Epimmune and IDM Agree to Combine Businesses
Cooley Godward LLP represented Epimmune Inc. in its merger with IDM. The Cooley team, comprised of attorneys from San Diego and Palo Alto, CA and Broomfield,CO includes partners Barbara Borden, Kay Chandler, Mark Hrenya, Dennis Childs and Thomas Welk, and associates Jason Conger, Molly McEnery, James Pennington, Michelle Lara and Mark Bradford.
SAN DIEGO and PARIS, March 16, 2005 -- Epimmune Inc. (Nasdaq: EPMN), a developer of vaccines for cancer and infectious diseases, and IDM S.A. (Immuno-Designed Molecules), a biopharmaceutical company specializing in immunotherapy for the treatment of cancer, today announced the signing of a definitive agreement under which Epimmune will combine with privately-held IDM in an all-stock transaction. By combining, Epimmune and IDM expect to create a leading company in the increasingly important field of immunotherapeutics, with a broader and more mature product pipeline, nearer-term product revenue opportunities, an improved cash position, and increased visibility in the financial markets.
Combined Company Information
The combined company (the Company) will focus on seven product candidates in clinical development for cancer and infectious disease indications as shown on the following table:
||Phase III completed|
||Non-small cell lung cancer
|* Licensed to strategic partner|IDM's lead product candidate, Mepact, has completed a Phase III clinical trial in the U.S. for the treatment of osteosarcoma. Mepact has received Orphan Drug Status in both the U.S. and EU, and IDM is working with U.S. and EU regulatory agencies regarding product marketing approval. The Company would expect to receive regulatory approval for Mepact in the U.S. and EU in 2007. The Company's most advanced clinical product candidates, other than Mepact, will address large cancer markets, including bladder, colorectal and non-small cell lung cancer and melanoma. The Company will also maintain strategic partnerships with Sanofi-Aventis, Medarex and Innogenetics.
On a pro forma basis and after estimated transaction expenses, the Company, at the end of 2004, had approximately $41 million of net cash on its balance sheet. The Company believes this is sufficient funding for the Company's operations for the next 18 to 24 months.
Emile Loria, M.D., President and Chief Executive Officer of Epimmune said, "Combining Epimmune with IDM creates a leading immunotherapy company with greater strength and depth in its product pipeline and financial position, creating a better opportunity for success."
Jean-Loup Romet-Lemonne, M.D., Chairman and Chief Executive Officer of IDM added, "This transaction also makes sense from the standpoint of the products, indications and technologies each company is targeting, which are highly complementary. IDM in-licensed Epimmune's epitope technology in 2003 and we are now using it in our U.S. colorectal cancer trials. By combining IDM's delivery and production expertise with Epimmune's epitope target identification capabilities, we believe we broaden our opportunities to successfully develop new products for patients who would benefit from immunotherapeutics."
Following the closing of the transaction, the Company will be headquartered in San Diego and will have manufacturing sites in Irvine, California and Paris, France. The Company will have approximately 150 employees on a combined basis. Dr. Jean-Loup Romet-Lemonne, Chairman and Chief Executive Officer of IDM will be CEO of the Company, Dr. Emile Loria, President and Chief Executive Officer of Epimmune will be President and Chief Business Officer of the Company and Bob De Vaere, Chief Financial Officer of Epimmune will be Chief Financial Officer of the Company.
The transaction has been unanimously approved by the Boards of Directors of both companies. In addition, certain institutional investors, strategic partners and executives of IDM who collectively hold more than 85% of IDM's outstanding stock (including shares issuable upon exercise of warrants) have entered into the definitive agreement thus far. The closing of the transaction is subject to certain closing conditions, including approval of the transaction by the Epimmune shareholders. Upon closing of the transaction, the Company will be named IDM, Inc. and the Company's shares are expected to be traded on the NASDAQ National Market under the ticker "IDMI".
