statement/Prospectus was mailed on or about September 27, 2010 to Trubion stockholders of record on
September 21, 2010. Stockholders may obtain a copy of the documents filed with the SEC, without
charge, 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 BioSolutions Trubion and their respective directors and officers may be deemed participants in the
solicitation of proxies from Trubions stockholders. Information regarding Emergent BioSolutions directors and
officers is available in Emergent BioSolutions 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 is also contained in
the proxy statement/prospectus, which is available at the SECs
website. Emergent BioSolutions and Trubions stockholders may obtain additional information about the
interests of Trubions directors and officers in the Merger by reading the proxy statement/prospectus.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly
authorized.
TRUBION PHARMACEUTICALS, INC. |
||||
Date: October 8, 2010 | By: | /s/ John A. Bencich | ||
Name: | John A. Bencich | |||
Title: | Vice President and Chief Financial Officer | |||