DEFM14A 1 d108944ddefm14a.htm DEFM14A DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

Filed by the Registrant  ☒                            

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Material
  Soliciting Material under §240.14a-12

AGIOS PHARMACEUTICALS, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which the transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


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LOGO

Agios Pharmaceuticals, Inc.

88 Sidney Street

Cambridge, Massachusetts 02139

February 11, 2021

Dear Stockholder:

You are cordially invited to attend a special meeting of the stockholders of Agios Pharmaceuticals, Inc. (“Agios,” the “Company,” “we” or “us”) to be held on March 25, 2021 at 9:00 a.m. (Eastern Time). You may attend online via live webcast as described in the accompanying proxy statement.

At the special meeting, you will be asked to consider and vote upon the proposal to approve the proposed sale of the Company’s commercial, clinical and research-stage oncology portfolio (the “oncology business”) to Servier Pharmaceuticals, LLC (“Servier”) pursuant to the terms of the Purchase and Sale Agreement, dated as of December 20, 2020 (the “purchase agreement”), by and among Agios, Servier and Servier S.A.S. (“Servier Parent”). As consideration for the sale of the oncology business, Servier has agreed to pay Agios (i) $1,800,000,000 in cash payable upon completion of the transaction, subject to adjustments based on closing levels of working capital of the oncology business and amounts payable in respect of a representation and warranty insurance policy, (ii) $200,000,000 in cash if a regulatory milestone for vorasidenib is achieved, (iii) a royalty of 5% of U.S. net sales of TIBSOVO® from the completion of the transaction through its loss of exclusivity and (iv) a royalty of 15% of U.S. net sales of vorasidenib from the first commercial sale of vorasidenib through its loss of exclusivity.

Following the completion of the transaction, Agios expects to focus on operating and expanding its genetically defined disease business. Agios will continue to be a corporation organized under the laws of the State of Delaware and its common stock will continue to be listed on Nasdaq Global Select Market under the ticker symbol “AGIO.”

The board of directors of Agios (the “Agios Board”) has unanimously determined that the terms of the transactions contemplated by the purchase agreement, including the transaction, are expedient and in the best interests of Agios. The Agios Board unanimously recommends that Agios stockholders vote “FOR” the transaction proposal.

Your vote is very important. The approval of the holders of a majority of the outstanding shares of Agios common stock entitled to vote at the special meeting is required to approve the transaction proposal. A failure to vote your shares of Agios common stock or an abstention from voting will have the same effect as a vote “AGAINST” the transaction proposal. Only Agios stockholders that owned Agios common stock as of the close of business on February 8, 2021, the record date for the special meeting, will be entitled to vote at the special meeting.

Whether or not you plan to attend the special meeting, we encourage you to submit your proxy as soon as possible to make sure that your shares are represented at the special meeting.

The accompanying proxy statement provides detailed information about the transaction, the oncology business and Agios. We encourage you to read the accompanying proxy statement, as well as the annexes attached thereto and the exhibits and documents incorporated by reference therein, carefully in their entirety.

Sincerely,

 

LOGO

Jacqualyn A. Fouse, Ph.D

Cambridge, Massachusetts

February 11, 2021

The accompanying proxy statement is dated February 11, 2021, and, together with the enclosed form of proxy, is first being mailed to Agios stockholders on or about February 11, 2021.


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LOGO

Agios Pharmaceuticals, Inc.

88 Sidney Street

Cambridge, Massachusetts 02139

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

Dear Stockholder:

We are pleased to invite you to attend, and notice is hereby given that Agios Pharmaceuticals, Inc., a Delaware corporation (“Agios,” the “Company,” “we” or “us”), will hold, a special meeting of its stockholders virtually via the internet at 9:00 a.m. (Eastern Time) on March 25, 2021.

The purpose of the special meeting is to vote upon the proposal to approve the proposed sale (the “transaction”) of the Company’s commercial, clinical and research-stage oncology portfolio (the “oncology business”) to Servier Pharmaceuticals, LLC pursuant to the Purchase and Sale Agreement, dated as of December 20, 2020 (the “purchase agreement”), by and among Agios, Servier and Servier S.A.S.

Agios will transact no other business at the special meeting, except such business as may properly be brought before the special meeting or any adjournment or postponement thereof. Please refer to the proxy statement of which this notice is a part for further information with respect to the business to be transacted at the special meeting.

In light of the ongoing coronavirus (COVID-19) pandemic, the special meeting will be held in a virtual meeting format only, via live webcast, and there will not be a physical meeting location. You will be able to attend the special meeting online and to vote your shares electronically at the special meeting by registering in advance at www.proxydocs.com/AGIO prior to the deadline of 5:00 p.m. (Eastern Time) on March 23, 2021. Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you access to the special meeting. Please be sure to follow instructions found on your proxy card and/or voting instruction form and subsequent instructions that will be delivered to you via email. We encourage you to complete your registration as soon as possible if you desire to attend the special meeting online and to vote your shares electronically at the special meeting.

The record date for the special meeting is February 8, 2021. Only Agios stockholders of record on such date are entitled to receive notice of, and to vote at, the special meeting or any adjournments or postponements thereof.    Completion of the transaction is conditioned upon approval of the transaction proposal by holders of a majority of the outstanding shares of Agios common stock entitled to vote at the special meeting.

The Agios Board has unanimously determined that the terms of the transactions contemplated by the purchase agreement, including the transaction, are expedient and in the best interests of Agios. The Agios Board unanimously recommends that Agios stockholders vote “FOR” the transaction proposal.

Your vote is very important. Whether or not you expect to attend the special meeting virtually via the special meeting website, to ensure your representation at the special meeting, we encourage you to submit a proxy to vote your shares as promptly as possible by (1) visiting the internet site listed on the proxy card, (2) calling the toll-free number listed on the proxy card or (3) submitting your proxy card by mail by using the provided self-addressed, stamped envelope. Submitting a proxy will not prevent you from voting virtually via the special meeting website at the special meeting. Any eligible holder present virtually at the special meeting may vote at that time, thereby revoking any previous proxy. In addition, a proxy may be revoked in writing before the special meeting in the manner described in the accompanying proxy statement. If your shares are held


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in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by the bank, broker or other nominee.

If you own shares in “street name” through an account with a bank, broker or other nominee, then you will need to obtain a legal proxy and further instructions from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on the transaction proposal without your instructions.

We urge you to carefully read this proxy statement, including the annexes attached hereto and the exhibits any documents incorporated by reference herein. If you have any questions concerning the proposal in this notice, the purchase agreement, the transaction or the proxy statement, would like additional copies of the proxy statement or need help voting your shares of Agios common stock, please contact the Company’s proxy solicitor below:

 

 

LOGO

INNISFREE M&A INCORPORATED

501 Madison Avenue, 20th Floor

New York, New York 10022

Stockholders May Call TOLL-FREE: (877) 825-8772

Banks and Brokers May Call Collect: (212) 750-5833

By Order of the Board of Directors,

 

LOGO

Jacqualyn A. Fouse, Ph.D

Cambridge, Massachusetts

February 11, 2021


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE TRANSACTION

     iii  

SUMMARY

     1  

Parties to the Transaction

     1  

Agios Pharmaceuticals, Inc.

     1  

Servier Pharmaceuticals, LLC

     1  

Servier S.A.S.

