Play-by-play: How Sanofi twice increased bid to seal $ 1.9 billion deal for Kadmon

With an existing transplant portfolio, Sanofi is naturally fit to become the new owner of Kadmon, developer of the Rezurock drug against graft versus host disease (GVHD). And the French pharma took less than three months to succeed in convincing the biotech and find the right price.

From June 26 to September 7, in what has been a whirlwind of discussion about the transaction, Sanofi turned an original collaboration into an outright acquisition, just as Kadmon attracted the interest of two other potential buyers and managed to sell at a better price, a Kadmon securities deposit (PDF) shows.

Sanofi has taken the first step. Matthieu Merlin, Sanofi’s Business Development and Licensing Manager in its General Practice Division, contacted Kadmon on June 26 for a call for presentations to explore opportunities for collaboration.

Merlin’s communication follows a similar request for an introduction by another company, coded as Part A, with Kadmon’s financial services provider, Moelis. Kadmon CEO Harlan Waksal and CFO Steven Meehan held a conference call with representatives from Party A on July 8, during which the two sides discussed topics such as the potential benefits of a collaboration. or some other strategic transaction.

RELATED: In Deal, Sanofi Spends $ 1.9 Billion For Kadmon And Its New Transplant Drug

On July 12, Merlin spoke with Kadmon’s general counsel, Gregory Moss, and expressed Sanofi’s interest in Rezurock. They didn’t know at the time that the ROCK inhibitor would go on and get the FDA’s quick green light for third-line treatment of chronic GVHD just four days after and six weeks ahead of schedule.

On July 20, Merlin contacted Moss again. This time around, he announced that Sanofi may be interested in a larger transaction covering the entire company, including its immuno-oncology platform.

Sanofi dispatched its senior executives to their next in-person meeting on July 27. In addition to Merlin and Moss, the CFO of Sanofi Jean-Baptiste de Chatillon, the head of general medicine Olivier Charmeil and the global head of mergers and acquisitions Loïc Gonnet joined Kadmon’s Waksal and its senior vice-president of research and development. Jeegar Patel clinic. During a post-meeting dinner, Sanofi executives confirmed their interest in acquiring Kadmon.

Meanwhile, Kadmon had entered into a confidentiality agreement with standstill provisions with Party A, which in a meeting at its European headquarters on July 28, indicated that it was also interested in acquiring the New York biotech.

RELATED: Kadmon Plans $ 15.5,000 Price and August Debut for New Transplant Rejection Drug Rezurock

At this point, Kadmon recalled another potential bidder, Party B, who had also previously suggested that they seek deals once Rezurock clears the FDA. Kadmon told Party B that it is now open to talks on July 29.

Following a meeting of Kadmon’s board of directors, Sanofi and Party A would learn on August 4 that the biotech now had formal approval to conduct full sale discussions. It was on that day that Sanofi made its first offer to buy Kadmon at $ 7 a share, a 55% premium over its previous closing price.

Kadmon immediately rejected this term. Five days later, Sanofi sent its second offer of $ 9 per Kadmon share along with a request for exclusive negotiations. And Kadmon again declined the offer, but granted Sanofi additional access to the company’s confidential information to carry out due diligence.

In the meantime, discussions with Parties A and B have stalled. On August 18, Party A told Kadmon they were no longer in the game thanks to Rezurock’s planned regulatory schedule in Europe. As for Part B, Kadmon’s board of directors noted at a meeting on August 23 that this third company was significantly behind in conducting due diligence and was unable to do so. an offer. In addition, none of the other six companies contacted by Kadmon’s financial advisers expressed significant interest in a merger, according to the securities filing.

Between those two points, on August 21, Sanofi returned with its third and “final offer,” offering to take over Kadmon at $ 9.5 apiece, which was an 88% premium over the company’s previous closing price. . Based on the progress made with Parts A and B, Kadmon has entered into the exclusivity agreement with Sanofi.

After several exchanges over termination fees, Rezurock’s upstream licenses and other terms of the deal, Kadmon and Sanofi finally shook hands on September 7 before making the deal public the next day. The final deal saw Sanofi pay $ 1.9 billion for Kadmon and newly approved Rezurock, which complements French pharma’s existing transplant drugs, Mozobil and Thymoglobulin. Jefferies predicted that Rezurock could reach a peak worldwide sales of $ 1 billion.

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