UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
TARGANTA THERAPEUTICS CORPORATION
(Name of Subject Company)
TARGANTA THERAPEUTICS CORPORATION
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.0001 PER SHARE
(Title of Class of Securities)
87612C100
(CUSIP Number of Class of Securities)
Daniel S. Char
Vice President, General Counsel and Secretary
Targanta Therapeutics Corporation
222 Third Street, Suite 2300
Cambridge, MA 02142
Telephone: (617) 577-9020
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
With a copy to:
Marc A. Rubenstein, Esq.
Ropes & Gray LLP
One International Place
Boston, MA 02110
(617) 951-7000
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Check the box if the filing relates solely to preliminary communications made before
the commencement of a tender offer.
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The
following was sent by Targanta Therapeutics Corporation, a Delaware
corporation (Targanta), on January 26, 2009 to
holders of options under Targantas 2005 Stock Option Plan
NOTICE TO HOLDERS OF STOCK OPTIONS
under the
TARGANTA THERAPEUTICS CORPORATION
2005 STOCK OPTION PLAN
January 26, 2009
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To:
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Holders of Options Under the Targanta Therapeutics Corporation 2005 Stock Option Plan
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From: Daniel Char, General Counsel
As previously announced, Targanta Therapeutics Corporation (Targanta) has entered into an
Agreement and Plan of Merger, dated as of January 12, 2009, by and among The Medicines Company
(MDCO), Boxford Subsidiary Corporation, a wholly owned subsidiary of MDCO (Purchaser), and
Targanta (the Merger Agreement), pursuant to which MDCO proposes to acquire Targanta through a
tender offer for all of the outstanding shares of Targantas common stock (the Shares) followed
by a merger of Purchaser with and into Targanta, with Targanta becoming a wholly owned subsidiary
of MDCO (the Merger).
Under the Merger Agreement, Purchaser has agreed to commence an offer to purchase Shares for
consideration of (1) $2.00 per Share, net to the seller in cash (the Closing Consideration), plus
(2) the right to receive up to an additional $4.55 per Share in contingent cash payments if
specified regulatory and commercial milestones are achieved within agreed upon time periods (the
Contingent Payment Rights and, together with the Closing Consideration, the Offer Price). The
Closing Consideration and any amounts paid with respect to Contingent Payment Rights will be
subject to any withholding of taxes, and no interest will be paid thereon. The terms and
conditions of the Offer are set forth in the Offer to Purchase that will be sent to holders of
Shares and in the related Letter of Transmittal, which together constitute the Offer. The Offer
to Purchase and the form of Letter of Transmittal will be filed as exhibits to the Schedule TO-T to
be filed by MDCO with the Securities and Exchange Commission (the
SEC) in connection with the Offer, and you can obtain copies of these
documents once they are available through the web site maintained by the SEC at www.sec.gov. In
the Merger, each outstanding share of Targantas common stock will be cancelled and converted into
the right to receive the Offer Price (the Merger Consideration).
This Notice is to advise you of important information related to the effect of the Merger on the
stock options that you hold under Targantas 2005 Stock Option Plan, as amended (the Plan).
Specifically, in connection with the Merger Agreement, the vesting of all of the unvested options
that you currently hold under the Plan (unless earlier expiring or terminating in accordance with
their terms) will be accelerated in full effective immediately prior to and contingent upon the
effectiveness of the Merger (the Effective Time). Pursuant to the terms of the Plan, you are
hereby notified that if you do not exercise the options that you hold under the Plan (the
Options), including those that are currently vested and those that become vested in connection
with the Merger, prior to the Effective Time, all such Options will terminate immediately prior to
and contingent upon the closing of the Merger without the payment of any cash consideration.
In the event the Merger is not consummated, the exercise of any Options will be void and
thereafter, all Options held by you immediately prior to the Effective Time will be exercisable
only as permitted by the Plan and the original terms and conditions of your option agreement, which
will remain in full force and effect.
For more information regarding the effect of the proposed
Merger on your Options, please read carefully the frequently asked questions that accompany this
Notice.
If you wish to exercise your Options, please use the enclosed Notice of Exercise in order to
exercise your Options prior to the Effective Time. Please read carefully the accompanying
Instructions to Notice of Option Exercise when completing your Notice of Exercise. In order to
exercise your Options, you will need to remit payment of the aggregate exercise price as provided
in your option agreement along with the amount of any withholding for taxes. If you intend to
exercise any of your Options, please contact Daniel Char, Vice-President & General Counsel of
Targanta (contact information is provided below), prior to such exercise to obtain information
regarding the tax withholding, if any, applicable to your proposed Option exercise.
Exhibit
A
to this Notice shows the number of shares of Targanta common stock subject to your options
and the exercise price per share of Targanta common stock subject to your Options.
Please note
that the Closing Consideration will not exceed the exercise price per share of your Options and that
there is no guarantee that any of the amounts payable in respect of the Contingent Payment Rights
will actually be paid. Please also be advised that payment of the Closing Consideration could take
up to several weeks to allow for processing by the depositary/paying agent for the Merger.