     2  

The Transaction

     2  

Purchase Agreement

     2  

Recommendation of the Agios Board

     3  

Opinion of Agios’ Financial Advisors

     3  

Regulatory Clearances and Approvals Required for the Transaction

     4  

Closing Date of the Transaction

     4  

Conditions to the Completion of the Transaction

     5  

Restrictions on Solicitation of Acquisition Proposals

     5  

Changes in Board Recommendation

     6  

Termination of the Purchase Agreement

     6  

Termination Fee Payable by Agios

     7  

Interests of Agios’ Directors and Executive Officers in the Transaction

     7  

Accounting Treatment

     7  

Appraisal Rights

     8  

The Special Meeting

     8  

RISK FACTORS

     9  

Risks Relating to the Transaction

     9  

Risks Relating to the Remaining Company

     12  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     14  

PARTIES TO THE TRANSACTION

     15  

Agios Pharmaceuticals, Inc.

     15  

Servier Pharmaceuticals, LLC

     15  

Servier S.A.S.

     15  

THE SPECIAL MEETING

     16  

Date, Time and Place

     16  

Attendance at the Agios Special Meeting

     16  

Purpose of the Special Meeting

     16  

Recommendation of the Agios Board

     17  

Record Date; Agios Stockholders Entitled to Vote

     17  

Quorum

     17  

Required Vote

     17  

Voting by Agios’ Directors and Executive Officers

     17  

Abstentions and Broker Non-Votes

     17  

Failure to Vote

     18  

Voting at the Special Meeting

     18  

Solicitation of Proxies

     19  

Assistance

     19  

Tabulation of Votes

     20  

Adjournment

     20  

Questions and Additional Information

     20  

THE TRANSACTION

     21  

Background of the Transaction

     21  

Recommendation of the Agios Board and Reasons for the Transaction

     29  

Opinion of Agios’ Financial Advisors

     32  

 

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Certain Unaudited Prospective Financial Information

     42  

Interests of Agios’ Directors and Executive Officers in the Transaction

     45  

Regulatory Clearances and Approvals Required for the Transaction

     45  

Accounting Treatment

     45  

Appraisal Rights

     45  

Effects on Agios if the Transaction Is Completed and the Nature of Agios’ Business Following the Transaction

     45  

THE PURCHASE AGREEMENT

     46  

Purchase and Sale of Assets

     46  

Assumption and Transfer of Liabilities

     48  

Consideration for the Transaction

     50  

Closing Date of the Transaction

     51  

Representations and Warranties

     52  

Definition of “Business Material Adverse Effect”

     53  

Conduct of the Business Pending the Transaction

     54  

Obligation to Call a Stockholders’ Meeting

     56  

No Solicitation Covenant

     56  

Changes in Board Recommendation

     58  

Required Efforts to Consummate the Transaction

     60  

Employee Benefits Matters

     62  

Financing

     63  

Representation and Warranty Insurance Policy

     63  

Other Covenants

     64  

Conditions to the Completion of the Transaction

     64  

Termination of the Purchase Agreement

     65  

Termination Fee Payable by Agios

     66  

Survival

     66  

Indemnification

     67  

Fees and Expenses

     67  

Amendments, Waivers

     67  

Governing Law and Venue, Waiver of Jury Trial

     67  

Other Transaction Documents

     68  

FINANCIAL INFORMATION

     69  

Financial Statements of Agios and the Oncology Business

     69  

Unaudited Pro Forma Financial Information

     69  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     77  

MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS

     79  

STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING

     80  

WHERE YOU CAN FIND MORE INFORMATION

     81  

UNAUDITED COMBINED FINANCIAL STATEMENTS OF THE ONCOLOGY BUSINESS

     F-1  

ANNEX A—PURCHASE AND SALE AGREEMENT

     A-1  

ANNEX B—OPINION OF GOLDMAN SACHS & CO. LLC

     B-1  

ANNEX C—OPINION OF MORGAN STANLEY & CO. LLC

     C-1  

 

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE TRANSACTION

The following are brief answers to certain questions that you, as a stockholder of Agios, may have regarding the purchase agreement, the transaction and the special meeting. Agios urges you to carefully read the remainder of this proxy statement, including the documents incorporated herein by reference, because the information in this section does not provide all the information that might be important to you with respect to the purchase agreement, the transaction and the special meeting.

 

Q:

What is the purpose of the special meeting?

 

A:

At the special meeting, Agios stockholders will consider and vote upon the transaction proposal.

The transaction proposal is a proposal to approve the sale of our oncology business to Servier and, in exchange therefor, Servier will assume certain liabilities with respect to the oncology business and pay to Agios:

 

   

$1,800,000,000 in cash upon the completion of the transaction, subject to certain adjustments for the working capital of the oncology business at the completion of the transaction and amounts for a representation and warranty insurance policy;

 

   

$200,000,000 in cash if, on or before January 1, 2027, vorasidenib is granted approval for an NDA from the FDA with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an IDH1 or IDH2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval);

 

   

a royalty payment of 5% of the U.S. net sales (as defined in the purchase agreement) of TIBSOVO® (ivosidenib) from the completion of the transaction through loss of exclusivity of TIBSOVO® (ivosidenib); and

 

   

a royalty payment of 15% of the U.S. net sales (as defined in the purchase agreement) of vorasidenib from its first commercial sale through loss of exclusivity of vorasidenib.

 

Q:

Where and when is the special meeting?

 

A:

The Agios special meeting is scheduled to be held on March 25, 2021, at 9:00 a.m. (Eastern Time). You will be able to attend the special meeting online and to vote your shares of Agios common stock electronically at the meeting by registering in advance at www.proxydocs.com/AGIO prior to the deadline of 5:00 p.m. (Eastern Time) on March 23, 2021. Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you access to the special meeting. Please be sure to follow instructions found on your proxy card and/or voting instruction form and subsequent instructions that will be delivered to you via email. We encourage you to complete your registration as soon as possible if you desire to attend the special meeting online and to vote your shares of Agios common stock electronically at the special meeting.

As part of our precautions regarding the coronavirus or COVID-19, the special meeting will be held virtually rather than in person.

 

Q:

How does the Agios Board recommend that I vote on the proposal at the special meeting?

 

A:

The Agios Board unanimously recommends that you vote “FOR” the transaction proposal.

 

Q:

Will Agios cease to exist if the transaction is completed?

 

A:

No. Following the completion of the transaction, Agios expects to focus on operating and expanding its genetically defined disease business. Agios will continue to be a corporation organized under the laws of the State of Delaware and its common stock will continue to be listed on Nasdaq Global Select Market (“NASDAQ”) under the ticker symbol “AGIO.”

 

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Q:

What will happen to my shares of Agios common stock if the transaction is completed?

 

A:

You will continue to hold the shares of Agios common stock you held immediately prior to the completion of the transaction. The shares of Agios common stock will continue to trade on NASDAQ under the ticker symbol “AGIO.”

 

Q:

Am I entitled to appraisal rights in connection with the transaction?

 

A:

No. You are not entitled to appraisal or dissenters’ rights under Delaware law or under our certificate of incorporation or bylaws in connection with the transaction.

 

Q:

What vote is required to approve the transaction proposal?

 

A:

The transaction proposal requires the approval of the holders of a majority of the outstanding shares of Agios common stock entitled to vote at the special meeting. A failure to vote your shares of Agios common stock or an abstention from voting will have the same effect as a vote “AGAINST” the transaction proposal.

 

Q:

When do you expect the transaction to be completed?

 

A:

In order to complete the transaction, Agios must obtain the stockholder approval described in this proxy statement and the other closing conditions under the purchase agreement must be satisfied or waived.

