8-K
Elanco Animal Health Inc (ELAN)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 27, 2021
Elanco
Animal Health Incorporated
(Exact name of registrant as specified in its charter)
| Indiana | 001-38661 | 82-5497352 |
|---|---|---|
| (State<br>or other jurisdiction<br><br> of incorporation) | (Commission<br><br> File Number) | (I.R.S.<br> Employer<br> <br>Identification<br> No.) |
| 2500 Innovation Way<br><br> <br>Greenfield, Indiana<br> <br>(Address of principal executive offices) | 46140<br> <br>(Zip<br> Code) | |
| --- | --- |
Registrant’s telephone number, including area code:
(877
)
352-6261
Not Applicable
(Former Name or Address, if Changed Since Last Report)
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):
| ¨ | Written communications<br>pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant<br>to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement communications<br>pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement communications<br>pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, no par value | ELAN | New York Stock Exchange |
| 5.00% Tangible Equity Units | ELAT | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
¨ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 7.01 | Regulation FD Disclosure |
|---|
A copy of the press release announcing the completion of the acquisition described under Item 8.01 below is attached to this Current Report on Form 8-K as Exhibit 99.1. The information contained in the accompanying Exhibit 99.1 is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information contained in the press release shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such a filing.
| Item 8.01 | Other Events |
|---|
On August 27, 2021, pursuant to the Agreement and Plan of Merger, dated as of June 15, 2021 (as amended by the First Amendment, dated June 30, 2021 (the “First Amendment”), the “Merger Agreement”), by and among Elanco Animal Health Incorporated, an Indiana corporation (“Elanco”), Knight Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Elanco (“Merger Sub”), and Kindred Biosciences, Inc., a Delaware corporation (“KindredBio”), Merger Sub merged with and into KindredBio (the “Merger”), with KindredBio continuing as the surviving corporation and a wholly owned subsidiary of Elanco.
At the effective time of the Merger (the “Effective Time”), each share of KindredBio common stock that was outstanding immediately prior to the Effective Time (other than shares of KindredBio common stock held by (1) KindredBio as treasury stock, (2) Elanco or Merger Sub (or by any wholly owned subsidiary of Elanco) or (3) stockholders who properly exercised their appraisal rights under Section 262 of the Delaware General Corporation Law with respect to such shares) was canceled and automatically converted into the right to receive $9.25 in cash, without interest (the “Merger Consideration”).
In addition, at the Effective Time, (i) each share of KindredBio common stock subject to vesting, repurchase or other lapse restriction that was outstanding immediately prior to the Effective Time became fully vested (to the extent such KindredBio common stock would not have otherwise vested) and was cancelled and converted automatically into the right to receive the Merger Consideration; (ii) each option to purchase shares of KindredBio common stock (other than rights to purchase shares of KindredBio common stock under the KindredBio employee stock purchase plan) (each, a “KindredBio Option”), whether vested or unvested and whether subject to time-based or performance-based vesting, that was outstanding immediately prior to the Effective Time became fully vested (to the extent unvested or to the extent such KindredBio Option would not otherwise have vested) and was automatically cancelled and converted into the right to receive a payment in cash equal to the product of (a) the excess, if any, of the Merger Consideration over the exercise price per share subject to such KindredBio Option and (b) the total number of shares subject to such KindredBio Option; and (iii) each award of restricted stock units denominated in shares of KindredBio common stock, whether subject to time-based or performance-based vesting, that was outstanding immediately prior to the Effective Time (each, a “KindredBio RSU Award”) became fully vested (to the extent unvested or to the extent such award would not otherwise have vested), and was automatically cancelled and converted into the right to receive a payment in cash equal to the product of (A) the total number of shares of KindredBio common stock subject to such KindredBio RSU Award and (B) the Merger Consideration. Any KindredBio Option with a per share exercise price equal to greater than the Merger Consideration was cancelled for no consideration.
The foregoing description of the Merger, the Merger Agreement and the related transactions contemplated thereby is not complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which, other than the First Amendment, was filed as Exhibit 2.1 to Elanco’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on June 16, 2021, and the First Amendment, a copy of which was filed as Exhibit 2.1 to Elanco’s Current Report on Form 8-K filed with the SEC on July 1, 2021, both of which are incorporated by reference into this Item 8.01.
| Item 9.01 | Financial Statements and Exhibits |
|---|
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release issued by Elanco Animal Health Incorporated, dated August 30, 2021. |
| 104.1 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
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.