If you have questions regarding this Notice, please contact Daniel Char, Vice-President & General
Counsel, 617-577-9020, ext. 244 or by e-mail at dchar@targanta.com.
ADDITIONAL INFORMATION
This communication is not a recommendation, an offer to purchase or a solicitation of an offer to
sell shares of Targanta common stock. Boxford Subsidiary Corporation (the Merger Sub), a wholly
owned subsidiary of The Medicines Company (MDCO), has not commenced the tender offer for the
shares of Targanta common stock described in this communication.
Upon commencement of the tender offer, MDCO and the Merger Sub will file with the SEC a tender offer statement on Schedule TO and related exhibits,
including the offer to purchase, letter of transmittal and other related documents. Following
commencement of the tender offer, Targanta will file with the SEC a tender offer
solicitation/recommendation statement on Schedule 14D-9 and related exhibits.
Stockholders should
read the offer to purchase and solicitation/recommendation statement and the tender offer statement
on Schedule TO and, as applicable, related exhibits when such documents are filed and become
available, as they will contain important information about the tender offer.
Investors and security holders will be able to obtain free copies of the tender offer statement,
the tender offer solicitation/recommendation statement and other documents filed with the SEC by
MDCO, the Merger Sub and Targanta through the web site maintained by
the SEC at www.sec.gov. In addition, investors and security holders will be able to obtain free copies of
these documents from Susan Hager of Targanta at 617-577-9020 x217 or shager@targanta.com.
Exhibit A
Outstanding Options
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Optionholder
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Number of Options
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Exercise Price
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TARGANTA THERAPEUTICS CORPORATION
2005 STOCK OPTION PLAN
INSTRUCTIONS TO NOTICE OF OPTION EXERCISE
INSTRUCTIONS: You have received a Notice to Holders of Stock Options dated January 26, 2009 from
Targanta Therapeutics Corporation (the Company) that if the options that you hold under the
Targanta Therapeutics Corporation 2005 Stock Option Plan, as amended (the Plan), are not
exercised by you prior to the Effective Time, such options, whether or not vested, will terminate
automatically immediately prior to the Effective Time without the payment of any cash
consideration. Use the form to which these instructions relate to elect to exercise your Options.
Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the
accompanying Notice to Holders of Stock Options.
TIMING: The completed Notice of Option Exercise must be
received
by the Companys General Counsel
no later than immediately prior to the Effective Time. The Effective Time will occur on a date
that is not earlier than February 25, 2009. Forms that are not received immediately prior to the
Effective Time or are not complete will not be accepted for processing.
IMPORTANT INFORMATION: Please note that all of your unvested Options will vest immediately prior
to and contingent on the closing of the Merger. You should use this form to exercise
both
already vested Options and Options that will vest in connection with the Merger.
PAYMENT: This form must be accompanied by payment of the aggregate exercise price and the amount of
any withholding for taxes. Please remit a check for the aggregate exercise price for all exercised
Options along with the amount of any withholding for taxes. Prior to exercising your Options,
please contact Daniel Char, Vice-President & General Counsel of the Company (contact information is
provided below) to obtain information regarding the tax withholding, if any, applicable to your
proposed Option exercise. Your check will be held in escrow by the Company until the date on which
the Effective Time occurs and will be applied to the payment of the exercise price immediately
prior to the Effective Time. Forms that are received without full payment (including the amount of
any withholding for taxes) will not be complete and will not be accepted for processing.
SUBMISSION OF ELECTION: Please mail or deliver this form together with payment to:
Targanta Therapeutics Corporation
Attn: Daniel Char, General Counsel
222 Third Street, Suite 2300
Cambridge, MA 02142-1122
TARGANTA THERAPEUTICS CORPORATION
2005 STOCK OPTION PLAN
ELECTION TO EXERCISE STOCK OPTION
The undersigned option holder hereby elects to exercise the Option(s) to purchase
shares of the common stock of Targanta Therapeutics Corporation (the Company) granted
under and pursuant to the 2005 Stock Option Plan, as amended, and granted to the undersigned by the
Company on the date(s) and at the exercise price(s) per share set forth below. Capitalized terms
used herein and not otherwise defined have the meanings ascribed to them in the accompanying Notice
to Holders of Stock Options dated January 26, 2009 from the Company. Enclosed is my check payable
to Targanta Therapeutics Corporation in the aggregate amount set forth below, which represents the
full exercise price of the shares with respect to which this election is made, along with the
amount of any withholding for taxes. Prior to exercising your Options, please contact Daniel Char,
Vice-President & General Counsel of Targanta to obtain information regarding the tax withholding,
if any, applicable to your Option exercise.
I understand that each share of the Companys common stock received upon exercise will, upon
consummation of the Merger, be cancelled and converted into the Offer Price. I understand that the
Closing Consideration payable in the Merger will be $2.00 per share, which is less than the
exercise price per share of my Options, and that such payment could take up to several weeks
following the Merger to allow for processing by the depositary/paying agent for the Merger. I
further understand that the maximum potential amount payable in respect of the Contingent Payment
Rights is $4.55 for each share of Targanta common stock and will be paid only if specified
regulatory and commercial milestones are achieved within agreed upon time periods.