Agios currently expects to complete the transaction at the end of the first quarter or in the beginning of the second quarter of 2021, although Agios cannot assure completion by any particular date, if at all. Because the transaction is subject to a number of conditions, the exact timing of the transaction cannot be determined as of the date of this proxy statement.

 

Q:

Who is entitled to vote at the special meeting?

 

A:

The record date for the special meeting is February 8, 2021. Only Agios stockholders of record at the close of business on that date are entitled to attend and vote at the special meeting or any adjournment or postponement thereof. Each share of Agios common stock is entitled to one vote on all matters that come before the meeting.

 

Q:

Who may attend the special meeting?

 

A:

Agios stockholders of record as of the close of business on February 8, 2021, or their duly appointed proxies, may attend the special meeting online and vote electronically at the meeting by registering in advance at www.proxydocs.com/AGIO prior to the deadline of 5:00 p.m. (Eastern Time) on March 23, 2021. Upon completing the registration, the Agios stockholder of record or their duly appointed proxies will receive further instructions via email, including unique links that will allow access to the special meeting. Agios stockholders of record or their duly appointed proxies should follow instructions found on the notice, proxy card and/or voting instruction form and subsequent instructions that will be delivered via email.

 

Q:

Why is the special meeting a virtual, online meeting?

 

A:

To support the health and well-being of our stockholders, employees and directors in light of the recent novel COVID-19 outbreak, our special meeting will be a virtual meeting of stockholders where stockholders will participate by accessing a website using the Internet. There will not be a physical meeting location. In light of the public health and safety concerns related to the COVID-19 outbreak, we believe that hosting a virtual meeting will facilitate stockholder attendance and participation at the special meeting by enabling stockholders to safely participate remotely from any location around the world. Our virtual meeting will be governed by our Rules of Conduct and Procedures which will be posted at www.proxydocs.com/AGIO in advance of the meeting. We have designed the virtual special meeting to provide the same rights and opportunities to participate as stockholders have at an in-person meeting, including the right to vote and ask questions through the virtual meeting platform.

 

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Q:

How do I virtually attend the special meeting?

 

A:

We will host the special meeting live online via webcast. Online registration for the special meeting will begin on or around February 11, 2021. In order to attend the special meeting online, you must register in advance at www.proxydocs.com/AGIO prior to the deadline of 5:00 p.m. (Eastern Time) on March 23, 2021. Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you access to the special meeting. Please be sure to follow instructions found on your proxy card and/or voting instruction form and subsequent instructions that will be delivered to you via email. We encourage you to complete your registration as soon as possible if you desire to attend the special meeting online and to vote your shares of Agios common stock electronically at the special meeting.

The webcast of the special meeting will start at 9:00 a.m. (Eastern Time) on March 25, 2021. Instructions on how to attend and participate in the meeting online will be sent to you via email, upon completing your registration.

If you encounter any difficulties accessing the virtual meeting during registration or at the time of the virtual meeting, please contact technical support by following the instructions provided to you upon registration for the special meeting.

 

Q:

Who is soliciting my vote?

 

A:

The Agios Board is soliciting your proxy, and Agios will bear the cost of soliciting proxies. Innisfree M&A Incorporated (“Innisfree”) has been retained to assist with the solicitation of proxies. Innisfree will be paid a solicitation fee of $30,000 and will be reimbursed for its reasonable out-of-pocket expenses for these and other advisory services in connection with the special meeting. Forms of proxies and proxy materials may also be distributed through brokers, custodians, and other like parties to the beneficial owners of shares of Agios common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses.

Proxies may also be solicited in person or by telephone, facsimile, electronic mail or other electronic medium by Innisfree or Agios and its directors and officers.

 

Q:

How many votes do I have?

 

A:

Each share of our common stock that you own as of the record date, February 8, 2021, entitles you to one vote on the transaction proposal.

 

Q:

What do I need to do now?

 

A:

Carefully read and consider the information contained in and incorporated by reference into this proxy statement, including its annexes. Whether or not you expect to attend the special meeting virtually, we encourage you to submit a proxy to vote your shares of Agios common stock as promptly as possible so that your shares of Agios common stock may be represented and voted at the special meeting. A failure to vote your shares of Agios common stock or an abstention from voting will have the same effect as a vote “AGAINST” the transaction proposal.

 

Q:

How do I vote if my shares of Agios common stock are registered directly in my name?

 

A:

If you are a stockholder of record, there are four methods by which you may vote at the special meeting:

 

   

Internet: You may submit your proxy by going to www.proxypush.com/AGIO (before the meeting) or at www.proxydocs.com/AGIO (during the meeting) and by following the instructions on how to complete an electronic proxy card.

 

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Telephone: To vote by telephone, follow the instructions printed on your proxy card. If you vote by telephone, you do not have to mail in a proxy card.

 

   

Mail: To vote by mail, complete, sign and date a proxy card and return it promptly in the postage paid envelope provided. If you return your signed proxy card to us before the special meeting, we will vote your shares of Agios common stock as you direct.

 

   

Online During the Special Meeting: In order to attend the special meeting online and vote online during the special meeting, you must register in advance at www.proxydocs.com/AGIO prior to the deadline of March 23, 2021 at 5:00 p.m. (Eastern Time). You may vote your shares of Agios common stock online while virtually attending the special meeting by following instructions found on your proxy card and/or voting instruction form and any subsequent instructions that may be delivered to you via email. If you vote by proxy prior to the special meeting and choose to attend the special meeting online, there is no need to vote again during the special meeting unless you wish to change your vote.

Whether or not you plan to attend the special meeting virtually, we urge you to vote by proxy to ensure your vote is counted. You may still attend the special meeting and vote virtually, if you have already voted by proxy. Please choose only one method to cast your vote by proxy. We encourage you to vote over the internet or by telephone, both of which are convenient, cost-effective and reliable alternatives to returning a proxy card by mail.

 

Q:

How do I vote if my shares of Agios common stock are held in the name of my broker (street name)?

 

A:

If your shares of Agios common stock are held by your broker, bank or other nominee, often referred to as held in “street name,” you will receive a form from your broker, bank or other nominee seeking instruction as to how your shares of Agios common stock should be voted. You should contact your broker, bank or other nominee with questions about how to provide or revoke your instructions.

 

Q:

Can I change my vote after I submit my proxy?

 

A:

Yes. You can change or revoke your proxy at any time before the final vote at the special meeting. If you are the record holder of your shares of Agios common stock, you may change or revoke your proxy in any one of three ways:

 

   

you may follow the instructions found on your proxy card and/or vote instruction form and vote over the internet or by telephone. Only your latest internet or telephone vote submitted prior to the special meeting is counted. You may not change your vote prior to the special meeting over the internet or by telephone after 9:00 a.m., Eastern Time, on March 25, 2021;

 

   

you may sign, date and complete a new proxy card and send it by mail to Inspector of Elections for Agios Pharmaceuticals, Inc., c/o Mediant Communications, P.O. Box 8016, Cary, NC 27512-9903. Mediant must receive the proxy card no later than March 24, 2021. Only your latest dated and timely received proxy will be counted; or

 

   

you may register for the special meeting and virtually attend the special meeting and vote online during the special meeting. Virtually attending the special meeting alone, without voting online during the special meeting, will not revoke your internet vote, telephone vote or proxy submitted by mail, as the case may be.

If your shares of Agios common stock are held by your broker or bank as a nominee or agent, you will have to follow the instructions provided by your broker or bank to change or revoke your proxy.

