For more information, see www.achillion.com. Under the terms of the merger agreement, Achillion will merge into a new wholly-owned subsidiary of Alexion. For a more detailed description of the risks and uncertainties associated with Achillion, please see Achillion`s Annual Report on Form 10-K for the year ended December 31, 2018, as well as subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which have been filed with the SEC and are available under www.sec.gov and www.achillion.com. Under the terms of the agreement announced on October 16, 2019, Alexion will acquire Achillion for an initial consideration of approximately $930 million, or $6.30 per share in cash for each common share of Achillion. The transaction includes the possibility of additional consideration in the form of non-negotiable contingent value rights (CVRs) to be paid to Achillion shareholders if certain clinical and regulatory milestones are reached within certain time frames. These include $1.00 per share for the U.S. FDA APPROVAL of Danicopan and $1.00 per share for the entry into Phase 3 ACH-5228. For more information, see the SEC`s Privacy and Security Policy. Thank you for your interest in the U.S. Securities and Exchange Commission.
To read more articles, log in. To learn more about a subscription, click here. . CVRs are similar to call options or warrants. They often have an expiration date, sometimes a very long expiration date, depending on the type of contract, just like the guarantees. After this period, the contract expires worthless if the evaluation events have not been triggered. Again, this is similar to call options that expire worthless if the underlying stock does not exceed the exercise price of the option. For more information on using options in merger arbitration, see our article How to Use Options in a Merger Arbitration Strategy. . If a user or application submits more than 10 requests per second, other requests from the IP address may be limited for a short time.
Once the request rate has fallen below the threshold for 10 minutes, the user can continue to access the content on SEC.gov. This SEC practice is designed to limit excessive automated searches to SEC.gov and is not intended or should not affect anyone browsing the site SEC.gov. Given the IRS`s strong preference for «closing» transactions that involve contracts and claims to receive indefinite amounts of income in return, it is likely reasonable to assume that the realized amount from the sale of Achillion stock includes not only the cash consideration, but also the fair market value of the CVR. An Achillion shareholder therefore has a basis in the CVR that corresponds to the amount taken into account when determining the amount of the sale of his Achillion shares. This column does not necessarily reflect the views of the Office of National Affairs, Inc. or its owners. In this «reverse subsidiary merger», each common share of Achillion will be converted into a right to receive: (1) $6.30 in interest-free cash and (2) a CVR. Each CVR represents the right to receive ($1) $1 if a «clinical trial milestone» related to the development of ACH-5528 is reached before the fourth anniversary of the completion of the merger, and (2) $1 if Alexion first receives approval from the Food and Drug Administration for ACH-4471 prior to the date, which is 54 months after the completion of the merger. . Please report your traffic by updating your user agent to include company-specific information.
A contingent value right (CVR) is a contract given to target shareholders when certain elements of the target are difficult to assess. Like the success of a drug trial, which can result in a significant increase in value to the owner or ultimately has a value of zero. Theoretically, these contracts can be used in any business or environment. However, in mergers and acquisitions, they are more commonly used in biotech or pharmaceutical transactions and, as such, become an important part of the evaluation of merger arbitration. Most conditional value rights are not transferable, which reduces the burden on the issuing company. However, some may be transferable and traded on an exchange. In this case, market forces will help determine a fair price for the CVR, and investors or merger arbitrators can enter or exit a position based on their risk appetite. Alexion Pharmaceuticals Inc. acquires Achillion Pharmaceuticals Inc. for cash and contingent value (CVR) rights that will entitle former Achillion shareholders to additional liquidity based on clinical and regulatory thresholds. These payments will be made no later than the date of fifteen (15) business days following the completion of the clinical trial stage or regulatory approval (the «Milestone Payment Date»). December 19, 2019 09:24 AND | Source: Achillion Pharmaceuticals, Inc.
Achillion Pharmaceuticals, Inc. Unauthorized attempts to upload information and/or modify information to any part of this website are strictly prohibited and subject to prosecution under the Computer Fraud and Abuse Act of 1986 and the National Information Infrastructure Protection Act of 1996 (see 18 U.S.C § § 1001 and 1030). Media: Susanne Heinzinger Senior Vice President, Corporate Communications Achillion Pharmaceuticals, Inc. Tel. 215-709-3032 Clayton Robertson Achillion Pharmaceuticals, Inc. Tel. 215-709-3078 The IRS, based on the reasoning it used in Rev. Rul. 58-402, in order to justify an extremely narrow window of opportunity for the processing of open transactions, seems to assume that the `profit` resulting from the receipt of a CVR (i.e. the amount, if any, by which the CVR payment exceeds the beneficiary`s base in the CVR) is classified as ordinary income.
This argument is undoubtedly based on the fact that the expiry of a CVR after its expiry does not constitute a `sale or exchange` of that financial instrument. This document clearly explains the quota value right and shows how it will develop a value based on meeting predefined criteria. Payment dates are also indicated. No later than the effective date, Alexion and a representative of the mutually acceptable rights of Alexion and Achillion will enter into the CVR Agreement, which governs the terms of the CVRs to be obtained from Achillion shareholders. CVRs are not transferable except in certain limited circumstances, are not proven by a certificate or other instrument, and are not registered or listed for trading. CVRs have no voting or dividend rights and do not represent any shares or interests in Alexion, Merger Subsidiary, Achillion or any of their affiliates. In Tax Decision 58-402, the Internal Revenue Service stated that «the gain on the sale or other disposal of property is the amount realized on the adjusted basis.» The amount realized, he said, was «the sum of the money received plus the fair market value of the property received (other than the money).» CVRs are property. Do they have a «fair market value»? BLUE BELL, Pa., Dec. 19, 2019 (GLOBE NEWSWIRE) — Achillion Pharmaceuticals, Inc. (Nasdaq: ACHN), a clinical-stage biopharmaceutical company dedicated to transforming the lives of patients and families affected by supplement-mediated diseases, today announced that its shareholders have approved the acquisition of Achillion by Alexion Pharmaceuticals, Inc.
(Nasdaq: ALXN). Achillion continues to expect the transaction to close in the first half of 2020, subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the «HSR Act»). Alexion and Achillion have not yet submitted their bids under the HSR Act and currently plan to do so in January 2020. Alexion Pharmaceuticals Inc. plans to acquire Achillion Pharmaceuticals Inc. as part of an agreement that includes conditional value rights (CVRs) related to the drugs Achillion develops and for which it seeks regulatory approval. Robert Willens believes that these CVRs raise interesting tax issues. By using this website, you agree to security monitoring and auditing. For security reasons and to ensure that the public service remains accessible to users, this government computer system uses network traffic monitoring programs to identify unauthorized attempts to upload or modify information, or otherwise cause damage, including attempts to deny service to users. On January 28, 2020, Alexion issued a press release announcing the completion of the merger. A copy of the press release is attached as Annex 99.1. .