Please complete the following chart:
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Number of
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ISO or
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Shares for
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Nonqualified
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which Option is
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Exercise Price
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Aggregate
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Option
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Date Granted
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Exercised
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Per Share
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Purchase Price
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Total
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Employee Signature:
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Print Name:
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Date:
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Social Security Number:
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Address:
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Internal Use Only
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Company Authorization
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ADDITIONAL INFORMATION
This communication is not a recommendation, an offer to purchase or a solicitation of an offer to
sell shares of Targanta common stock. Boxford Subsidiary Corporation (the Merger Sub), a wholly
owned subsidiary of The Medicines Company (MDCO), has not commenced the tender offer for the
shares of Targanta common stock described in this communication.
Upon commencement of the tender offer, MDCO and the Merger Sub will file with the Securities and
Exchange Commission (the SEC) a tender offer statement on Schedule TO and related exhibits,
including the offer to purchase, letter of transmittal and other related documents. Following
commencement of the tender offer, Targanta will file with the SEC a tender offer
solicitation/recommendation statement on Schedule 14D-9 and related exhibits.
Stockholders should
read the offer to purchase and solicitation/recommendation statement and the tender offer statement
on Schedule TO and, as applicable, related exhibits when such documents are filed and become
available, as they will contain important information about the tender offer.
Investors and security holders will be able to obtain free copies of the tender offer statement,
the tender offer solicitation/recommendation statement and other documents filed with the SEC by
MDCO, the Merger Sub and Targanta through the web site maintained by the SEC at www.sec.gov. In
addition, investors and security holders will be able to obtain free copies of these documents from
Susan Hager of Targanta at 617-577-9020 x217 or shager@targanta.com.
Targanta Therapeutics Corporation
Stock Option Plans
Frequently Asked Questions
This frequently asked questions is designed to provide general information to individuals who hold
options under the Targanta Therapeutics Corporation 2005 Stock Option Plan (2005 Plan) and 2007
Stock Option Plan (2007 Plan) (together the Plans). Because the treatment of your stock
options will depend on the stock option plan in which you participate, your particular option
agreement and other facts that are specific to you, you are strongly advised to consult with a
financial, legal and tax advisor regarding the consequences to you of your participation in the
Plans and the effect of the proposed Merger on your options.
You have previously been provided with a copy of the prospectus of the stock option plan(s) under
which your options were granted, and you should refer to that prospectus and a copy of the relevant
Plan (in addition to your individual option agreement) for the specific terms and conditions of
your option grant. In the event of any conflict between this summary and the Plans or your option
agreement, the terms of the Plans and your option agreement, as applicable, will control.
What is the proposed transaction?
As previously announced, Targanta Therapeutics Corporation (Targanta) has entered into an
Agreement and Plan of Merger, dated as of January 12, 2009, by and among The Medicines Company
(MDCO), Boxford Subsidiary Corporation, a wholly owned subsidiary of MDCO (Purchaser), and
Targanta (the Merger Agreement), pursuant to which MDCO proposes to acquire Targanta through a
tender offer for all of the outstanding shares of Targantas common stock (the Shares) followed
by a merger of Purchaser with and into Targanta, with Targanta becoming a wholly owned subsidiary
of MDCO (the Merger). A copy of the Form 8-K as filed by Targanta with the Securities and
Exchange Commission (the
SEC) on January 14, 2009, which describes the material provisions of the Merger
Agreement, including the consideration to be paid with respect to each share of Targantas common
stock in the Merger, and which includes a copy of the executed Merger Agreement as an exhibit, is
attached as
Exhibit A
to this frequently asked questions.
Under the Merger Agreement, Purchaser has agreed to commence an offer to purchase Shares for
consideration of (1) $2.00 per Share, net to the seller in cash (the Closing Consideration), plus
(2) the right to receive up to an additional $4.55 per Share in contingent cash payments if
specified regulatory and commercial milestones are achieved within agreed upon time periods (the
Contingent Payment Rights and, together with the Closing Consideration, the Offer Price). The
Closing Consideration and any amounts paid with respect to Contingent Payment Rights will be
subject to any withholding of taxes, and no interest will be paid thereon. The terms and
conditions of the Offer are set forth in the Offer to Purchase that will be sent to holders of
Shares and in the related Letter of Transmittal, which together constitute the Offer. The Offer
to Purchase and the form of Letter of Transmittal will be filed as exhibits to the Schedule
TO to be filed by MDCO with the SEC in connection with the Offer, and you can obtain copies of
these documents once they are available through the web site maintained by the SEC at www.sec.gov.
In the Merger, each outstanding share of Targantas common stock will be cancelled and converted
into the right to receive the Offer Price (the Merger Consideration).
How will my options be affected by the Merger?
If you hold options granted under the 2005 Plan, all of the options that you hold under the 2005
Plan, to the extent not yet vested will become fully vested immediately prior to and contingent
upon the closing of the Merger. You have received notice from Targanta that if you want to
exercise your options under the 2005 Plan (even those that will become vested in connection with
the Merger), you must do so prior to the effective time of the Merger (the Effective Time).