 

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If you have questions about how to vote or change your vote, you should contact our proxy solicitor:

 

 

LOGO

INNISFREE M&A INCORPORATED

501 Madison Avenue, 20th Floor

New York, New York 10022

Stockholders May Call TOLL-FREE: (877) 825-8772

Banks and Brokers May Call Collect: (212) 750-5833

 

Q:

How many shares of Agios common stock must be present to constitute a quorum for the meeting?

 

A:

The presence at the special meeting virtually, or by proxy, of a majority of the shares of Agios common stock issued and outstanding and entitled to vote on the record date will constitute a quorum. There must be a quorum for business to be conducted at the special meeting.

 

Q:

What if I abstain from voting?

 

A:

If you attend the special meeting or send in your signed proxy card, but abstain from voting on any proposal, your shares of Agios common stock will still be counted for purposes of determining whether a quorum exists. Abstentions and a failure to vote your shares of Agios common stock (including the failure of a record owner to execute and return a proxy card and the failure of a beneficial owner of shares of Agios common stock held in “street name” by a broker to give voting instructions to the broker) will have the same effect as a vote “AGAINST” the transaction proposal.

 

Q:

Will my shares of Agios common stock be voted if I do not sign and return my proxy card or vote by telephone or over the internet or in person?

 

A:

If you are a stockholder of record and you do not sign and return your proxy card or vote by telephone, over the internet or virtually at the special meeting, your shares of Agios common stock will not be voted at the special meeting and will not be counted for purposes of determining whether a quorum exists.

If your shares of Agios common stock are held in street name and you do not issue instructions to your broker, bank or other nominee, your broker, bank or other nominee may vote your shares at its discretion on routine matters, but may not vote your shares on non-routine matters. The transaction proposal is a non-routine matter. Accordingly, if your shares of Agios common stock are held in “street name” and you do not issue instructions to your broker, your shares of Agios common stock will not be voted at the special meeting and will not be counted for purposes of determining whether a quorum exists.

 

Q:

What is a broker non-vote?

 

A:

Brokers, bankers and other nominees who hold shares of Agios common stock on behalf of their customers may not give a proxy to Agios to vote those shares with respect to the transaction proposal without specific instructions from their customers, as banks, brokers and other nominees do not have discretionary voting power on “non-routine” matters like the transaction proposal. When a bank, broker or other nominee refrains from voting your shares on a particular proposal because the bank, broker or other nominee has not received your instructions and has discretionary authority to vote on the “routine” matters to be considered, it is called a “broker non-vote.” Because there are no routine matters to be considered at the special meeting, there will be no broker non-votes.

 

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Q:

Will my shares of Agios common stock held in “street name” or another form of record ownership be combined for voting purposes with shares I hold of record?

 

A:

No. Because any shares of Agios common stock you may hold in “street name” will be deemed to be held by a different stockholder than any shares you hold of record, any shares so held will not be combined for voting purposes with shares of Agios common stock you hold of record. Similarly, if you own shares of Agios common stock in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card for those shares of Agios common stock because they are held in a different form of record ownership. Shares of Agios common stock held by a corporation or business entity must be voted by an authorized officer of the entity. Shares of Agios common stock held in an individual retirement account must be voted under the rules governing the account.

 

Q:

What does it mean if I receive more than one set of proxy materials?

 

A:

This means you own shares of Agios common stock that are registered under different names or are in more than one account. For example, you may own some shares of Agios common stock directly as a stockholder of record and other shares through a broker or you may own shares through more than one broker. In these situations, you will receive multiple sets of proxy materials. You must vote, sign and return all of the proxy cards or follow the instructions for any alternative voting procedure on each of the proxy cards that you receive in order to vote all of the shares of Agios common stock you own. Each proxy card you receive comes with its own prepaid return envelope. If you submit your proxy by mail, make sure you return each proxy card in the return envelope that accompanies that proxy card.

 

Q:

Can I participate if I am unable to attend the special meeting?

 

A:

If you are unable to attend the special meeting virtually, we encourage you to vote by telephone or over the internet or send your proxy card.

 

Q:

Who will count the votes?

 

A:

The votes will be counted, tabulated and certified by Mediant Communications Inc.

 

Q:

How do I submit a question at the special meeting?

 

A:

If you wish to submit a question, on the day of the special meeting, beginning at 9:00 a.m. (Eastern Time) on March 25, 2021, you may log into the virtual meeting platform using the unique link provided to you via email following the completion of your registration at www.proxydocs.com/AGIO, and follow the instructions there. Our virtual meeting will be governed by our Rules of Conduct and Procedures will be posted at www.proxydocs.com/AGIO in advance of the meeting. The Rules of Conduct and Procedures will address the ability of stockholders to ask questions during the meeting, including rules on permissible topics, and rules for how questions and comments will be recognized and disclosed to meeting participants. All questions received from stockholders before or during the special meeting and the related answers will be posted on our website at investor.agios.com as soon as practicable following the special meeting.

 

Q:

Where can I find the voting results of the special meeting?

 

A:

Agios intends to announce preliminary voting results at the special meeting and publish final results in a Current Report on Form 8-K that will be filed with the U.S. Securities and Exchange Commission (the “SEC”) following the special meeting. All reports that Agios files with the SEC are publicly available when filed.

 

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Q:

What happens if the transaction is not completed?

 

A:

The purchase agreement provides that, upon termination of the purchase agreement under certain circumstances, Agios may be required to pay to Servier a termination fee of $45 million. See the section entitled “The Purchase Agreement—Termination Fee Payable by Agios” for a discussion of the circumstances under which such a termination fee may be required to be paid.

 

Q:

How can I obtain additional information about Agios?

 

A:

Agios will provide copies of this proxy statement, documents incorporated by reference and its 2019 Annual Report to Stockholders without charge to any stockholder who makes a written request to our Secretary at 88 Sidney Street, Cambridge, Massachusetts 02139. Agios’ SEC filings may also be accessed at www.sec.gov or on Agios’ Investor Relations website at https://investor.agios.com/financial-information/sec-filings. Agios’ website address is provided as an inactive textual reference only. The information provided on or accessible through our website is not part of this proxy statement and is not incorporated in this proxy statement by this or any other reference to our website provided in this proxy statement.

 

Q:

How many copies of this proxy statement and related voting materials should I receive if I share an address with another stockholder?

 

A:

The SEC’s proxy rules permit companies and intermediaries, such as brokers, to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies. Agios and some brokers may be householding our proxy materials by delivering a single set of proxy materials to multiple stockholders who request a copy and share an address, unless contrary instructions have been received from the affected stockholders. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if your household is receiving multiple copies of these documents and you wish to request that future deliveries be limited to a single copy, please notify your broker if your shares of Agios common stock are held in a brokerage account or Agios if you are a stockholder of record by sending a written request to our Secretary at 88 Sidney Street, Cambridge, Massachusetts 02139, or calling (617) 649-8600. In addition, Agios will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the proxy statement.

 

Q:

Who should I contact if I have any questions?

 

A:

If you have questions about the transaction or the other matters to be voted on at the special meeting or desire additional copies of this proxy statement or additional proxy cards or otherwise need assistance voting, please call the firm assisting us with the proxy solicitation, Innisfree M&A Incorporated: stockholders may call toll-free at (877) 825-8772; and banks and brokers may call collect at (212) 750-5833.

