Inkine Pharmaceutical (NASDAQ:INKP)
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Salix Pharmaceuticals, Ltd. (NASDAQ: SLXP) and InKine
Pharmaceutical Company, Inc. (NASDAQ: INKP) announced today that the
two companies have entered into a definitive merger agreement under
which InKine stockholders will receive Salix common stock valued at
$3.55 per share of InKine common stock, or approximately $190 million
in equity value. On a GAAP basis, the transaction is expected to be
EPS neutral to Salix in 2006 and significantly accretive thereafter.
The merger agreement, which was approved by the board of directors of
both companies, provides that InKine stockholders will receive newly
issued shares of Salix common stock in exchange for each share of
InKine common stock with the final exchange ratio to be determined
based on Salix's stock price prior to closing.
This merger brings together two complementary companies to create
the largest specialty pharmaceutical company focused exclusively on
gastroenterology. The combined company will be marketing six
gastroenterology products, led by COLAZAL(R), XIFAXAN(TM) and
VISICOL(R). A New Drug Application for INKP-102, InKine's
second-generation purgative product, was filed with the U.S. Food and
Drug Administration in April 2005 and is currently under review. The
combined company also will be developing a gastroenterology product
pipeline comprised of numerous Phase III candidates and projects.
"The combination of Salix and InKine provides an unparalleled
opportunity for each company to capitalize on their assets in the
short-term and strengthen their prospects for continued growth over
the long-term," stated Carolyn J. Logan, President and Chief Executive
Officer, Salix Pharmaceuticals. "The combined company should benefit
from the expanded reach and penetration of a sales force totaling
approximately 100 specialty sales representatives focused on
gastroenterologists. The addition of VISICOL tablets to our product
portfolio provides Salix entry into the growing purgative/bowel
preparation market along with the potential to enter the prescription
constipation market with InKine's second-generation purgative product,
INKP-102. We view VISICOL and INKP-102 as key additions to our mission
to provide important and effective products to gastroenterologists and
their patients. We believe the opportunity to combine the assets of
our two companies should benefit all the combined company's
stakeholders - patients, physicians, stockholders and employees."
Commenting on the merger, Leonard S. Jacob, M.D., Ph.D., Chairman
and Chief Executive Officer, InKine Pharmaceutical Company, stated,
"We believe the combination of InKine and Salix will provide critical
mass to further grow sales of VISICOL, the only FDA-approved tablet
for bowel preparation prior to colonoscopy, and fund the timely launch
of our next-generation purgative agent, INKP-102. We are confident
that the expanded gastroenterology-focused marketing and sales effort
of the combined company will substantially increase the adoption and
utilization of InKine's products which will benefit our stockholders
now and in the future."
RATIONALE FOR MERGER
This transaction should accelerate both companies' strategic
initiatives. The addition of VISICOL(R), InKine's flagship product
with patent protection to 2013, and INKP-102, a product with potential
patent-protection through 2024, to the Salix product portfolio
represents the next opportunity for Salix to create stockholder value
by leveraging its primary asset - its top-performing specialty sales
force. The combination of the two companies represents an opportunity
for InKine to take advantage of the strength of the marketing and
sales capabilities of the combined company in order to more rapidly
penetrate the purgative market and capitalize on its key assets -
VISICOL, the first and only tablet formulation purgative product - and
INKP-102, a second-generation purgative product, potentially
approvable in both colonoscopy preparation and in constipation. Among
other things, the combined entity:
-- Represents a combination of assets with strategic fit and
clear rationale for ongoing growth;
-- Creates the largest and most-respected specialty sales force
in gastroenterology;
-- Enhances the ability to pursue additional product acquisitions
to improve ongoing growth prospects;
-- Offers immediate opportunity to capitalize on VISICOL, COLAZAL
and XIFAXAN's strong growth potential; and
-- Broadens and strengthens the portfolio of marketed and
potential, patent-protected products available to drive
revenue.
Salix is committed to retaining the best management team and
marketing and sales team for the combined company and recognizes that
a number of the current InKine employees are complementary to the
Salix team. Salix will retain certain InKine senior executives to help
lead the combined entity.
The combined company will continue to operate out of Salix's
corporate headquarters in Raleigh, NC. The combined company will sell
its products through a sales force comprised of approximately 100
specialty sales representatives focused on gastroenterologists who
will serve in geographic locations across the United States.