Options granted under the 2005 Plan that are not exercised will terminate automatically immediately
prior to the Effective Time without the payment of any cash consideration.
By contrast, vesting of options granted under the 2007 Plan will not accelerate in connection with
the Merger. Your options under the 2007 Plan will continue to vest in accordance with the 2007
Plan and your option agreement (unless you have agreed as part of the Offer and Merger to the
cancellation of your 2007 Plan options). While you may choose to exercise your vested options
prior to the Effective Time, you are not required to do so. However, if later you choose to
exercise your vested options (upon payment of the aggregate exercise price and any withholding
taxes and within the time periods permitted under the 2007 Plan and your option agreement), you
will receive the Merger Consideration. As described above, the maximum potential amount of Merger
Consideration (consisting of both the Closing Consideration and the Contingent Payment Rights) is
$6.55 per share; accordingly, if the exercise price per share of your option is greater than $6.55
per share, you will not receive any net cash payment upon exercise of your option.
How do I exercise my options?
To exercise your options, you must deliver to Targanta a Notice of Option Exercise and pay the
aggregate exercise price of the options along with the amount of any withholding for taxes.
Targanta has provided you with a special Notice of Option Exercise form under the 2005 Plan that
you must complete and submit to Targanta if you wish to exercise your options under the 2005 Plan
prior to the Effective Time. You must remit payment to Targanta of the aggregate exercise price
along with the amount of any withholding for taxes, which Targanta will hold in escrow until the
date on which the Effective Time occurs. Each share of Targanta common stock that you receive upon
exercise will, upon consummation of the Merger, be cancelled and converted into the Offer Price.
The Closing Consideration payable in the Merger will be $2.00 per share, which is less than the
exercise price per share of your options, and such payment could take up to several weeks following
the Merger to allow for processing by the depositary/paying agent for the Merger. The maximum
potential amount payable in respect of the Contingent Payment Rights is $4.55 for each share of
Targanta common stock and will be paid only if specified regulatory and commercial milestones are
achieved within agreed upon time periods.
If the Merger is not consummated, the payment amounts delivered by you will be returned to you as
soon as reasonably practicable, without interest. Until the Effective Time, you can obtain a
Notice of Option Exercise for the 2007 Plan from Daniel Char, Targantas General Counsel, and
thereafter, from Stephen Rodin, Assistant General Counsel, The Medicines Company, 8 Sylvan Way,
Parsippany, New Jersey 07054.
What are the Contingent Payment Rights that are part of the Merger Consideration?
The Form 8-K referenced above contains a detailed description of the terms and conditions under
which amounts are payable in respect of the Contingent Payment Rights, and you should review it
carefully (together with the relevant provisions of the Merger Agreement and the form of Contingent
Payment Rights Agreement to be entered into by MDCO and American Stock Transfer & Trust Company, as
Rights Agent, which is also filed as an exhibit to the same Form 8-K). The maximum potential
amount payable in respect of the Contingent Payment Rights is $4.55 for each share of Targanta
common stock. However, the amounts payable in respect of the Contingent Payment Rights depend on
achievement of specified regulatory and commercial milestones within agreed upon time periods. If
a regulatory or commercial milestone is not met, no payment will become payable to the holders of
Contingent Payment Rights with respect to that milestone. It is possible that none of the
regulatory and commercial milestones will be achieved, in which case you will receive only the
portion of the Merger Consideration that is payable in cash at the closing of the Merger ($2.00 per
share, net of any withholding for taxes and without interest) for any shares of Targanta common
stock that you acquire immediately prior to the Effective Time. It is not possible to predict
whether or how many payments will become payable with respect to the Contingent Payment Rights or,
if one or more contingent cash payments become payable, the exact timing or, in some cases, the
amount of those contingent cash payments. You should contact a financial advisor to obtain advice
on the financial aspects of exercising your options.
You should also read the Offer to Purchase referenced above when it becomes available, which
contains more information regarding the Offer Price and the Merger Consideration, including a
description of the Contingent Payment Rights.
What are the tax consequences of my exercise of my options?
The tax consequences of holding and exercising options is complex and you are strongly advised to
consult a tax advisor to receive advice based on your particular circumstances. This summary does
not purport to be complete and addresses only the U.S. federal income tax consequences of
exercising options and does not address other federal, state, local or non-U.S. tax consequences of
holding or exercising options or other tax consequences relating to the Merger. In addition to the
following summary, you should also read the discussion in the Offer to Purchase relating to
material U.S. federal income tax consequences of the Offer, which will be substantially similar to
the material U.S. federal income tax consequences of the Merger, with respect to any shares of
Targanta common stock that you acquire immediately prior to the Effective Time.