 

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SUMMARY

This summary highlights information contained elsewhere in this proxy statement and may not contain all the information that is important to you with respect to the transaction. We urge you to read carefully the remainder of this proxy statement, including the attached annexes, and the documents incorporated herein by reference. For additional information on Agios included in documents incorporated by reference into this proxy statement, see the section entitled “Where You Can Find More Information” beginning on page 81 of this proxy statement. We have included page references in this summary to direct you to a more complete description of the topics presented below.

Unless otherwise indicated or as the context otherwise requires, all references to “Agios”, “we”, “us”, or “our” in this proxy statement refer to Agios Pharmaceuticals, Inc., a Delaware corporation; all references to “Servier” refer to Servier Pharmaceuticals LLC, a Delaware limited liability company.

Parties to the Transaction

Agios Pharmaceuticals, Inc. (see page 15)

Agios Pharmaceuticals, Inc.

88 Sidney Street

Cambridge, Massachusetts 02139

(617) 649-8600

Agios Pharmaceuticals, Inc. is focused on discovering and developing novel investigational medicines to treat malignant hematology, solid tumors and genetically defined diseases through scientific leadership in the field of cellular metabolism. In addition to an active research and discovery pipeline across these three therapeutic areas, Agios has two approved oncology precision medicines and multiple first-in-class investigational therapies in clinical and/or preclinical development.

Agios is a corporation organized under the laws of the State of Delaware. Shares of Agios common stock are listed on the NASDAQ under the symbol “AGIO.”

Our principal executive offices are located at 88 Sidney Street, Cambridge, Massachusetts 02139.

Servier Pharmaceuticals, LLC (see page 15)

Servier Pharmaceuticals, LLC

200 Pier Four Boulevard, 7th Floor

Boston, Massachusetts 02110

(888) 788-1735

Servier Pharmaceuticals, LLC is a commercial-stage pharmaceuticals company wholly-owned by the Servier Group with a passion for innovation and improving the lives of patients, their families and caregivers. It is committed to building a robust portfolio, starting with oncology, with future growth driven by innovation in other areas of unmet medical need, leveraging its and its affiliates’ global portfolio and seeking acquisitions, licensing deals and partnerships. Servier Pharmaceuticals has more than 125 employees, which operate cross-functionally to deliver current therapies that are now standard of care in the treatment of patients with acute lymphoblastic leukemia (“ALL”), while advancing a diverse pipeline that includes novel modalities addressing multiple tumor targets. Already a robust business, in the past two years, Servier Pharmaceutical’s net revenues increased by 18.5%, and Servier Pharmaceuticals launched a new product, Asparlas, also for ALL.



 

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Servier Pharmaceuticals is a limited liability company organized under the laws of the State of Delaware. Its principal executive offices are located at 200 Pier Four Boulevard, 7th Floor Boston, Massachusetts 02110.

Servier S.A.S. (see page 15)

Servier S.A.S.

50 rue Carnot

92284 Suresnes Cedex, France

33 1 55 72 60 00

Servier S.A.S. (“Servier Parent”) is the parent company of the Servier Group, a global pharmaceutical group governed by a non-profit foundation. With a strong international presence in 150 countries and a total revenue of 4.7 billion euros in the fiscal year ended September 30, 2020, the Servier Group employs 22,000 people worldwide. The Servier Group invests on average 25% of its total revenue (excluding generics) every year in research and development and uses all its profits for its development. Corporate growth is driven by its constant commitment in five areas of excellence: cardiovascular, immune-inflammatory, and neurodegenerative diseases, cancer and diabetes, as well as by its activities in high-quality generic drugs. The Servier Group also offers eHealth solutions beyond drug development.

Servier Parent is a French societe par actions simplifiee. Servier Parent has its principal executive offices located at 50 rue Carnot, 92284 Suresnes Cedex, France.

The Transaction

A copy of the Purchase and Sale Agreement, dated as of December 20, 2020 (the “purchase agreement”), by and among Agios, Servier and Servier Parent is attached as Annex A to this proxy statement. We encourage you to read the entire purchase agreement carefully because it is the principal document governing the transaction. For more information on the purchase agreement, see the section entitled “The Purchase Agreement” beginning on page 46 of this proxy statement.

Purchase Agreement (see page 46)

On December 20, 2020, we entered into the purchase agreement, pursuant to which we agreed to sell our oncology business to Servier (the “transaction”). As consideration for the transaction, Servier has agreed to pay to Agios:

 

   

$1,800,000,000 in cash upon the completion of the transaction, subject to certain adjustments for the working capital of the oncology business at the completion of the transaction and amounts for a representation and warranty insurance policy;

 

   

$200,000,000 million in cash if, on or before January 1, 2027, vorasidenib is granted approval for a New Drug Application (“NDA”) from the U.S. Food and Drug Administration (“FDA”) with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an IDH1 or IDH2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval) (the “regulatory approval milestone”);

 

   

a royalty payment of 5% of the U.S. net sales (as defined in the purchase agreement) of TIBSOVO® (ivosidenib) from the completion of the transaction through loss of exclusivity of TIBSOVO® (ivosidenib); and

 

   

a royalty payment of 15% of the U.S. net sales (as defined in the purchase agreement) of vorasidenib from its first commercial sale through loss of exclusivity of vorasidenib.



 

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Recommendation of the Agios Board (see page 17)

After careful consideration, the Agios Board has unanimously (i) determined that the terms of the transactions contemplated by the purchase agreement, including the transaction, are expedient and in the best interests of Agios, and (ii) approved the execution, delivery and performance by Agios of the purchase agreement and the consummation of the transactions contemplated thereby, including the transaction. The Agios Board unanimously recommends that the stockholders of Agios approve the transaction and the other transactions contemplated by the purchase agreement and vote “FOR” the transaction proposal.

Certain factors considered by the Agios Board in making such unanimous determination and approval are described in the section entitled “The Transaction—Recommendation of the Agios Board and Reasons for the Transaction.”

Opinion of Agios’ Financial Advisors (see page 32)

Opinion of Goldman Sachs

At a meeting of the Agios Board held on December 20, 2020, Goldman Sachs rendered to the Agios Board its oral opinion, subsequently confirmed in its written opinion dated December 20, 2020, that, as of the date of the written opinion and based upon and subject to the factors and assumptions set forth therein, the aggregate of (i) $1,800,000,000 in cash upon the completion of the transaction, subject to the adjustments set forth in the purchase agreement, (ii) $200,000,000 in cash if the regulatory approval milestone (as defined in the purchase agreement) with respect to Vorasidenib fully occurs on or before January 1, 2027 and (iii) an earn-out payment (as defined in the purchase agreement) equal to 5% of the net sales (as defined in the purchase agreement) of TIBSOVO® (ivosidenib) during each net sales measurement period (as defined in the purchase agreement) and 15% of the net sales (as defined in the purchase agreement) of Vorasidenib during each net sales measurement period (as defined in the purchase agreement) (collectively, the “aggregate consideration”) to be paid to Agios as consideration for the oncology business pursuant to the purchase agreement was fair from a financial point of view to Agios.

The full text of the written opinion of Goldman Sachs, dated December 20, 2020, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Agios Board in connection with its consideration of the transaction. The Goldman Sachs opinion does not constitute a recommendation as to how any holder of shares of Agios common stock should vote with respect to the transaction or any other matter.

For a description of the opinion that the Agios Board received from Goldman Sachs, see “The Transaction—Opinion of Agios’ Financial Advisors” beginning on page 32 of this proxy statement.