| Elanco Animal Health Incorporated | ||
|---|---|---|
| August 30, 2021 | By: | /s/ Todd Young |
| Name: Todd Young | ||
| Title: Executive Vice President and Chief Financial Officer |
Exhibit 99.1
| Elanco Animal Health<br><br><br><br>2500 Innovation Way<br><br><br><br>Greenfield, IN 46140 |
|---|
FOR IMMEDIATE RELEASE
Investor Contact: Tiffany Kanaga, 302-897-0668, tiffany.kanaga@elancoah.com
Media Contact: Colleen Parr Dekker, 317-989-7011, colleen.dekker@elancoah.com
Elanco Closes Acquisition of Kindred Biosciences
Differentiated, Disruptive Portfolio PositionsElanco for Next Era of Pet Health Growth
GREENFIELD, Ind. (August 30, 2021) – Elanco Animal Health Incorporated (NYSE: ELAN) today announced it has closed the acquisition of Kindred Biosciences. The transaction advances Elanco’s access to the fast-growing $1+ billion dermatology market, complementing the company’s existing pipeline and increasing R&D capability in biologics and monoclonal antibodies.
The acquisition brings three potential dermatology blockbusters expected to launch through 2025, as well as additional R&D programs for other chronic disorders and unmet needs. The transaction also builds on the existing relationship between Elanco and KindredBio, including the prior licensing of the global commercial rights of KindredBio’s late-stage treatment for canine parvovirus. In June, KindredBio announced positive results from a pivotal efficacy study for that treatment showing 100% survival in the treated group versus 43% in the placebo, with licensure expected in 2022.
Elanco anticipates the KindredBio acquisition will add approximately $100 million to its innovation revenue expectation, bringing the total to $600 million to $700 million by 2025, with significant opportunity beyond the period. The accretive revenue is expected to unlock upside to Elanco’s long-term growth algorithm, with the potential to add a full percentage point of consistent annual revenue growth, starting in 2024, and expand the company’s gross margin over time.
“The addition of KindredBio strengthens and accelerates Elanco’s Innovation, Portfolio and Productivity (IPP) strategy, and positions Elanco to deliver solutions for veterinarians and pet owners in areas of unmet or under-served medical needs,” said Jeff Simmons, Elanco president and CEO. “The combination further shifts our mix into the attractive pet health sector with up to four launches from our combined pipeline by 2025 in the rapidly expanding dermatology category, which is expected to fuel continued growth and create sustainable long-term value for shareholders.”
Transaction Details
Elanco acquired all outstanding stock of Kindred Biosciences at a price of $9.25 per share, or approximately $444 million. Elanco utilized its revolving credit facility and cash on hand to finance the acquisition, after having refinanced the company's $500 million of Senior Notes due August 27, 2021. Elanco's year-end net leverage target remains approximately 5.5x, with a goal of below 3x at the end of the first quarter of 2024.
Goldman Sachs acted as financial advisors to Elanco and Covington & Burling LLP was legal counsel. Barclays acted as financial advisor to KindredBio and Morrison & Foerster LLP was legal counsel.
About Elanco
Elanco Animal Health Incorporated (NYSE: ELAN) is a global leader in animal health dedicated to innovating and delivering products and services to prevent and treat disease in farm animals and pets, creating value for farmers, pet owners, veterinarians, stakeholders, and society as a whole. With nearly 70 years of animal health heritage, we are committed to helping our customers improve the health of animals in their care, while also making a meaningful impact on our local and global communities. At Elanco, we are driven by our vision of Food and Companionship Enriching Life and our Elanco Healthy Purpose™ Sustainability Pledges –all to advance the health of animals, people, and the planet. Learn more at elanco.com.
Forward Looking Statement
Statements included in this press release that are not a description of historical facts are forward-looking statements. Words or phrases such as “believe,” “may,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “seek,” “plan,” “expect,” “should,” “would” or similar expressions are intended to identify forward-looking statements and are based on our current beliefs and expectations. These forward-looking statements include, without limitation, statements regarding future financial and operating results, benefits and synergies of the acquisition of KindredBio, future opportunities for the combined businesses and any other statements regarding events or developments that Elanco believes or anticipates will or may occur in the future. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. There are a number of important factors that could cause actual events to differ materially from those suggested or indicated by such forward-looking statements. These factors include risks and uncertainties that may affect future results of the combined company, including the risks described in the section entitled “Risk Factors” in Elanco’s and KindredBio’s Annual Reports on Form 10-K for the year ended December 31, 2020 and Quarterly Reports on Form 10-Q for the quarter ended June 30, 2021. All forward-looking statements are qualified in their entirety by this cautionary statement and Elanco does not undertake any obligation to revise or update this press release to reflect events or circumstances after the date hereof, except as required by law.