Item 8.01 Other Events
Introduction
This Form 8-K amends and supplements the Definitive Proxy Statement on Schedule
14A (the "Proxy Statement") previously filed by Kadmon Holdings, Inc. (the
"Company" or "we") with the Securities and Exchange Commission on October 4,
2021, relating to the proposal to adopt the Agreement and Plan of Merger, dated
as of September 7, 2021 (as it may be amended, supplemented, or modified from
time to time, the "Merger Agreement"), by and among the Company, Sanofi, a
societe anonyme formed under the laws of France ("Sanofi"), and Latour Merger
Sub, Inc., a Delaware corporation and wholly owned indirect subsidiary of Sanofi
("Merger Sub"), whereby Merger Sub will merge with and into the Company (the
"Merger"), with the Company surviving as a wholly owned indirect subsidiary of
Sanofi. Under the terms of the Merger Agreement, the Company's stockholders
shall be entitled to receive $9.50 in cash, without interest thereon, less any
applicable withholding taxes, for each share of the Company's common stock, par
value $0.001 per share ("Common Stock"), upon completion of the Merger. Any
capitalized term used and not otherwise defined herein shall have the meaning
ascribed to such term in the Proxy Statement.
Between October 1 and October 26, 2021, ten alleged stockholders of the Company
filed actions in federal courts located in the states of New York, Delaware, and
Pennsylvania against the Company and the members of its Board of Directors under
the following captions: (i) Nancy Jaser v. Kadmon Holdings, Inc., et al., No.
1:21-cv-08154 (S.D.N.Y.); (ii) John Dillon v. Kadmon Holdings, Inc., et al., No.
1:21-cv-08169 (S.D.N.Y.); (iii) Alex Ciccotelli v. Kadmon Holdings, Inc., et
al., No. 1:21-cv-08299 (S.D.N.Y.); (iv) Michael Young v. Kadmon Holdings, Inc.,
et al., No. 1:21-cv-05641 (E.D.N.Y.); (v) Michael Bierman v. Kadmon Holdings,
Inc., et al., No. 1:21-cv-08441 (S.D.N.Y.); (vi) Jacob Wheeler v. Kadmon
Holdings, Inc., et al., No. 1:21-cv-08576 (S.D.N.Y.); (vii) Robert Wilhelm v.
Kadmon Holdings, Inc., et al., No. 1:21-cv-01470 (D. Del.); (viii) Matthew
Whitfield v. Kadmon Holdings, Inc., et al., No. 2:21-cv-04605 (E.D. Pa.); (ix)
Jerome Anderson v. Kadmon Holdings, Inc., et al., No. 1:21-cv-08705 (S.D.N.Y.);
and (x) Joseph Gibson v. Kadmon Holdings, Inc., et al., No. 1:21-cv-01503 (D.
Del.) (collectively, the "Merger Actions"). The Merger Actions assert claims
solely on behalf of the individual stockholders and generally allege that the
Company and its Board of Directors failed to disclose allegedly material
information in the Proxy Statement. The Merger Actions seek an order enjoining
the consummation of the transactions contemplated by the Merger Agreement and
awarding damages. We believe that the claims asserted in the Merger Actions are
without merit. Additional lawsuits arising out of the Merger Agreement may be
filed in the future. If additional similar lawsuits are filed, absent new or
different allegations that are material, the Company will not necessarily
announce such additional filings.
While the Company believes that the disclosures set forth in the Proxy Statement
comply fully with all applicable law and denies the allegations in the Merger
Actions, in order to moot plaintiffs' disclosure claims, avoid nuisance and
possible expense and business delays, and provide additional information to its
stockholders, the Company has determined voluntarily to amend and supplement
certain disclosures in the Proxy Statement related to plaintiffs' claims with
the amended and supplemental disclosures set forth below under the sections
entitled "Background of the Merger" and "Opinions of the Company Financial
Advisors" (the "Supplemental Disclosures"). Nothing in the Supplemental
Disclosures shall be deemed an admission of the legal merit, necessity, or
materiality under applicable laws of any of the disclosures set forth herein.
To the contrary, the Company specifically denies all allegations in the Merger
Actions that any additional disclosure was or is required or material.
Except as otherwise set forth below, the information set forth in the Proxy
Statement remains unchanged and is incorporated by reference as relevant to the
items in this Form 8-K. This Form 8-K is being filed to reflect certain updates
as set forth below.