Opinion of Morgan Stanley

The Agios Board retained Morgan Stanley as its financial advisor in connection with the transaction. Morgan Stanley rendered to the Agios Board its written opinion to the effect that, as of the date of such opinion and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in Morgan Stanley’s written opinion, the aggregate of (i) $1,800,000,000 in cash upon the completion of the transaction, subject to the adjustments set forth in the purchase agreement, (ii) $200,000,000 in cash if the regulatory approval milestone (as defined in the purchase agreement) with respect to Vorasidenib fully occurs on or before January 1, 2027 and (iii) an earn-out payment (as defined in the purchase agreement) equal to 5% of the net sales



 

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(as defined in the purchase agreement) of TIBSOVO® (ivosidenib) during each net sales measurement period (as defined in the purchase agreement) and 15% of the net sales (as defined in the purchase agreement) of Vorasidenib during each net sales measurement period (as defined in the purchase agreement) ((i), (ii) and (iii) collectively, the “aggregate consideration”) to be received by Agios pursuant to the purchase agreement was fair, from a financial point of view, to Agios. The full text of the written opinion of Morgan Stanley, dated as of December 20, 2020, is attached as Annex C and is incorporated by reference in this proxy statement in its entirety.

The description of Morgan Stanley’s opinion is qualified in its entirety by reference to the full text of the opinion. Morgan Stanley’s opinion was directed to the Agios Board, in its capacity as such, and addressed only the fairness from a financial point of view of the aggregate consideration to be received by Agios, pursuant to the purchase agreement, as of the date of such written opinion. It did not address any other aspects or implications of the transaction and was not intended to and did not express any opinion or recommendation as to how the stockholders of Agios should vote at the special meeting to be held in connection with the transaction.

For a description of the opinion that the Agios Board received from Morgan Stanley, see “The Transaction—Opinion of Agios’ Financial Advisors” beginning on page 32 of this proxy statement.

Regulatory Clearances and Approvals Required for the Transaction (see page 45)

HSR Act. The transaction is subject to the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), which prohibits Agios and Servier from completing the transaction until required information and materials are furnished to the Antitrust Division of the Department of Justice (the “DOJ”) and the Federal Trade Commission (the “FTC”) and the HSR Act waiting period under the HSR Act is terminated or expires. Servier and Agios submitted the requisite notification and report forms under the HSR Act on January 19 and 20, 2021, respectively.

Antitrust Laws of Germany. The transaction is subject to the approval of appropriate regulators in Germany under the antitrust and competition laws of Germany. The requisite report forms were submitted under such antitrust and competition laws on January 26, 2021.

For more information about regulatory approvals relating to the transaction, see the sections entitled “The Transaction—Regulatory Clearances and Approvals Required for the Transaction” and “The Purchase Agreement—Conditions to the Completion of the Transaction.”

There can be no assurance that all of the regulatory approvals that might be required to consummate the transaction will be sought or obtained and, if obtained, there can be no assurance as to the timing of any such approvals, the parties’ ability to obtain the approvals on satisfactory terms, or that such regulatory bodies or private parties will not seek to take legal action to enjoin the completion of the transaction.

Closing Date of the Transaction (see page 51)

We currently expect to complete the transaction at the end of the first quarter or in the beginning of the second quarter of 2021. The transaction is subject to certain conditions, and it is possible that factors outside the control of Agios or Servier could result in the transaction being completed at a later time, or not at all. There may be a substantial amount of time between the special meeting and the completion of the transaction. We expect to complete the transaction promptly following the satisfaction, or waiver, of all required conditions set forth in the purchase agreement.



 

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Conditions to the Completion of the Transaction (see page 64)

As more fully described in this proxy statement and in the purchase agreement, each party’s obligation to complete the transaction is subject to the satisfaction, or (to the extent permitted by law) waiver, of certain conditions, including:

 

   

the waiting period required under the HSR Act for the consummation of the transaction having expired or been terminated, and the approval by regulatory authorities in Germany under the antitrust laws of Germany having been received and obtained;

 

   

the absence of any judgment or law issued or enacted by any governmental entity of competent jurisdiction, in each case that has been entered and remains and effect that prevents, enjoins, renders illegal or prohibits the consummation of the transaction; and

 

   

approval by the Agios stockholders of the transaction proposal.

The obligations of Agios to complete the transaction are also subject to the satisfaction, or waiver, of the following conditions:

 

   

the representations of Servier set forth in the purchase agreement being true and correct on and as of the closing date as if made on and as of the closing date, except in most cases where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, result in a purchaser material adverse effect (defined below);

 

   

the performance in all material respects by Servier on or before the closing date of its covenants and agreements in the purchase agreement; and

 

   

the receipt by Agios of an officer’s certificate, signed on behalf of Servier by an executive officer of Servier, dated as of the closing date, stating that the two conditions above have been satisfied.

The obligations of Servier to complete the transaction are also subject to the satisfaction, or waiver, of the following conditions:

 

   

the representations and warranties of Agios set forth in the purchase agreement having been true and correct as of date of the purchase agreement and the closing date as if made on and as of the closing date, except in most cases where the failure of such representations and warranties to be so true and correct would not have, individually or in the aggregate, a business material adverse effect (as defined below);

 

   

the performance in all material respects by Agios on or before the closing date of its covenants and agreements in the purchase agreement; and

 

   

the receipt by Servier of an officer’s certificate, signed on behalf of Agios by an executive officer of Agios, dated as of the closing date, stating that the two conditions above have been satisfied.

No Solicitation Covenant (see page 56)

Subject to certain exceptions, Agios has agreed that it will not, and will cause each of its subsidiaries and its and their respective officers and directors not to, and will use reasonable best efforts to cause each of its and their respective employees and other representatives not to, directly or indirectly:

 

   

solicit, initiate, or knowingly encourage or knowingly facilitate any proposal or offer or any inquiries regarding the making of any proposal or offer, including any proposal or offer to its stockholders, that constitutes, or would reasonably be expected to lead to, an acquisition proposal (as defined below);

 

   

engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person any information in connection with or for the purpose of encouraging or facilitating, any



 

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inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal;

 

   

approve, recommend or enter into, or propose to approve, recommend or enter into, any competing acquisition agreement (defined below) or any acquisition proposal; or

 

   

agree to do any of the foregoing.

Prior to approval by the Agios stockholders of the transaction proposal and subject to certain additional conditions set forth in the purchase agreement, Agios may, upon receipt of a bona fide written acquisition proposal, which acquisition proposal did not result from breach of the Company’s non-solicitation obligations, and that the Agios Board determines in good faith, after consultation with its outside financial advisors and outside legal counsel, constitutes or could reasonably be expected to lead to a superior proposal (as defined below), furnish information and engage in discussions or negotiations with such applicable third party.

Changes in Board Recommendation (see page 58)

Prior to approval by the Agios stockholders of the transaction proposal and subject to certain additional conditions set forth in the purchase agreement, the Agios Board may change its recommendation with respect to the transaction proposal either (i) upon receipt of a superior proposal, which superior proposal did not result from a material breach by Agios of the Company’s non-solicitation obligations or (ii) in certain other circumstances relating to previously unknown material circumstances, events, changes or occurrences; provided that in either case the Agios Board has determined in good faith, after consultation with its outside financial advisors and outside legal counsel, that a failure to take such action could reasonably be expected to be inconsistent with the fiduciary duties of the Agios Board under applicable law.