Nonqualified Options
If you submit a Notice of Option Exercise to exercise nonqualified options under the Plans, your
options will be treated as exercised immediately prior to the Effective Time and if the Merger is
not consummated, the Notice of Option exercise will be disregarded. However, if the Merger is
consummated and the options are exercised, you will have taxable income equal to the difference
between the fair market value of the shares received upon exercise of the options and the aggregate
exercise price. The fair market value of the shares will equal the Closing Consideration plus the
value of the Contingent Payment Rights payable with respect to such shares. If you owe income and
payroll tax withholding on your option exercise, you will need to deliver payment of the
withholding taxes to Targanta when you make payment of the aggregate exercise price. Because the
exact amount of withholding taxes will not be calculated until after the completion of the Offer,
for purposes of determining the payment amount you must deliver in connection with any options you
wish to exercise prior to the Effective Time, the withholding taxes initially will be calculated
assuming the Contingent Payment Rights are valued at $4.55 per share. Once the actual value of the
Contingent Payment Rights is determined, Targanta will refund any excess withholding.
Incentive Stock Options
If you exercise incentive stock options, similar to the nonqualified options your options will be
treated as exercised immediately prior to the Effective Time and if the Merger is not consummated,
the Notice of Option Exercise will be disregarded. If the Merger is consummated, the cancellation
and conversion of your shares of Targanta common stock in the Merger will be treated as a
disqualifying disposition and you will have taxable income equal to the difference between the
fair market value of the shares at the date of the Merger and your aggregate exercise price. The
fair market value of the shares will equal the Closing Consideration plus the value of the
Contingent Payment Rights payable with respect to such shares. However, the exercise of the
options is not subject to income or payroll tax withholding. You will need to make sure that you
have remitted the appropriate amount timely to taxing authorities directly.
Section 409A
In addition, if you hold options under the 2007 Plan, under the current rules applicable to
deferred compensation under Section 409A of the Internal Revenue Code of 1986, as amended (the
Code), contingent rights payments, if any, made more than five years after the date of the Merger
may be subject to an additional tax to you of 20%, plus interest. You and your tax advisors should
take this into account in determining the advantages and disadvantages to you of exercising (or not
exercising) your options prior to the Effective Time.
ADDITIONAL INFORMATION
This communication is not a recommendation, an offer to purchase or a solicitation of an offer to
sell shares of Targanta common stock. Boxford Subsidiary Corporation (the Merger Sub), a wholly
owned subsidiary of The Medicines Company (MDCO), has not commenced the tender offer for the
shares of Targanta common stock described in this communication.
Upon commencement of the tender offer, MDCO and the Merger Sub will file with the Securities and
Exchange Commission (the SEC) a tender offer statement on Schedule TO and related exhibits,
including the offer to purchase, letter of transmittal and other related documents.
Following commencement of the tender offer, Targanta will file with the SEC a tender offer
solicitation/recommendation statement on Schedule 14D-9 and related exhibits.
Stockholders should
read the offer to purchase and solicitation/recommendation statement and the tender offer statement
on Schedule TO and, as applicable, related exhibits when such documents are filed and become
available, as they will contain important information about the tender offer.
Investors and security holders will be able to obtain free copies of the tender offer statement,
the tender offer solicitation/recommendation statement and other documents filed with the SEC by
MDCO, the Merger Sub and Targanta through the web site maintained by the SEC at www.sec.gov. In
addition, investors and security holders will be able to obtain free copies of these documents from
Susan Hager of Targanta at 617-577-9020 x217 or shager@targanta.com.
Exhibit A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT
(DATE OF EARLIEST EVENT REPORTED):
January 12, 2009
TARGANTA THERAPEUTICS CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware
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1-33730
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20-3971077
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(State or other jurisdiction of
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(Commission file number)
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(IRS employer identification
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incorporation or organization)
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number)
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222 Third Street, Suite 2300
Cambridge, MA 02142-1122
(Address of Principal Executive Offices) (Zip Code)
(617) 577-9020
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01
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Entry into a Material Definitive Agreement
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On January 12, 2009, Targanta Therapeutics Corporation, a Delaware corporation (Targanta),
entered into an Agreement and Plan of Merger (the Merger Agreement) with The Medicines Company, a
Delaware corporation (MDCO), and Boxford Subsidiary Corporation, a Delaware corporation and
wholly owned subsidiary of MDCO (the Purchaser), pursuant to which, among other things, the
Purchaser has agreed to commence a tender offer for all the outstanding shares of common stock of
Targanta, subject to the terms and conditions contained in the Merger Agreement.
On January 12, 2009, MDCO issued a press release relating to the Merger Agreement. A copy of
the press release was previously furnished by Targanta on a
Schedule 14D-9C, filed with the Securities and Exchange
Commission on January 13,
2009.
Merger Agreement
Pursuant to the Merger Agreement, and upon the terms and subject to the conditions
contained therein, the Purchaser is obligated to commence a tender offer (the Offer) to acquire
all the outstanding shares of Targanta common stock, par value $0.0001 per share (Targanta Common
Stock), for consideration per share (the Offer Price) equal to (i) a payment promptly after the
acceptance of the shares in the Offer of $2.00 per share, net to the selling stockholders in cash,
without interest thereon, plus (ii) a contractual right to receive contingent cash payments (as
described below under the heading Contingent Payment Rights Agreement).