TRANSACTION TERMS
Salix's business combination with InKine will take the form of a
tax-free stock-for-stock merger and is expected to be completed in the
fourth quarter of 2005. Under the terms of the agreement, InKine
shareholders will receive newly issued shares of Salix common stock
for each InKine share owned based on an exchange ratio. This exchange
ratio will equal $3.55 divided by the average (rounded to the nearest
cent) of the per share closing prices of Salix common stock as
reported by NASDAQ during the 40 trading days ending two days prior to
the closing of the transaction; however, if this average is greater
than $20.44, then the exchange ratio will be 0.1737, and if this
average is less than $16.00, then the exchange ratio will be 0.2219.
Cash will be paid for fractional shares.
The transaction is subject to clearance under the
Hart-Scott-Rodino Antitrust Improvements Act, approval of InKine's
stockholders and approval of Salix's stockholders. In association with
the transaction, Salix anticipates it may incur charges associated
with purchase accounting which will be detailed following its closing.
Banc of America Securities is acting as exclusive financial
advisor to Salix; and Wyrick Robbins Yates & Ponton LLP is acting as
legal counsel to Salix in the transaction. UBS Securities LLC is
acting as exclusive financial advisor to InKine; and Morgan, Lewis &
Bockius LLP is acting as legal counsel to InKine in the transaction.
CONFERENCE CALL INFORMATION
Salix will host a joint conference call to discuss the contents of
this press release at 5:00 p.m. ET, on Thursday, June 23, 2005.
Interested parties may access the conference call by way of web cast
or telephone. The live web cast will be available at
http://www.salix.com. A replay of the web cast will be available at
the same location.
The telephone numbers to access the conference call are (800)
946-0719 (U.S. and Canada) or (719) 457-2645 (international.) The
access code for the call is 6154011. A replay of the call will be
available beginning at 8:00 p.m. ET. The telephone numbers to access
the replay of the call are (888) 203-1112 (U.S. and Canada) or (719)
457-0820 (international.) The access code for the replay is 6154011.
ABOUT SALIX
Salix Pharmaceuticals, Ltd., headquartered in Raleigh, North
Carolina, develops and markets prescription pharmaceutical products
for the treatment of gastrointestinal diseases. Salix's strategy is to
in-license late-stage or marketed proprietary therapeutic drugs,
complete any required development and regulatory submission of these
products, and market them through Salix's gastroenterology specialty
marketing and sales team.
Salix's first marketed product is COLAZAL(R) (balsalazide
disodium) Capsules 750 mg, an anti-inflammatory drug approved for the
treatment of mildly to moderately active ulcerative colitis. Salix
launched the product in the U.S. through its specialty sales force in
January 2001. Safety and effectiveness of COLAZAL beyond 12 weeks has
not been established. COLAZAL was well tolerated in clinical studies.
In clinical trials, patients reported the following adverse events
most frequently: headache (8%); abdominal pain (6%); diarrhea (5%);
nausea (5%); vomiting (4%); respiratory infection (4%); and arthralgia
(4%). Withdrawal from therapy due to adverse events was comparable to
placebo.
XIFAXAN(TM) (rifaximin) tablets 200 mg are indicated for the
treatment of patients (greater than or equal to 12 years of age) with
travelers' diarrhea caused by noninvasive strains of Escherichia coli.
XIFAXAN should not be used in patients with diarrhea complicated by
fever or blood in the stool or diarrhea due to pathogens other than
Escherichia coli. XIFAXAN should be discontinued if diarrhea symptoms
get worse or persist more than 24-48 hours and alternative antibiotic
therapy should be considered. In clinical trials, XIFAXAN was
generally well tolerated. The most common side effects (vs. placebo)
were flatulence 11.3% (vs. 19.7%), headache 9.7% (vs. 9.2%), abdominal
pain 7.2% (vs. 10.1 %) and rectal tenesmus 7.2% (vs. 8.8%).
Salix also markets AZASAN(R) (azathioprine 75mg and 100mg tablets,
USP), Anusol-HC(R) 2.5% (hydrocortisone Cream USP), Anusol-HC(R) 25 mg
Suppository (Hydrocortisone Acetate), Proctocort(R) Cream
(Hydrocortisone Cream USP) 1% and Proctocort(R) Suppositories
(Hydrocortisone Acetate Rectal Suppositories, 30 mg). Granulated
mesalamine is under development.
ABOUT INKINE
InKine Pharmaceutical Company, Inc., headquartered in Blue Bell,
PA, is a publicly traded specialty pharmaceutical company focused on
developing and commercializing pharmaceutical products for the
diagnosis and treatment of gastrointestinal disorders. InKine's
development strategy is to acquire late-stage drug candidates with
short times to commercialization. InKine's first franchise product,
VISICOL, is the only tablet purgative preparation indicated for bowel
cleansing prior to colonoscopy.