Under the terms of the agreement, the shareholders of IDM will receive approximately 3.77 shares of Epimmune common stock in exchange for each share of IDM they hold. In connection with the closing, the holders of Epimmune's Series S and S-1 preferred stock have also agreed to exchange those shares into Epimmune common stock. Following the closing of the transaction, the Company will have approximately 102 million shares outstanding, on a fully diluted basis, with Epimmune's current shareholders owning approximately 22% of the Company and IDM's current shareholders owning approximately 78%, on a fully diluted basis.
On December 23, 2004, IDM sold approximately 2.1 million shares to certain existing IDM shareholders for 6.32 Euros per share, or approximately $8.41 per share based on a current exchange rate of 1.33 Dollars per Euro. If the transaction is completed and each share of IDM is exchanged for approximately 3.77 shares of Epimmune, these IDM shareholders will have paid approximately $2.23 per Epimmune share. This represents a premium of 70% to Epimmune's closing price on March 14, 2005 of $1.31 per share.
The transaction is expected to close in the second or third quarter of 2005, subject to the satisfaction of closing conditions, including approval of the transaction and a one-for-four reverse stock split by the Epimmune shareholders. The shares to be issued in the exchange will not be registered under U.S. securities laws and may not be offered or sold in the U.S. absent registration or unless an applicable exemption from the registration requirements is available. Epimmune will file a registration statement covering the resale of the shares issued in the transaction following the closing of the transaction.
Jefferies & Company, Inc. acted as exclusive financial advisor to Epimmune in this transaction. UBS Investment Bank acted as exclusive financial advisor to IDM.
Conference Call, Webcast and Transcript
Epimmune and IDM will hold a conference call to discuss the transaction at 1:00 p.m. Eastern time on Wednesday, March 16, 2005. To access the call, dial (800) 366-3908 (domestic) or (303) 262-2138 (international). Live audio of the conference call will be simultaneously broadcast over the Internet and will be available to members of the news media, investors and the general public. Access to live audio of the conference call will be available by following the appropriate links at http://www.epimmune.com. A replay of the call will be available through March 25, 2005 by dialing (800) 405-2236 or (303) 590-3000, passcode 11026513. A transcript of the call will be available on Epimmune's website.
About Epimmune Inc.
EPIMMUNE INC., based in San Diego, is focused on the development of vaccines using multiple epitopes to specifically activate the body's immune system. Epitopes, critical signaling molecules, stimulate the T cell arm of the immune system to respond to specific regions of cancer cells or infectious agents. By combining multiple, selected epitopes into a single vaccine candidate, the immune response can be both targeted and optimized for strength. Epimmune's therapeutic vaccine candidates have been designed to treat disease by stimulating the body's immune system to respond aggressively to infections such as HIV, hepatitis C virus and hepatitis B virus, and tumors such as breast, colon, lung and prostate. Epimmune's prophylactic vaccine candidates have been designed to protect against disease by teaching the body's immune system to react quickly when exposed to infectious agents. Epimmune's technology can also be used to identify and potentially eliminate undesirable reactions to therapeutic drugs or consumer products by modifying specific epitopes to suppress the unwanted immune response without degrading product efficacy. For more information on Epimmune, visit www.epimmune.com.
About IDM S.A.
IDM S.A. is a biopharmaceutical company headquartered in Paris and focused on the development of innovative products to treat and control cancer while maintaining the patient's quality of life. IDM is currently developing two lines of products; one aimed at the destruction of residual cancer cells after the use of traditional therapies, and the other to prevent tumor recurrence by triggering an immune response. IDM's most advanced product, Mepact, has completed a Phase III clinical trial. IDM has an additional five products in clinical development along with five products in preclinical development. For more information on IDM, visit www.idm-biotech.com.