In addition, in the case of a superior proposal, the Agios Board may cause Agios to terminate the purchase agreement in order to enter into a definitive agreement relating to such superior proposal, subject to complying with certain notice and other specified conditions set forth in the purchase agreement, including giving Servier the opportunity to make adjustments to the terms of the purchase agreement in response to the superior proposal so that such proposal no longer constitutes a superior proposal. In the event Agios so terminates the purchase agreement in order to enter into definitive agreements with respect to a superior proposal, Agios will be required to pay to Servier a termination fee of $45 million prior to or concurrently with such termination.

If the Agios Board changes its recommendation with respect to the transaction, Servier may terminate the purchase agreement, and if such termination occurs Agios will be required to pay to Servier a termination fee of $45 million.

Termination of the Purchase Agreement (see page 65)

The purchase agreement may be terminated at any time prior to the completion of the transaction:

 

   

by mutual written consent of Agios and Servier;

 

   

by either Agios or Servier if:

 

   

the other party materially breached any of its representations, warranties, covenants or agreements contained in the purchase agreement, and such breach would give rise to the failure of certain closing conditions of that party, subject to a cure period set forth in the purchase agreement;

 

   

the closing has not occurred on or prior to September 20, 2021 (the “outside date”); provided that if, on the outside date, the condition to closing related to antitrust approvals has not been satisfied or waived, then the outside date will automatically be extended to December 20, 2021;



 

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a judgment issued by a governmental entity of competent jurisdiction permanently prevents the consummation of the transaction, and such judgment becomes final and nonappealable;

 

   

the meeting of Agios stockholders (as it may be adjourned or postponed) at which a vote on the transaction proposal was taken has concluded and such approval has not been obtained;

 

   

by Servier, prior to the approval of the transaction proposal, in the event that Agios makes an adverse recommendation change (as defined below); or

 

   

by Agios, prior to the approval of the transaction proposal, in order to enter into definitive agreements with respect to a superior proposal.

Termination Fee Payable by Agios (see page 66)

Agios has agreed to pay to Servier $45 million in cash (the “termination fee”) in the following circumstances:

 

   

Agios terminates the purchase agreement prior to the approval of the transaction proposal in order to enter into definitive agreements with respect to a superior proposal;

 

   

Servier terminates the purchase agreement prior to the approval of the transaction proposal, in the event that Agios makes an adverse recommendation change; or

 

   

if under certain circumstances the purchase agreement is terminated and Agios or any of its subsidiaries within one year of such termination completes or enters a definitive agreement providing for, or consummates, a transaction that constitutes an acquisition proposal (with all references to “fifteen percent” in the definition of acquisition proposal being deemed to be references to “fifty percent” and disregarding the proviso in the definition of acquisition proposal).

The purchase agreement provides that, if the termination fee becomes due and payable, following such termination and payment of the termination fee in full, together with certain collection fees and expenses, if any, neither Agios nor any of its affiliates or representatives will have any further liability in connection with the purchase agreement or the termination thereof, other than with respect to claims for fraud.

In no event will Agios be obligated to pay the termination fee on more than one occasion.

Interests of Agios’ Directors and Executive Officers in the Transaction (see page 45)

After the transaction, it is expected that all of the directors and executive officers of Agios will continue to provide services as directors and executive officers, respectively, of Agios. Agios will continue to provide indemnification and insurance coverage to the directors and executive officers of Agios.

None of Agios’ directors or executive officers is a party to, or participates in, any plan, program, or arrangement of Agios that provides such director or executive officer with any kind of compensation that is enhanced by or otherwise triggered by the completion of the transaction.

Accounting Treatment (see page 45)

Under generally accepted accounting principles, upon completion of the transaction, we will remove the net assets and liabilities related to the oncology business from our consolidated balance sheet. The results of operations of the oncology business will be treated as discontinued operations.



 

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Appraisal Rights (see page 45)

No appraisal rights or dissenters’ rights are available to our stockholders under Delaware law or our certificate of incorporation or bylaws in connection with the transaction.

The Special Meeting (see page 16)

Agios will be hosting a special meeting live via the internet only to consider and vote on the transaction proposal. The Agios special meeting is scheduled to be held on March 25, 2021, at 9:00 a.m.(Eastern Time). You will be able to attend the special meeting online and to vote your shares electronically at the meeting by registering in advance at www.proxydocs.com/AGIO prior to the deadline of 5:00 p.m. (Eastern Time) on March 23, 2021. Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you access to the special meeting. Please be sure to follow instructions found on your proxy card and/or voting instruction form and subsequent instructions that will be delivered to you via email.

Only holders of record of Agios common stock at the close of business on February 8, 2021, the record date for the special meeting, are entitled to notice of, and to vote at, the special meeting or any adjournments or postponements of the special meeting.

The presence at the special meeting virtually, or by proxy, of the holders of a majority of the shares of Agios common stock issued and outstanding and entitled to vote on the record date will constitute a quorum. There must be a quorum for business to be conducted at the special meeting. If you submit a properly executed proxy card, even if you abstain from voting, your shares will be counted for purposes of calculating whether a quorum is present at the special meeting. Failure of a quorum to be represented at the special meeting will necessitate an adjournment or postponement of the special meeting.

You may cast one vote for each share of Agios common stock that you own at the close of business on the record date. The transaction proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Agios common stock entitled to vote at the special meeting.

An abstention occurs when a stockholder attends a meeting virtually, or by proxy, but abstains from voting. At the special meeting, abstentions will be counted in determining whether a quorum is present. Also, abstentions and a failure to vote your shares of Agios common stock (including the failure of a record owner to execute and return a proxy card and the failure of a beneficial owner of shares held in “street name” by a broker to give voting instructions to the broker) will have the same effect as a vote “AGAINST” the transaction proposal.

If no instruction as to how to vote is given in an executed, duly returned and not revoked proxy, the proxy will be voted “FOR” the transaction proposal.



 

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RISK FACTORS

In addition to the other information contained in or incorporated by reference into this proxy statement, you should consider carefully the following risk factors and the matters addressed in the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements.” You should also read and consider the other information included and incorporated by reference into this proxy statement, including the information set forth under the caption “Risk Factors” in Agios’ Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Report on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020. See the section of this proxy statement entitled “Questions and Additional Information.”

Risks Relating to the Transaction

The transaction is subject to conditions, some or all of which may not be satisfied, or completed on a timely basis, if at all. Failure to complete, or unexpected delays in completing, the transaction or any termination of the purchase agreement could have an adverse effect on Agios, its financial condition and results of operations.

The completion of the transaction is subject to a number of conditions, including the approval of the transaction by Agios stockholders and the receipt of certain regulatory approvals, which make the completion and timing of the transaction uncertain. See the section entitled “The Purchase Agreement—Conditions to Completion of the Transaction” for a more detailed discussion. The failure to satisfy all of the required conditions could delay the completion of the transaction for a significant period of time or prevent it from occurring at all. There can be no assurance that the conditions to the completion of the transaction will be satisfied or waived or that the transaction will be completed.

In addition, either Agios or Servier may terminate the purchase agreement under certain circumstances, including if the transaction is not completed by the outside date. In certain circumstances, upon termination of the purchase agreement, Agios would be required to pay a termination fee of $45 million to Servier. For further discussion, see the section entitled “The Purchase Agreement—Termination Fee Payable by Agios.”