Supplemental Disclosures
Background of the Merger
Insert the following paragraph after the paragraph beginning "On February 16,
2021" on p. 23:
On May 12, 2021, the Company held its 2021 Annual Meeting of Stockholders (the
"Annual Meeting"), at which a quorum was present. Among the three proposals on
which stockholders voted was a proposal to approve the Amended and Restated 2016
Equity Incentive Plan. The Amended and Restated 2016 Equity Incentive Plan was
approved based upon the following votes: 48,777,519 votes in favor, 45,457,979
votes against, 2,535,220 votes to abstain, and 21,452,689 broker non-votes. A
copy of the Amended and Restated 2016 Equity Incentive Plan was attached as
Exhibit 10.1 to, and incorporated by reference into, the Company's Form 8-K
filed with the Securities and Exchange Commission on May 12, 2021.
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Cantor Fitzgerald Valuation Analysis
Selected Companies Analysis - Amend first sentence immediately following table
on p. 36 to include underlined text:
Based on its professional judgment and experience, Cantor Fitzgerald then
applied a selected range of 2026E revenue multiples of 1.00x to 3.00x, derived
from the selected companies, to corresponding data of the Company.
Amend sentence that immediately follows to include underlined text:
Based on information provided by the Company's management, Cantor Fitzgerald
then adjusted for the number of fully-diluted shares of Common Stock (determined
using the treasury stock method and taking into account outstanding in-the-money
options and warrants) as of September 3, 2021, which totaled approximately 192.8
million shares.
Selected Precedent Transactions Analysis - Amend first sentence immediately
following table on p. 37 to include underlined text:
Based on its professional judgment and experience, Cantor Fitzgerald then
applied a selected range of enterprise values of $1,250 million to $2,000
million, derived from the selected transactions.
Amend sentence that immediately follows to include underlined text:
Based on information provided by the Company's management, Cantor Fitzgerald
then adjusted for the Company's estimated cash, debt, convertible preferred
stock and other liabilities, and divided by the number of fully-diluted shares
of Common Stock (determined using the treasury stock method and taking into
account outstanding in-the-money options and warrants) as of September 3, 2021,
which totaled approximately 192.8 million shares.
Amend first sentence of paragraph that immediately follows to include underlined
text:
Based on its professional judgment and experience, Cantor Fitzgerald also
applied a selected range of 2026E revenue multiples of 2.25x to 4.25x, derived
from the selected transactions, to the Company's 2026E revenue, based on
internal estimates of the Company's management.
Amend sentence that immediately follows to include underlined text:
Based on information provided by the Company's management, Cantor Fitzgerald
then adjusted for the Company's estimated cash, debt, convertible preferred
stock and other liabilities, and divided by the number of fully-diluted shares
of Common Stock (determined using the treasury stock method and taking into
account outstanding in-the-money options and warrants) as of September 3, 2021,
which totaled approximately 192.8 million shares.
Discounted Cash Flow Analysis - Amend the first sentence following table on p.
38 to include underlined text:
Based on its analysis of the selected immuno-oncology companies and on its
professional judgment and experience, Cantor Fitzgerald included a selected
enterprise value of $200 million for the Company's oncology platform.
Amend the second sentence following table on p. 38 to include underlined text:
Using the sum of the estimated valuations summarized above, based on information
provided by the Company's management Cantor Fitzgerald then divided by the
number of fully-diluted shares of Common Stock (determined using the treasury
stock method and taking into account outstanding in-the-money options and
warrants) as of September 3, 2021, which totaled approximately 192.8 million
shares.
Moelis Valuation Analysis
Discounted Cash Flow Analysis, p. 41 - Revise the second sentence of second
paragraph as follows:
The estimated WACC range was derived using the Capital Assets Pricing Model and
a size premium using (i) an equity risk premium; (ii) a risk-free rate based on
20-year U.S. government bonds; (iii) a size premium; and (iv) a selected range
of unlevered betas informed by the selected publicly traded companies described
below.
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Selected Publicly Traded Companies Analysis, pp. 42-43 - Insert the following at
end of paragraph immediately after IO Platform Group Table:
Moelis based its selection of a 1.50x-2.25x sales multiple range and $1
billion-$2 billion TEV range on its professional judgment and experience which
was informed by the respective mean and median sales multiple range and TEV
range of the public companies selected for the analysis, which are set forth in
the tables above. Likewise, Moelis based the $175 million-$350 million range
for the Company's IO Platform assets on its professional judgment and experience
which was informed by the range of TEVs of the selected IO Platform companies
($289 million and $320 million, respectively, as set out in the table above).
Selected Precedent Transactions Analysis, p. 44 - Insert the following at end of
penultimate paragraph:
Moelis based its selection of 1.50x-3.00x TEV / CY+5 Sales multiples range and
$1.5 billion-$2.5 billion TEV range on its professional judgment and experience
which was informed by the respective mean and median TEV / CY+5 Sales multiples
range and TEV range of the precedent transactions selected for the analysis
after accounting for certain transactions that Moelis, based on its professional
judgment and experience, viewed as outliers given unique distinguishing
characteristics of those transactions.