The Merger Agreement provides that MDCO will commence the Offer within 10 business days after
the date of the Merger Agreement, and that the Offer will remain open for at least 20 business
days. Pursuant to the Merger Agreement, after the consummation of the Offer, and subject to the
satisfaction or waiver of certain conditions set forth in the Merger Agreement, the Purchaser will
merge with and into Targanta (the Merger) and Targanta will become a wholly owned subsidiary of
MDCO. At the effective time of the Merger, each issued and outstanding share of Targanta Common
Stock (the Shares) (other than Shares owned by Targanta, MDCO or any wholly owned subsidiary of
MDCO, and Shares held by stockholders who have perfected their statutory rights of appraisal under
Section 262 of the Delaware General Corporation Law) will be
automatically canceled and converted into the right
to receive the Offer Price as set forth above.
The Merger Agreement includes certain representations, warranties and covenants of Targanta,
MDCO and the Purchaser. Among others, Targanta has agreed to operate its business in the ordinary
course until the Offer is consummated. Targanta has also agreed not to solicit or initiate
discussions with third parties regarding other proposals to acquire Targanta and to certain
restrictions on its ability to respond to such proposals. The Merger Agreement also includes
customary termination provisions for both Targanta and MDCO and provides that, in connection with
the termination of the Merger Agreement under specified circumstances, Targanta will be required to
pay to MDCO a termination fee of $5.48 million, subject to offset by any expense reimbursement
amounts previously paid by Targanta. Targanta will be obligated to reimburse MDCOs actual
expenses of up to $2.5 million in connection with the termination of the Merger Agreement under
specified circumstances.
The Purchasers obligation to accept for payment and pay for shares of Targanta Common Stock
tendered in the Offer is subject to certain conditions, including, among other things, that at
least a majority of the outstanding shares of Targanta Common Stock on a fully diluted basis shall
have been validly tendered in accordance with the terms of the Offer and not properly withdrawn.
The foregoing summary of the Merger Agreement and the transactions contemplated thereby does
not purport to be complete and is subject to, and qualified in its entirety by, the full text of
the Merger Agreement filed herewith as Exhibit 2.1 hereto and incorporated herein by reference.
The Merger Agreement has been filed as an exhibit to provide investors and security holders
with information regarding its terms. It is not intended to provide any other factual information
about Targanta, MDCO or the Purchaser. The representations, warranties and covenants contained in
the Merger Agreement were made only for the purposes of such agreement and only as of specified
dates, were solely for the benefit of the parties to such agreement and should not be relied upon
by any other person. The representations and warranties may not be intended as statements of fact
but rather as a way of allocating contractual risk between the parties to the agreement and may be
subject to standards of materiality applicable to the contracting parties that differ from those
applicable to investors. In addition, the assertions embodied in the representations and warranties
contained in the Merger Agreement are qualified by information in a confidential disclosure
schedule that the parties have exchanged and may be modified by the information contained in such
disclosure schedule.
Stockholder
Agreements
In connection with the Offer, MDCO and certain of Targantas stockholders have entered into
Stockholder Agreements, each dated as of January 12, 2009 (each, a Stockholder Agreement). The
outstanding shares of Targanta Common Stock subject to the Stockholder Agreements represent
approximately 36% of the total outstanding shares of Targanta Common Stock. Pursuant to each
Stockholder Agreement, the applicable stockholder has agreed, among other things, subject to the
termination of such Stockholder Agreement (i) to tender in the Offer (and not to withdraw) all
shares of Targanta Common Stock beneficially owned or subsequently acquired by them, (ii) to vote
such shares in support of the Merger in the event stockholder approval is required to consummate
the Merger and against any competing transaction, (iii) to appoint MDCO as his, her or its proxy to
vote such shares in connection with the Merger Agreement and (iv) not to otherwise transfer any of
his, her or its shares of Targanta Common Stock. Each Stockholder Agreement will terminate upon the termination of the
Merger Agreement.
The form of the Stockholder Agreement is filed as Exhibit 99.1 to this report and is
incorporated by reference herein. The description of the Stockholder Agreements set forth above
does not purport to be complete and is qualified in its entirety by reference to the provisions of
such agreements.
Contingent Payment Rights Agreement
Pursuant to the Merger Agreement, MDCO agreed to enter into a Contingent Payment
Rights Agreement (the CPR Agreement) with American Stock Transfer & Trust Company (the
Rights Agent) promptly after the first time at which the Purchaser accepts for payment any Shares
pursuant to the Offer. The CPR Agreement will establish the terms, policies and procedures by
which those stockholders entitled to contingent cash payments will be paid.
In the event that the European Medicines Agency (EMEA) approval of a Marketing Authorization
Application for oritavancin for the treatment of complicated skin and skin structure infections
(cSSSI) is granted to MDCO or a MDCO-affiliated party on or before December 31, 2013 (the EMEA CPR
Payment Event), then MDCO will, subject to the terms of the CPR Agreement, (i) pay an additional
$1.00 per share to stockholders of Targanta whose shares of Targanta
Common Stock are accepted for payment in connection
with the Offer or converted in the Merger (CPR Holders) provided the EMEA CPR Payment Event
occurs on or before December 31, 2009, (ii) pay an
additional $0.75 per share to CPR Holders
provided the EMEA CPR Payment Event occurs after December 31, 2009 and on or before June 30, 2010,
or, alternatively, (iii) pay an additional $0.50 per share to CPR Holders provided the EMEA CPR
Payment Event occurs after June 30, 2010 (each, an EMEA CPR Payment Amount). In the event that
the EMEA CPR Payment Event has not occurred on or before December 31, 2013, then MDCO shall deliver
notice thereof to the Rights Agent, and CPR Holders shall have no right to receive any EMEA CPR
Payment Amount.