Where You Can Find Additional Information About Epimmune's Proposed Combination with IDM
Epimmune will file a proxy statement concerning its proposed combination with IDM with the Securities and Exchange Commission (SEC). Investors and security holders are advised to read the proxy statement related to the proposed transaction when it becomes available, because it will contain important information related to the transaction. Investors and security holders may obtain a free copy of the proxy statement (when it is available) and other documents filed by Epimmune with the SEC at the SEC's website at www.sec.gov. The proxy statement and any other documents filed by Epimmune with the SEC may also be obtained free of charge from Epimmune by directing such request to Epimmune's Secretary at the following address: 5820 Nancy Ridge Drive, San Diego, California 92121.
Information Concerning Participation in Epimmune's Proxy Solicitation
Epimmune and IDM and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the shareholders of Epimmune with respect to the proposed transaction between Epimmune and IDM. Information regarding Epimmune's executive officers and directors is included in Epimmune's Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2003. This document is available free of charge at the SEC's website at www.sec.gov and from Epimmune www.epimmune.com. Investors and security holders may obtain additional information about the interests of the respective executive officers and directors of Epimmune and IDM in the proposed transaction between Epimmune and IDM by reviewing the proxy statement related to the transaction once it has been filed with the SEC.
This press release includes forward-looking statements that reflect Epimmune's management's current views of future events, including statements regarding the potential closing of the proposed transaction between Epimmune and IDM, the trading of the Company's stock on the NASDAQ National Market, the status and revenue opportunities of the Company's product candidates, the expected advantages of combining Epimmune and IDM, the expected cash position of the Company, and the expected timing of closing of the transaction. Actual results may differ materially from the above forward-looking statements due to a number of important factors, including the possibility that the proposed transaction with IDM may not ultimately close for any of a number of reasons, including, but not limited to, Epimmune not obtaining shareholder approval of the transaction, the increase in its authorized capital or the reverse split of Epimmune common stock; the failure of holders of at least 95% of the outstanding stock of IDM to become parties to the definitive agreement; the possibility that IDM shareholders who have not become parties to the definitive agreement make an alternative bid regarding a transaction involving IDM to the IDM shareholders pursuant to rights under the shareholders agreement among the IDM shareholders and, if so, that the IDM shareholders accept that bid instead of the transaction with Epimmune; the possibility that NASDAQ will not approve the listing of the Company's shares for trading on the NASDAQ National Market or that the Company will be able to meet the continued listing requirements after the closing of the transaction; that Epimmune will forego business opportunities while the transaction is pending; that prior to the closing of the proposed transaction, the businesses of the companies, including the retention of key employees, may suffer due to uncertainty; and even in the event the transaction is completed, that combining Epimmune and IDM may not result in a stronger company, that the technologies and clinical programs of the two companies may not be compatible and that the parties may be unable to successfully execute their integration strategies or realize the expected benefits of the transaction. Additional factors that may cause actual results to differ materially include risks regarding whether the Company or any of its collaborators will be able to develop pharmaceutical products using the technologies of the Company; risks associated with completing clinical trials of product candidates; the risks involved in the regulatory approval process for the Company's product candidates, including whether the Company will be able to obtain marketing approval in the U.S. and the EU for Mepact and whether regulatory approval of Mepact in the U.S. and EU and revenues, if any, from sales of Mepact will be obtained within expected timeframes; the possibility that clinical trials may reveal undesirable and unintended side effects or other characteristics that may prevent or limit the commercial use of proposed products; whether the cash resources of the Company will be sufficient to fund operations as planned, reliance on key employees, especially senior management; the uncertainty of the Company's future access to capital; the risk that the Company may not secure or maintain relationships with collaborators, and the Company's dependence on intellectual property. These factors as they relate to Epimmune are more fully discussed in Epimmune's Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2003, Epimmune's Quarterly Report on 10-Q filed with the SEC for the quarter ended September 30, 2004 and other periodic reports filed with the Securities and Exchange Commission. Epimmune and IDM expressly disclaim any intent or obligation to update these forward-looking statements, except as required by law.