Forward-Looking Statements
This Form 8-K and the documents referred to herein contain forward-looking
statements as defined in the Private Securities Litigation Reform Act of 1995,
as amended. Forward-looking statements are statements that are not historical
facts and may include projections and estimates and their underlying
assumptions, statements regarding plans, objectives, intentions and expectations
with respect to future financial results, events, operations, services, product
development and potential, and statements regarding future performance.
Forward-looking statements are generally identified by the words "expects",
"anticipates", "believes", "intends", "estimates", "plans", "will be" and
similar expressions. Although the Company's management believes that the
expectations reflected in such forward-looking statements are reasonable,
investors are cautioned that forward-looking information and statements are
subject to various risks and uncertainties, many of which are difficult to
predict and generally beyond the Company's control, that could cause actual
results and developments to differ materially from those expressed in, or
implied or projected by, the forward-looking information and statements. These
risks and uncertainties include among other things, risks related to Sanofi and
the Company's ability to complete the transaction on the proposed terms or on
the proposed timeline, including the receipt of required stockholder approvals,
the possibility that competing offers will be made, other risks associated with
executing business combination transactions, such as disruption from the
proposed acquisition making it more difficult to conduct business as usual or to
maintain relationships with customers, employees, manufacturers, suppliers or
patient groups, as well as other risks related to the Company's business,
including the uncertainties inherent in research and development, including
future clinical data and analysis, compliance with regulatory obligations and
oversight by regulatory authorities, trends in exchange rates and prevailing
interest rates, volatile economic and market conditions, cost containment
initiatives and subsequent changes thereto, and the impact that COVID-19 will
have on the Company and its customers, suppliers, vendors, and other business
partners, and the financial condition of any one of them, as well as on the
Company's employees and on the global economy as a whole. Any material effect of
COVID-19 on any of the foregoing could also adversely impact the Company. This
situation is changing rapidly and additional impacts may arise of which the
Company are not currently aware and may exacerbate other previously identified
risks. While the list of factors presented here is representative, no list
should be considered a statement of all potential risks, uncertainties or
assumptions that could have a material adverse effect on the companies' ability
to consummate the Merger and/or their consolidated financial condition or
results of operations. The foregoing factors should be read in conjunction with
the risks and cautionary statements discussed or identified in the public
filings with the SEC made by the Company, including those listed under "Risk
Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in the
Company's annual report on Form 10-K for the year ended December 31, 2020,
quarterly reports on Form 10-Q and current reports on Form 8-K filed with the
SEC. The forward-looking statements speak only as of the date hereof and, other
than as required by applicable law, the Company does not undertake any
obligation to update or revise any forward-looking information or statements.
Additional Information and Where to Find It
This communication may be deemed to be a solicitation material in respect of the
proposed Merger. On October 4, 2021, the Company filed the Definitive Proxy
Statement with the SEC in connection with the solicitation of proxies for a
special meeting to be held on November 5, 2021. The Definitive Proxy Statement
and a proxy card have been mailed to each stockholder of the Company entitled to
vote at the meeting. STOCKHOLDERS OF THE COMPANY ARE ADVISED TO READ THE
DEFINITIVE PROXY STATEMENT FOR THE MERGER, AND ANY AMENDMENT OR SUPPLEMENT
THERETO THAT MAY BE FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT
INFORMATION ABOUT THE COMPANY AND THE MERGER. All such documents, when filed,
may be obtained free of charge at the SEC's website (http://www.sec.gov) or upon
request by contacting the Company, Investor Relations, by telephone at
1-833-900-5366 or via email at investors@kadmon.com. The Company's filings with
the SEC are also available on the Company's website at
https://investors.kadmon.com/.
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Participants in the Solicitation
The Company and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the Company's stockholders with
respect to the Merger. Information about the Company's directors and executive
officers and their ownership of the Company's common stock is set forth in the
Proxy Statement and in the proxy statement on Schedule 14A filed with the SEC on
April 1, 2021 and the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2020. To the extent that such individual's holdings of the
Company's common stock have changed since the amounts printed in the Company's
proxy statement, such changes have been or will be reflected on Statements of
Change in Ownership on Form 4 filed with the SEC. Information regarding the
identity of the potential participants, and their direct or indirect interests
in the Merger, by security holdings or otherwise, will be set forth in the proxy
statement and other materials to be filed with SEC in connection with the
Merger.
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