Ligand Pharmaceuticals Incorporated (NasdaqGM:LGND) signed a definitive agreement to acquire Pfenex Inc. (AMEX:PFNX) for approximately $460 million on August 10, 2020. Under the terms of the transaction, Ligand will commence a tender offer to acquire all of the outstanding shares of Pfenex's common stock for $12 per share in cash. In addition, Ligand will pay $2 per share or $78 million as a contingent value right (CVR) if Therapeutic Equivalence for Teriparatide Injection is achieved in the US by December 31, 2021. The option holders will receive excess, if any, of the cash portion over the per share exercise price of such in the money options plus CVR Portion. All Directors and Chief Executive Officer of Pfenex Inc. have entered into a support agreement and agreed, among other things, and subject to the terms and conditions of the support agreements, to tender all of their respective shares in Pfenex Inc. (including those owned through the exercise of options into the offer, which, as of August 9, 2020, in the aggregate represent approximately 6% of the outstanding shares of Pfenex Inc.'s common stock). The tender offer will be commenced no later than August 31, 2020. The transaction will be funded by Ligand with cash on hand. Until the closing of the proposed transaction, Pfenex will continue to operate as an independent company. After the transaction, Pfenex Inc. will become a wholly owned subsidiary of Ligand Pharmaceuticals Incorporated. In the event, the transaction is terminated, Pfenex Inc. will pay a termination fee of $17.5 million to Ligand Pharmaceuticals Incorporated.

There are no discussion regarding potential layoffs. Post completion, Pfenex's team will join Ligand. The tender offer is subject to customary conditions, including the tender of a majority of the outstanding shares of Pfenex's common stock, customary conditions, regulatory approvals and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The offer is not subject to any financing condition. The Board of Directors of Pfenex Inc. unanimously recommends that stockholders tender their shares of common stock in the offer. The Board of Directors of Ligand Pharmaceuticals Incorporated and Pfenex Inc. unanimously approved the transaction. On September 8, 2020, Federal Trade Commission and the Antitrust Division of the DOJ granted early termination notice. The offer will expire at midnight at the end of the day on the date that is (20) business days following the commencement of the offer, unless extended in accordance with the terms of the merger agreement, including as required by the applicable rules and regulations of the U.S. Securities and Exchange Commission. As of August 31, Ligand Pharmaceuticals commenced a tender offer to purchase all outstanding shares of common stock of Pfenex. The transaction is expected to close in the fourth quarter of 2020. The tender offer will expire on September 29, 2020. The acquisition is expected to contribute a profitable, cash-flow positive business that is projected to be accretive to Ligand's adjusted diluted EPS beginning in 2021. Ligand expects the transaction will be modestly dilutive to 2020 adjusted diluted EPS, will provide $0.10 to $0.30 of adjusted diluted EPS accretion in 2021, and will provide significant annual adjusted diluted EPS accretion thereafter with the current forecast of $0.60 to $0.80 in 2022 and $1.25 to $1.50 in 2023. The acquisition holds potential to have a significantly positive scientific and financial impact on Ligand's business in the short and long term. William Blair & Company, L.L.C. acted as financial advisor and Dan Koeppen, Zachary Myers and Ethan Lutske of Wilson Sonsini Goodrich & Rosati acted as legal advisors to Pfenex. Barclays Capital Inc. acted as financial advisor and Matt Bush and R. Scott Shean of Latham & Watkins LLP acted as legal advisors to Ligand Pharmaceuticals. A fairness opinion fee of $2 million became payable to William Blair upon delivery of its fairness opinion. A fee of approximately $5,474,095, less any fairness opinion fee previously paid to William Blair, will become payable to William Blair upon the consummation of the merger. An additional approximately $972,856 will become payable to William Blair if and when the CVR Portion is paid to holders. D.F. King & Co., Inc. is acting as information agent and American Stock Transfer & Trust Company, LLC is acting as depositary in the tender offer to Pfenex.

Ligand Pharmaceuticals Incorporated (NasdaqGM:LGND) completed the acquisition of Pfenex Inc. (AMEX:PFNX) on September 29, 2020. As of the expiration of the offer, a total of 24.7 million shares (excluding shares with respect to which notices of guaranteed delivery were delivered) were validly tendered and not properly withdrawn pursuant to the Offer, representing approximately 72.0% of Pfenex shares outstanding. In addition, notice of guaranteed delivery have been delivered with respect to approximately 2.85 million shares that have not yet been tendered, representing approximately 8.3% of the outstanding shares. As of the expiration of the offer, the number of shares validly tendered and not validly withdrawn pursuant to the offer satisfied the minimum condition, and all other conditions to the offer were satisfied or waived. As a consequence of the merger, each outstanding Pfenex share not tendered and purchased in the offer will be converted into the right to receive the same offer price. Following completion of the merger, Pfenex will become a wholly owned subsidiary of Ligand. Pfenex's common stock will cease to be traded on the New York Stock Exchange American. Ligand expects the merger to close on October 1, 2020.