Full Press Release Details
Investor Contact: Tiffany Kanaga, 302-897-0668, tiffany.kanaga@elancoah.com
Media Contact: Colleen Parr Dekker, 317-989-7011, colleen.dekker@elancoah.com
For KindredBio: Katja Buhrer, 917-969-3438, katja.buhrer@kindredbio.com
Elanco Announces Agreement to Acquire Kindred
Bolt-on Acquisition Accelerates Elanco's
Expansion in Pet Health
Elanco to host conference call for investment
community at 8:00 am Eastern Time
GREENFIELD, Ind. and SAN FRANCISCO (June 16, 2021) - Elanco
Animal Health Incorporated (NYSE: ELAN) and Kindred Biosciences, Inc. (KindredBio, NASDAQ: KIN) today announced the parties have entered
into a definitive agreement for Elanco to acquire KindredBio, a biopharmaceutical company focused on developing novel pet therapeutics
based on validated human targets. The acquisition further accelerates Elanco's expansion in the attractive pet health market, particularly
advancing Elanco's presence in the fast-growing billion-dollar dermatology category.
KindredBio brings three potential dermatology blockbusters
expected to launch through 2025, as well as a number of additional R&D programs for other chronic disorders and unmet needs,
including canine parvovirus. KindredBio's innovative pipeline - added to Elanco's own organic efforts -
meaningfully augments Elanco's ability to launch products, gain share, and grow in the dermatology market through fully
accretive revenue dollars. Elanco anticipates the combination will add approximately $100 million to its previously stated
innovation revenue expectation of $500 million to $600 million by 2025, with significant opportunity beyond the period.
"This highly complementary combination is focused in one of the
most exciting spaces in pet health, and one where we see a strategic imperative to build a differentiated competitive offering,"
said Jeff Simmons, president and CEO of Elanco. "It further accelerates our mix shift into pet health and advances our IPP strategy.
Ultimately, we believe the combination positions Elanco to bring innovative solutions to veterinarians and pet owners in areas of unmet
or under-served medical needs, fueling continued growth in the exciting pet therapeutic category and creating sustainable long-term value
The acquisition agreement builds on Elanco's existing relationship
with KindredBio, which began with licensing the global commercial rights of KindredBio's late-stage treatment for canine parvovirus,
and continues Elanco's proven approach as an innovation partner of choice.
"From the beginning, we have been
focused at KindredBio on bringing the best medicines to our animal family members. With this transaction with Elanco, a widely respected
leader in veterinary medicine with global reach, we will maximize the impact our innovative pipeline will have on improving the lives
of pets," said Richard Chin CEO and co-founder of KindredBio.
"This announcement is validation of KindredBio's achievements
as one of the world's first veterinary biopharmaceutical companies, recognizing our track record in drug development and remarkably
talented team," added Denise Bevers, KindredBio director and co-founder. "KindredBio looks forward to continuing our mission
to transform veterinary medicine as part of the Elanco family."
The deal will expand Elanco's omnichannel leadership complementing
the company's e-commerce and retail position by increasing its veterinary clinic presence in a leading therapeutic category and
keeping the veterinarian at the center. This continues Elanco's work to be a conduit for pet owners to the veterinarian. Dermatologic
symptoms such as scratching and allergies are the number one reason pet owners visit the veterinarian today.
Under the terms of the agreement, Elanco will acquire all outstanding
stock of Kindred Biosciences at a price of $9.25 per share, or approximately $440 million, a premium of 52% based on the 30-day average.
Elanco intends to fund the acquisition with pre-payable debt. Elanco expects to extend its leverage objective of under three times net
leverage to Adjusted EBITDA by three months, from the end of 2023 to the end of the first quarter of 2024.
Elanco expects to unlock upside to its long-term growth algorithm,
with the potential to add a full percentage point of consistent annual revenue growth, starting in 2024, and further expand the company's
margin potential over time. Transaction and operating costs will be slightly dilutive to Elanco's reported and adjusted earnings per share
in 2021, with the impact expected to be concentrated in the fourth quarter, and also slightly dilutive to the full year 2022.