VISICOL(R) Tablets (sodium phosphate monobasic monohydrate, USP,
sodium phosphate dibasic anhydrous, USP) are indicated for cleansing
of the bowel as a preparation for colonoscopy, in adults 18 years of
age or older. VISICOL(R) Tablets are the only FDA approved tablets
available to adults for bowel preparation prior to colonoscopy.
VISICOL Tablets are virtually taste-free, can be taken with any clear
liquid such as water, lemonade or ginger ale, and have been proven to
be associated with significantly less nausea, vomiting and bloating
than the leading, currently-available, prescribed class of liquid
bowel preparations. VISICOL Tablets are not to be used in patients
with congestive heart failure, ascites, unstable angina pectoris,
gastric retention, ileus or acute obstruction or pseudo-obstruction,
severe chronic constipation, bowel perforation, acute colitis, toxic
megacolon or hypomotility syndrome. Use with caution in patients with
impaired renal function, pre-existing electrolyte disturbances, or
people taking drugs that affect electrolyte levels.
Salix trades on the Nasdaq National Market under the ticker symbol
"SLXP".
InKine trades on the Nasdaq Small Cap Market under the ticker
symbol "INKP".
For more information on Salix please call 919-862-1000 or visit
www.salix.com. Information on the web site is not incorporated in
Salix's SEC filings.
For more information on InKine please call 215 283-6850 or visit
www.InKine.com. Information on the web site is not incorporated in
InKine's SEC filings.
AZASAN(R) is a registered trademark of aaiPharma Inc.
XIFAXAN(TM) is licensed from Alfa Wassermann SpA.
VISICOL(R) is a registered trademark of InKine Pharmaceutical
Company, Inc.
Please Note: This press release contains forward-looking
statements regarding future events including statements regarding the
effect of the transaction to EPS, the benefits of the merger to InKine
and Salix and to each of their stockholders, the timing of completion
of the transaction and potential purchase accounting charges. These
statements are just predictions and are subject to risks and
uncertainties that could cause the actual events or results to differ
materially. These risks and uncertainties include receipt of
regulatory and stockholder approval, integration of the two companies,
post closing, market acceptance for the transaction and approved
products, management of rapid growth, risks of regulatory review and
clinical trials, intellectual property risks, and the need to acquire
additional products. The reader is referred to the documents that
Salix and InKine file from time to time with the Securities and
Exchange Commission.
Additional Information
In connection with the merger between Salix and InKine, Salix
intends to file with the SEC a registration statement on Form S-4,
containing a joint proxy statement/prospectus and other relevant
materials. INVESTORS AND SECURITY HOLDERS OF SALIX AND INKINE ARE
URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND THE OTHER
RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT SALIX, INKINE AND THE MERGER. The
joint proxy statement/prospectus and other relevant materials (when
they become available), and any other documents filed by Salix or
InKine with the SEC, may be obtained free of charge at the SEC's web
site at www.sec.gov. In addition, investors and security holders may
obtain free copies of the documents (when they are available) filed
with the SEC by Salix by directing a request to: Salix
Pharmaceuticals, Ltd., 1700 Perimeter Park Drive, Morrisville, North
Carolina 27560, Attn: Investor Relations. Investors and security
holders may obtain free copies of the documents filed with the SEC by
InKine by contacting InKine Pharmaceutical Company, Inc., 1787 Sentry
Parkway West, Building 18, Suite 440, Blue Bell, Pennsylvania 19422.
Attn: Investor Relations
Salix, InKine and their respective executive officers and
directors may be deemed to be participants in the solicitation of
proxies from the stockholders of Salix and InKine in favor of the
merger. Information about the executive officers and directors of
Salix and their ownership of Salix common stock is set forth in the
proxy statement for Salix's 2005 Annual Meeting of Stockholders, which
was filed with the SEC on April 29, 2005. Information about the
executive officers and directors of InKine and their ownership of
InKine common stock is set forth in the proxy statement for InKine's
2005 Annual Meeting of Stockholders, which was filed with the SEC on
May 2, 2005. Investors and stockholders may obtain more detailed
information regarding the direct and indirect interests of Salix,
InKine and their respective executive officers and directors in the
merger by reading the joint proxy statement/prospectus regarding the
merger when it becomes available.