In the event that the U.S. Food and Drug Administration (FDA) approval of a New Drug
Application (NDA) for oritavancin for the treatment of cSSSI is granted to MDCO or a
MDCO-affiliated party on or before the date that is 40 months after the date the first patient is
enrolled in a Phase III trial of cSSSI and prior to December 31, 2013 (the FDA CPR Payment
Event), then MDCO will, subject to the terms of the CPR Agreement, pay an additional $0.50 per
share to CPR Holders (the FDA CPR Payment Amount). In the event that the FDA CPR Payment Event
has not occurred on or before the date that is 40 months after the date the first patient is
enrolled in a Phase III trial of cSSSI and prior to December 31, 2013 (the Outside Payment Date),
then MDCO shall deliver notice thereof to the Rights Agent, and CPR Holders shall have no right to
receive the FDA CPR Payment Amount.
In the event that the FDA approval of an NDA for the use of oritavancin for the treatment of
cSSSI administered by a single dose intravenous infusion is granted to MDCO or a MDCO-affiliated
party on or before the Outside Payment Date (the Single Dose CPR Payment Event), then MDCO will,
subject to the terms of the CPR Agreement, pay an additional $0.70
per share to CPR Holders (the
Single Dose CPR Payment Amount). In the event that the Single Dose CPR Payment Event has not
occurred on or before the Outside Payment Date, then MDCO shall deliver notice thereof to the
Rights Agent, and CPR Holders shall have no right to receive the Single Dose CPR Payment Amount.
Upon the first achievement of aggregate net sales (as defined in the CPR Rights Agreement) of
oritavancin in four consecutive calendar quarters of at least $400,000,000, all of which aggregate
net sales shall have occurred on or before December 31, 2021 (the Net Sales CPR Payment Event),
then MDCO will, subject to the terms of the CPR Agreement, pay an
additional $2.35 per share to CPR
Holders (the Net Sales CPR Payment Amount). In the event that the Net Sales CPR Payment Event
has not occurred on or before December 31, 2021, then MDCO shall deliver notice thereof to the
Rights Agent, and CPR Holders shall have no right to receive the Net Sales CPR Payment Amount.
The rights to receive contingent cash payments under the CPR Agreement are nontransferable,
shall not have any voting or dividend rights and shall not represent any equity or ownership
interest in MDCO or in any constituent company to the Merger.
The form of the CPR Agreement is filed as Exhibit 99.2 to this report and is incorporated by
reference herein. The description of the CPR Agreement set forth above does not purport to be
complete and is qualified in its entirety by reference to the provisions of the agreement.
Amendment to Development and Supply Agreement
On January 12, 2009, Targanta entered into Amendment Number 5 to the Development and Supply
Agreement dated as of December 28, 2001, as amended, with Abbott Laboratories, an Illinois
corporation (the Amendment). Pursuant to the Amendment, Abbott Laboratories agreed to delay
until January 1, 2012 its termination right in the event Targanta fails to obtain NDA approval for
oritavancin prior to such date.
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Item 9.01
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Financial Statements and Exhibits
.
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Exhibit 2.1
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Agreement and Plan of Merger, dated as of January 12,
2009, by and among The Medicines Company, a Delaware corporation, Boxford
Subsidiary Corporation, a Delaware corporation, and Targanta Therapeutics
Corporation, a Delaware corporation.
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Exhibit 99.1
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Form of Stockholder Agreement, by and among The
Medicines Company, a Delaware corporation, and certain stockholders of Targanta
Therapeutics Corporation, a Delaware corporation.
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Exhibit 99.2
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Form of Contingent Payment Rights Agreement, by and
between The Medicines Company, a Delaware corporation, and American Stock
Transfer & Trust Company, as rights agent.
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Additional Information
This Current Report on Form 8-K is not a recommendation, an offer to purchase or a
solicitation of an offer to sell shares of Targanta Common Stock. As of the date hereof, the
Purchaser has not commenced the Offer for shares of Targanta Common Stock described in this
communication.
Upon commencement of the Offer, MDCO and the Purchaser intend to file with the Securities and
Exchange Commission a tender offer statement on Schedule TO and related exhibits, including the
offer to purchase, letter of transmittal and other related documents, and Targanta intends to file
with the Securities and Exchange Commission a solicitation/recommendation statement on Schedule
14D-9. Purchaser and Targanta intend to mail these documents to the stockholders of Targanta.
Stockholders should read the offer to
purchase and solicitation/recommendation statement and the tender offer statement on Schedule TO
and related exhibits carefully when such documents are filed and become available, as they will
contain important information about the Offer.
