Safeguard Scientifics To Realize At Least $36 M In Initial Sale Proceeds From Eli Lilly's Completed Acquisition Of Partner Company Avid Radiopharmaceuticals
Sale to Generate a Minimum Cash-on-Cash Return of 3x; Potential to Generate 8x Cash-on-Cash Return Based on Future Regulatory and Commercial Milestones
Safeguard Scientifics, Inc., a holding company that builds value in growth-stage life sciences and technology companies, recently announced that it expects to receive a minimum of $36M in initial sale proceeds from the successful completion of Eli Lilly and Company's acquisition of partner company Avid Radiopharmaceuticals, Inc., which took place earlier today, a portion of which amounts will be held in escrow for approximately one year. Safeguard has deployed $12M of capital in Avid since May 2007 for a 13% primary ownership stake. Therefore, the $36M in expected minimum initial sale proceeds to be received will constitute a 3x cash-on-cash return.
Under terms of the Lilly agreement, Lilly acquired all outstanding shares of Avid for an upfront payment of $300M, subject to adjustment based on existing cash on hand at closing, and subject to a portion of such amounts being held in escrow. Safeguard could see its cash-on-cash return approach 8x, based upon an additional $500M in contingent consideration payable upon the achievement of future regulatory and commercial milestones.
Eli Lilly's acquisition of Avid Radiopharmaceuticals represents Safeguard's second successful exit transaction from a partner company during the fourth quarter 2010, the other being the GE Healthcare public tender offer for Clarient, Inc. The Clarient exit will generate approximately $147M in net proceeds for Safeguard once the full transaction has been completed.
"Avid's accelerated progress through various clinical milestones since May 2007 demonstrates the importance of partnering with life sciences companies that have strong management, innovative products and/or services and capital efficient paths towards commercialization," said Gary J. Kurtzman, MD, Managing Director in the Life Sciences Group at Safeguard, and member of Avid's Board of Directors. "As a result of its fortitude and vision, Lilly recognized that Avid has become the leader in the development of molecular imaging agents that have the potential for early disease detection of pathology associated with Alzheimer's and other neurodegenerative diseases."
"Every innovative technology needs a strong advocate, and that's what we found with Safeguard Scientifics and our other partners," said Daniel M. Skovronsky, MD, PhD, CEO and President of Avid. "The support we received from Safeguard – financial, operational and strategic guidance – exemplifies their understanding of the inherent value in diagnostic imaging technology, and underlines their vision to take a leadership position in this space."
"The improved strength of our balance sheet provides us with financial flexibility to redeploy capital into new, high-growth, high-value opportunities as well as our current partner companies and ultimately expand the Safeguard platform," said Peter J. Boni, President and CEO of Safeguard Scientifics. "We are excited about our positive momentum and will continue to work to drive value for our shareholders."
About Safeguard Scientifics, Inc.
Founded in 1953 and based in Wayne, PA, Safeguard Scientifics, Inc. provides growth capital for entrepreneurial and innovative life sciences and technology companies. Safeguard targets life sciences companies in Molecular and Point-of-Care Diagnostics, Medical Devices, Regenerative Medicine and Specialty Pharmaceuticals, and technology companies in Internet / New Media, Financial Services IT and Healthcare IT with capital requirements of up to $25M. Safeguard participates in expansion financings, corporate spin-outs, management buyouts, recapitalizations, industry consolidations and early-stage financings. For more information, please visit our website at www.safeguard.com/.
SOURCE: Safeguard Scientifics, Inc.