Item 1.01. Entry into a Material Definitive Agreement.
Asset Purchase Agreement and Debt Financing
On April 21, 2023, Amphastar Pharmaceuticals, Inc., a Delaware corporation
("Amphastar" or the "Company"), entered into an Asset Purchase Agreement (the
"Purchase Agreement") with Eli Lilly and Company, an Indiana corporation
("Lilly"), pursuant to which Amphastar's wholly owned subsidiary, Amphastar
Medication Co., LLC, a Delaware limited liability company ("Amphastar
Medication"), has agreed to acquire Lilly's BAQSIMI® glucagon nasal powder
("BAQSIMI®") and related assets (the "Transferred Assets") and assume certain
liabilities (the "Assumed Liabilities") for a purchase price of $500 million in
cash payable at the closing of the transaction (the "Acquisition"). In addition,
Amphastar will pay Lilly a $125 million guaranteed payment on the first
anniversary after the consummation of the transactions contemplated by the
Purchase Agreement (the "Closing"). Amphastar may also be required to pay
additional contingent consideration of up to $450 million to Lilly based on the
achievement of certain milestones. Amphastar agreed to guarantee all obligations
of Amphastar Medication under the Purchase Agreement.
The Board of Directors of Amphastar has approved the Purchase Agreement and the
transactions contemplated thereby.
The Purchase Agreement provides that the contingent consideration that may
become payable to Lilly would be achieved as follows: (i) a one-time payment of
$100 million each if Amphastar achieves annual net sales of $175 million or more
of BAQSIMI® and certain related products (the "Milestone Products") in any one
year during the first five (5) years after the Closing; (ii) up to two (2)
payments of $100 million each if Amphastar achieves annual net sales of $200
million or more of Milestone Products in any one year during the first five
years after the Closing; and (iii) a one-time payment of $150 million if
Amphastar achieves total cumulative net sales of $950 million or more of the
Milestone Products for the first five (5) years after the Closing. In addition,
the Assumed Liabilities will include an assumption of certain earnout
obligations of Lilly, which would require Amphastar to pay up to an aggregate of
$125 million based on the achievement of annual net sales milestones of $350
million, $400 million and $600 million.
The Purchase Agreement includes customary representations, warranties and
covenants, including certain covenants, among other things, that (i) Lilly will,
prior to the Closing, conduct the development, manufacture, and
commercialization of BAQSIMI® (the "Business") in the ordinary course of
business consistent with past practice, (ii) each party will, prior to the
Closing, use reasonable best efforts to obtain required regulatory approvals for
the Closing and (iii) Lilly will assist in transitioning certain third-party
arrangements for the Business to Amphastar.
The Closing is subject to customary conditions, including, among other things,
the expiration or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other
closing conditions, such as the accuracy of representations and warranties
(subject to certain materiality qualifiers), material performance of covenants
and no occurrence of a material adverse effect. The Purchase Agreement contains
indemnification rights for each of Amphastar and Lilly for breaches of
representations, warranties, and covenants, as well as certain other matters,
subject to customary deductibles, caps and other limitations.
The Purchase Agreement contains certain customary termination rights in favor of
Amphastar and Lilly, including a right to terminate the Purchase Agreement if
the Acquisition is not consummated by October 21, 2023. If the Purchase
Agreement is terminated under certain circumstances involving a failure to
obtain certain regulatory approvals for the Acquisition, Amphastar will be
obligated to pay Lilly a termination fee equal to $5 million in cash.
The foregoing description of the Purchase Agreement and the transactions
contemplated thereby does not purport to be a complete description of the rights
and obligations of the parties thereunder, and is qualified in its entirety by
reference to the copy of the Purchase Agreement that will be filed as an exhibit
to Amphastar's Quarterly Report on Form 10-Q to be filed with the Securities and
Exchange Commission (the "SEC") for the fiscal quarter ending June 30, 2023, and
is incorporated herein by reference.
Amphastar plans to finance the Acquisition with approximately $500 million of
new debt. In connection with the Purchase Agreement, Amphastar entered into a
debt commitment letter (the "Commitment Letter"), dated as of April 21, 2023,
with Wells Fargo Bank, National Association ("Wells Fargo Bank"), Capital One,
National Association ("Capital One"), JPMorgan Chase Bank, N.A. (together with
any of its affiliates through which it may be acting, "JPMorgan"), East West
Bank ("East West Bank"), Cathay Bank ("Cathay"), Fifth Third Bank, National
Association ("Fifth Third"), and CIBC Bank USA ("CIBC" and, collectively with
Wells Fargo Bank, Capital One, JPMorgan, East West Bank, Cathay and Fifth Third,
the "Commitment Parties") pursuant to which the Commitment Parties have
committed to provide a senior secured term loan facility in an aggregate
principal amount of $500 million and a senior secured revolving credit facility
in an aggregate principal amount of $150 million (collectively, the "Debt
Financing"). The Debt Financing is available (i) to finance the Acquisition,
(ii) to refinance certain of Amphastar's existing third-party
indebtedness, and (iii) to pay fees and expenses incurred in connection
therewith. Under the terms of the Commitment Letter, Wells Fargo Securities,
LLC, Capital One, JPMorgan, East West Bank, Cathay and Fifth Third will act as
joint lead arrangers and joint bookrunners in connection with the Debt
Financing. The funding of the Debt Financing provided for in the Commitment
Letter is contingent on the satisfaction of customary conditions, including,
among other things, (i) the execution and delivery of definitive documentation
in accordance with the terms sets forth in the Commitment Letter and (ii) the
consummation of the Acquisition in accordance with the terms of the Purchase
Agreement. The definitive documentation governing the Debt Financing has not
been finalized, and, accordingly, the actual terms may differ from the
description of such terms in the Commitment Letter. The foregoing description of
the Commitment Letter and the transactions contemplated thereby does not purport
to be a complete description of the rights and obligations of the parties
thereunder, and is qualified in its entirety by reference to the copy of the
Commitment Letter that will be filed as an exhibit to Amphastar's Quarterly
Report on Form 10-Q to be filed with the SEC for the fiscal quarter ending June
30, 2023, and is incorporated herein by reference..
Intellectual Property License Agreement
In connection with the Closing, pursuant to the Purchase Agreement, Amphastar is
expected to enter into an Intellectual Property License Agreement with Lilly,
pursuant to which Lilly will grant a license to Amphastar under certain
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
The information contained in Item 1.01 above is incorporated herein by
reference.
Item 8.01 Other Events
On April 24, 2023, the Company issued a press release announcing the
Acquisition.
A copy of the press release being filed herewith as Exhibit 99.1 to this Current
Report on Form 8-K and is incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit
No. Description
99.1 Press Release, dated April 24, 2023 of Amphastar Pharmaceuticals, Inc.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
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