Stockholders can obtain these documents when they are filed free of charge from the Securities
and Exchange Commissions website at www.sec.gov. In addition, stockholders will be able to obtain
a free copy of these documents (when they become available) from Targanta by contacting Targanta at
222 Third Street, Suite 2300, Cambridge, MA 02142, attention: General Counsel or by contacting
Susan Hager of Targanta at 617-577-9020 x217 or shager@targanta.com.
In connection with the proposed transactions contemplated by the Merger Agreement, Targanta
and its directors, executive officers and other employees may be deemed to be participants in any
solicitation of Targanta stockholders in connection with such proposed transactions. Information
about Targantas directors and executive officers is available in Targantas proxy statement for
its 2008 annual meeting of stockholders, as filed with the SEC on April 28, 2008, and will be
available in Targantas solicitation/recommendation statement on Schedule 14D-9.
Safe Harbor for Forward-Looking Statements
Statements in this Current Report on Form 8-K may contain, in addition to historical
information, certain forward-looking statements. All statements included in this Current Report on
Form 8-K concerning activities, events or developments that Targanta expects, believes or
anticipates will or may occur in the future are forward-looking statements. Actual results could
differ materially from the results discussed in the forward-looking statements. Forward-looking
statements are based on current expectations and projections about future events and involve known
and unknown risks, uncertainties and other factors that may cause actual results and performance to
be materially different from any future results or performance expressed or implied by
forward-looking statements, including the risk that the Offer will not close because of a failure
to satisfy one or more of the closing conditions, including that Targantas business will have been
adversely impacted during the pendency of the Offer; that, if the Offer and Merger close, MDCO will
not be able to advance oritavancin through the contemplated Phase 3 trial on a timely basis or at
all or receive approval from the FDA or EMEA; and that, if oritavancin receives approval, MDCO will
not be able to successfully distribute and market the product. Additional information on these and
other risks, uncertainties and factors is included in Targantas Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents filed with the SEC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Targanta Therapeutics Corporation
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Date: January 14, 2009
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By:
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/s/ Daniel S. Char
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Name:
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Daniel S. Char
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Title:
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Vice President, General Counsel and Secretary
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EXHIBIT INDEX
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Exhibit 2.1
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Agreement and Plan of Merger, dated as of January 12, 2009,
by and among The Medicines Company, a Delaware corporation,
Boxford Subsidiary Corporation, a Delaware corporation, and
Targanta Therapeutics Corporation, a Delaware corporation.
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Exhibit 99.1
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Form of Stockholder Agreement, by and among The Medicines
Company, a Delaware corporation, and certain stockholders of
Targanta Therapeutics Corporation, a Delaware corporation.
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Exhibit 99.2
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Form of Contingent Payment Rights Agreement, by and between
The Medicines Company, a Delaware corporation, and American
Stock Transfer & Trust Company, as rights agent.
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Important Information About the Tender Offer
This communication is not a recommendation, an offer to purchase or a solicitation of an offer to
sell shares of common stock of Targanta Therapeutics Corporation, a Delaware corporation
(Targanta). Boxford Subsidiary Corporation, a Delaware corporation and a wholly owned subsidiary
of TMC (the Purchaser), has not commenced the tender offer for shares of Targanta common stock
described in this communication.
Upon commencement of the tender offer, TMC and the Purchaser will file with the Securities and
Exchange Commission a tender offer statement on Schedule TO and related exhibits, including the
offer to purchase, letter of transmittal and other related documents. Following commencement of the
tender offer, Targanta will file with the Securities and Exchange Commission a
solicitation/recommendation statement on Schedule 14D-9 and related exhibits. Stockholders should
read the offer to purchase and solicitation/recommendation statement and the tender offer statement
on Schedule TO and, as applicable, related exhibits when such documents are filed and become
available, as they will contain important information about the tender offer.
Stockholders can obtain these documents when they are filed and become available free of charge
from the Securities and Exchange Commissions website at www.sec.gov. In addition, stockholders
will be able to obtain a free copy of these documents (when they become available) from Targanta by
contacting Targanta at 222 Third Street, Suite 2300, Cambridge, MA 02142, attention: Investor
Contact.
In connection with the proposed transactions contemplated by the definitive agreement between TMC
and Targanta, Targanta and its directors, executive officers and other employees may be deemed to
be participants in any solicitation of Targanta stockholders in connection with such proposed
transactions. Information about Targantas directors and executive officers will be available in
Targantas solicitation/recommendation statement on Schedule 14D-9.
Safe Harbor Statement
Statements in this communication may contain, in addition to historical information, certain
forward-looking statements All statements included in this communication concerning activities,
events or developments that Targanta expects, believes or anticipates will or may occur in the
future are forward-looking statements. Actual results could differ materially from the results
discussed in the forward-looking statements. Forward-looking statements are based on current
expectations and projections about future events and involve known and unknown risks, uncertainties
and other factors that may cause actual results and performance to be materially different from any
future results or performance expressed or implied by forward-looking statements, including the
risk that the tender offer will not close because of a failure to satisfy one or more of the
closing conditions and that Targantas business will have been adversely impacted during the
pendency of the tender offer. Additional information on these and other risks, uncertainties and
factors is included in Targantas Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and other documents filed with the SEC.
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