This strategic combination will allow Pfizer to leverage its existing commercial capabilities and expertise to create one of the leading broad portfolios for pain relief and management in the biopharmaceutical industry, offering both currently marketed opioid and non-opioid products, as well as a pipeline spanning stages of clinical development. In addition to Pfizer’s current treatments for pain – which include Lyrica and Celebrex – King will bring Avinza, the Flector Patch and the recently launched Embeda, the first approved opioid pain product with design features intended to discourage misuse and abuse, two compounds in registration, which have the potential to lower the risk of abuse, as well as other compounds in development.
“We are highly impressed by King’s innovative products and technology in the pain relief disease area, as well as by its success in advancing promising compounds in its pipeline. The combination of our respective portfolios in this area of unmet medical need is highly complementary and will allow us to offer a fuller spectrum of treatments for patients across the globe who are in need of pain relief and management,” stated Jeffrey Kindler, Pfizer’s chairman and chief executive officer. “In addition, the revenue generated by King’s portfolio will further diversify Pfizer’s business, while at the same time contributing to steady earnings growth and shareholder value.”
“By bringing together King’s capabilities in new formulations of pain treatments, designed to discourage common methods of misuse and abuse, with Pfizer’s commercial, medical and regulatory expertise, global strength in patient services and reimbursement, and global scale and resources, we believe Pfizer can build on our foundation and take our business to the next level,” said Brian Markison, chairman and chief executive officer of King.
The market for pain relief and management treatments is increasing, with physicians in the U.S. writing approximately 320 million prescriptions to treat pain in 2009. However, the widespread misuse and abuse of prescription pain treatments is a major public health issue and a growing economic burden for the entire industry. King’s leadership in new formulations of pain treatments designed to discourage common methods of misuse and abuse will provide Pfizer with multiple new drug delivery platforms, while providing potential long-term upside.
In addition, Pfizer anticipates the transaction to yield initial cost savings from operating expenses of at least $200 million, which are expected to be fully realized by the end of 2013. The transaction is not expected to impact Pfizer’s 2010 financial guidance(2). Pfizer continues to expect to achieve its 2012 financial targets(2).
Under the terms of the definitive merger agreement, Pfizer will promptly commence a cash tender offer to purchase all of the outstanding shares of King common stock for $14.25 per share in cash. The agreement also provides for the parties to effect, subject to customary conditions, a merger to be completed following the completion of the tender offer which would result in all shares not tendered in the tender offer being converted into the right to receive $14.25 per share in cash. As is customary, the completion of the tender offer is conditioned on Pfizer acquiring sufficient shares to own a majority of the shares of King on a fully-diluted basis.
In addition, the tender offer is subject to regulatory approval in the U.S. and other jurisdictions. The companies are targeting a late fourth-quarter 2010 or first-quarter 2011 closing assuming execution of the tender process and receipt of the appropriate regulatory clearances.
Pfizer’s financial advisor for the transaction was J.P. Morgan Securities LLC while Cadwalader, Wickersham & Taft LLP was its legal advisor. Credit Suisse served as King’s financial advisor, while Covington & Burling LLP served as its legal advisor.