"Kindred Biosciences' monoclonal antibody pipeline
and capabilities are additive and complementary to what we've built within Elanco," said Aaron Schacht, executive vice
president Innovation, Regulatory and Business Development at Elanco. "This combination will bolster our opportunity for
leadership in atopic dermatitis and allow us to deliver innovation of novel biologic therapeutics to treat other unmet disease
challenges in pets."
Elanco expects the transaction to close in the third quarter of 2021,
subject to customary closing conditions, including approval by KindredBio's shareholders and clearance under the Hart-Scott-Rodino
Antitrust Improvements Act. KindredBio's Board has approved the proposed acquisition.
Elanco also reaffirmed second quarter 2021 revenue guidance of $1,225
million to $1,255 million, and full year 2021 revenue guidance of $4,670 million to $4,710 million.
Goldman Sachs is acting as financial advisors to Elanco and Covington
& Burling LLP is acting as legal counsel. Barclays is acting as financial advisor to KindredBio and Morrison & Foerster LLP is
acting as legal counsel.
Conference Call and Webcast
Elanco will host a conference call for the investment community today
at 8:00 am Eastern Time to discuss the announcement. Investors, media and general public can access a live webcast of the conference call
through the link posted on Elanco's website at https://investor.elanco.com/events-and-presentations/default.aspx. A replay
will also be available on the website shortly following the call.
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
About Kindred Biosciences
Kindred Biosciences is a biopharmaceutical company
developing innovative biologics focused on saving and improving the lives of pets. Its mission is to bring to pets the same kinds of safe
and effective medicines that human family members enjoy. The Company's strategy is to identify targets that have already demonstrated
safety and efficacy in humans and to develop therapeutics based on these validated targets for dogs and cats. KindredBio has a deep pipeline
of novel biologics in development across many therapeutic classes, alongside state-of-the-art biologics manufacturing capabilities and
a broad intellectual property portfolio.
For more information, visit: www.kindredbio.com
Important Information for Investors and Stockholders
This communication does not constitute a solicitation of any vote
or approval in connection with the proposed acquisition of Kindred Biosciences, Inc. ("KindredBio") by Elanco Animal Health
Incorporated ("Elanco" and such proposed acquisition, the "Merger"). KindredBio intends to file with the SEC
and mail to its stockholders a definitive proxy statement in connection with the proposed Merger. BEFORE MAKING ANY VOTING DECISION,
KINDREDBIO'S STOCKHOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE PROXY STATEMENT (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS
THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT KINDREDBIO AND THE PROPOSED MERGER. The proposals for the Merger will be made solely through the proxy statement. Investors
and stockholders may obtain copies of the proxy statement and other documents filed with the SEC by KindredBio (when they became available)
free of charge from the SEC's website at www.sec.gov or by accessing
KindredBio's website at www.kindredbio.com. In addition, a copy of the proxy statement (when it becomes available) may be
obtained free of charge from Investor Relations at Kindred Biosciences, Inc., 1555 Bayshore Highway, Suite 200, Burlingame, CA 94010.
Copies of the documents filed with the SEC by Elanco (when they become available) may be obtained free of charge from the SEC's
website at www.sec.gov or by accessing Elanco's website at www.elanco.com.
Participants in the Merger Solicitation
Elanco, KindredBio, and certain of their directors, executive officers
and employees may be considered participants in the solicitation of proxies from KindredBio's stockholders with respect to the proposed
transactions. Information regarding the persons who may, under the SEC rules, be deemed participants in the solicitation of KindredBio's
stockholders in connection with the proposed Merger and a description of their direct and indirect interests therein, by security holdings
or otherwise, will be set forth in the definitive proxy statement that KindredBio intends to file with the SEC when it becomes available.
Information about Elanco's directors and executive officers is set forth in Elanco's definitive proxy statement for its 2021