On October 6, 2017, pursuant to the Asset Purchase Agreement, dated as of July 14, 2017, with Sanofi Pasteur Biologics, LLC and Acambis Research Ltd. (collectively, the "Seller"), Emergent completed the previously announced acquisition of certain assets and liabilities of Seller relating to the ACAM2000^® (Smallpox (Vaccinia) Vaccine, Live) business. At the closing, Emergent paid $97.5 million in an upfront payment and $20 million in milestone payments earned as of the closing date and tied to the achievement of certain regulatory and manufacturing-related milestones, for a total payment in cash of $117.5 million. The agreement includes a potential milestone payment of up to $7.5 million, tied to the achievement of the remaining regulatory milestone event.

Emergent acquired, among other assets, (1) ACAM2000, the only vaccine approved by the Food and Drug Administration for active immunization against smallpox disease, (2) an existing ten-year contract, originally valued at up to $425 million, with the Centers for Disease Control and Prevention ("CDC") with a remaining value of up to approximately $160 million for deliveries of ACAM2000 to the Strategic National Stockpile and (3) a U.S.-based facility for cGMP manufacturing of ACAM2000, the lease to a U.S.-based cGMP facility for the fill/finish of ACAM2000 along with approximately 100 employees involved in the production of ACAM2000.

In connection with the closing of the transaction, Emergent entered into various agreements with Seller and their affiliates, including: (1) a pre-novation agreement pursuant to which Seller is subcontracting to Emergent the rights and obligations of Seller under the CDC agreement until novation of the CDC agreement to Emergent is effective; (2) a bulk manufacturing agreement for a ten-year term under which Emergent will manufacture the Seller's Japanese encephalitis virus vaccine ("JEVV") on behalf of Seller at the cGMP manufacturing facility located in Canton, Massachusetts acquired by Emergent in connection with the transaction; and (3) a transitional services agreement pursuant to which Seller will be performing certain services on behalf of Emergent for a limited period of time following the closing of the transaction.

The completion of the acquisition follows the satisfaction or waiver by the parties, as applicable, of all closing conditions, including termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Additional information and details regarding the Agreement and the acquisition were previously disclosed in Item 1.01 of Emergent's Form 8-K filed on July 14, 2017, which is incorporated by reference into this Item 2.01. The foregoing description of the terms and conditions of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, which was filed as Exhibit 2 to Emergent's Form 8-K filed on July 14, 2017.

The Agreement is not intended to provide any other factual information about Emergent or Seller. In particular, the assertions embodied in the representations and warranties contained in the Agreement were qualified by information in the disclosure schedules provided by Seller to Emergent in connection with the signing of the Agreement or in filings of the parties with the Securities and Exchange Commission. These confidential disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties and certain covenants set forth in the Agreement. Moreover, certain representations, warranties and covenants in the Agreement were used for the purposes of allocating risk between Emergent and the Seller rather than establishing matters of fact or reflecting what investors may view as material. Accordingly, the representations and warranties and covenants in the Agreement or any descriptions thereof should not be relied on as a characterization of the actual state of facts about Emergent or Seller or their respective subsidiaries or affiliates. Additionally, the representations, warranties, covenants, conditions and other terms of the Agreement were made subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations and warranties and covenants in the agreement may have changed after the date of the agreement, which subsequent information may or may not be fully reflected in Emergent's or the Seller's public disclosures.

 

 

Item 7.01.  Regulation FD Disclosure.

On October 6, 2017, Emergent issued a press release announcing completion of the acquisition, which is filed as Exhibit 99 hereto.