If the transaction is not completed, Agios may be adversely affected and, without realizing any of the benefits of having completed the transaction, will be subject to a number of risks, including the following:

 

   

the trading price of Agios common stock could decline;

 

   

if the purchase agreement is terminated and the Agios Board seeks another strategic transaction, Agios stockholders cannot be certain that Agios will be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms that Servier has agreed to in the purchase agreement;

 

   

time and resources, financial and otherwise, committed by Agios management to matters relating to the transaction could otherwise have been devoted to pursuing other beneficial opportunities;

 

   

Agios may experience negative reactions from the financial markets or from its customers, suppliers, partners or employees; and

 

   

Agios will generally be required to pay its expenses relating to the transaction, such as legal, accounting and financial advisory fees, whether or not the transaction is completed.

In addition, if the transaction is not completed, Agios could be subject to litigation related to any failure to complete the transaction or related to any enforcement proceeding commenced against Agios to perform its obligations under the purchase agreement. Any of these risks could materially and adversely impact our business, financial condition, results of operations and the trading price of shares of Agios common stock.

 

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Similarly, delays in the completion of the transaction could, among other things, result in additional transaction costs, loss of revenue or other negative effects associated with delay and uncertainty about completion of the transaction and could materially and adversely impact our business, financial condition, results of operations and the trading price of shares of Agios common stock.

The amount of consideration Agios will receive in the transaction is subject to various risks and uncertainties.

In connection with the transaction, Servier will assume certain liabilities with respect to the oncology business and pay to Agios:

 

   

$1,800,000,000 in cash upon the completion of the transaction, subject to certain adjustments for the working capital of the oncology business at the completion of the transaction and amounts for a representation and warranty insurance policy;

 

   

$200,000,000 in cash if, on or before January 1, 2027, vorasidenib is granted approval for an NDA from the FDA with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an IDH1 or IDH2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval);

 

   

a royalty payment of 5% of the U.S. net sales (as defined in the purchase agreement) of TIBSOVO® (ivosidenib) from the completion of the transaction through loss of exclusivity of TIBSOVO® (ivosidenib); and

 

   

a royalty payment of 15% of the U.S. net sales (as defined in the purchase agreement) of vorasidenib from its first commercial sale through loss of exclusivity of vorasidenib.

The consideration described above is subject to various risks and uncertainties.

The purchase price is subject to a working capital adjustment; specifically the purchase price will increase (or decrease) based on the amount of working capital of the oncology business as of the completion of the transaction relative to a specified working capital target. It is not possible to determine with precision as of the date of this proxy statement the amount of working capital the oncology business may have as of the completion of the transaction and, therefore, it is possible that the working capital adjustment may result in a meaningful reduction to the purchase price.

In addition, whether the regulatory approval milestone will be achieved on or before January 1, 2027 is subject to various risks and uncertainties, many of which are outside of the control of the parties, including adverse clinical developments with respect to vorasidenib.

Finally, the parties cannot predict what success, if any, Servier may have in the United States with respect to sales of TIBSOVO® and vorasidenib and, therefore, the amount of royalty payments that Agios can expect to receive from Servier under the terms of the purchase agreement prior to the loss of exclusivity of these products. The royalty payments are also subject to deductions and other adjustments under the terms of the purchase agreement, the amounts of which are uncertain as of the date of this proxy statement.

The purchase agreement contains provisions that limit our ability to pursue alternatives to the transaction, could discourage a third party from making a favorable alternative transaction proposal, and provide that, in specified circumstances, Agios would be required to pay a termination fee.

The purchase agreement contains provisions that make it more difficult for Agios to be acquired by, or enter into certain strategic transactions with (including the sale of businesses to), a third party. The purchase agreement contains certain provisions that restrict our ability to, among other things, solicit, initiate or knowingly encourage or knowingly facilitate, or engage in or otherwise participate in any discussions or negotiations, with respect to

 

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any alternative transaction. In addition, following receipt by Agios of any alternative transaction proposal that constitutes a “superior proposal,” Servier will have an opportunity to offer to modify the terms of the purchase agreement before the Agios Board may withdraw, qualify or modify its recommendation with respect to the transaction in favor of such superior proposal, as described further under “The Purchase Agreement—Changes in Board Recommendation.”

These provisions could discourage a potential third-party acquiror that might have an interest in acquiring all or a significant portion of Agios or pursuing an alternative transaction from considering or proposing such a transaction.

In addition, either Agios or Servier may terminate the purchase agreement under certain circumstances, including if the transaction is not completed by the outside date. In certain circumstances, upon termination of the purchase agreement, Agios would be required to pay a termination fee of $45 million to Servier. For further discussion, see the section entitled “The Purchase Agreement—Termination Fee Payable by Agios.”

The announcement and pendency of the transaction, whether or not consummated, may adversely affect our business and operations.

The announcement and pendency of the transaction, whether or not consummated, may adversely affect the trading price of our common stock as well as our relationships with existing or potential suppliers, customers, vendors, distributors, licensors, licensees, collaboration partners and other business partners, and may have an adverse effect on the business, financial condition and results of operations of Agios. The pending transaction may cause such counterparties to seek to change existing business relationships with Agios or the oncology business, to forego new relationships or to enter into alternative agreements with our competitors because business partners may perceive that such new relationships are likely to be more stable.

In addition, current and prospective employees of Agios, including of the oncology business, may feel uncertain about their roles within Agios or the oncology business prior to and following the completion of transaction, which may have an adverse effect on the Company’s ability to attract or retain key management personnel or other key employees. If key employees depart, the business of Agios, its financial condition and its results of operations may be adversely impacted.

The focus and attention of our management and employee resources may also be diverted from operational matters during the pendency of the transaction to focus on integration matters and the consummation of the transaction.

The parties must obtain certain regulatory approvals in order to complete the transaction; if such approvals are not obtained or are obtained with conditions, the transaction may be prevented or delayed or the anticipated benefits of the transaction could be reduced.

Completion of the transaction is conditioned upon the expiration or termination of the waiting period under the HSR Act. At any time before or after the transaction is completed, any of the DOJ, the FTC or U.S. state attorneys general could take action under the antitrust laws in opposition to the transaction, including seeking to enjoin completion of the transaction or condition completion of the transaction upon the divestiture of assets of Agios, Servier or their respective subsidiaries or affiliates. Any such requirements or restrictions may prevent or delay completion of the transaction or may reduce the anticipated benefits of the transaction, which could also have an adverse effect on Agios, its financial condition and its results of operations.

No assurance can be given that the required regulatory approvals will be obtained or that the required conditions to closing will be satisfied, and, even if all such approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms, conditions and timing of the approvals. See the section entitled “The Purchase Agreement—Conditions to the Completion of the Transaction” for a discussion of the

 

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conditions to the completion of the transaction and the section entitled “The Transaction—Regulatory Clearances and Approvals Required for the Transaction” for a discussion of the regulatory approvals required in connection with the completion of the transaction.

Lawsuits may be filed against Agios challenging the transaction and an adverse ruling in any such lawsuit may prevent the transaction from being completed or from being completed within the expected time frame.

One of the conditions to the completion of the transaction is the absence of any judgment or law issued or enacted by any governmental entity of competent jurisdiction, in each case that has been entered and remains and effect that prevents, enjoins, renders illegal or prohibits the consummation of the transaction. Accordingly, if litigation is filed challenging the transaction and a plaintiff is successful in obtaining an order enjoining completion of the transaction, then such order may prevent the transaction from being completed or from being completed within the expected time frame.

The unaudited pro forma financial information of Agios included in this proxy statement is preliminary and Agios’ actual financial position or results of operations after the completion of the transaction may differ materially and adversely from the financial position and results of operations indicated by such unaudited pro forma financial information.

The unaudited pro forma financial information of Agios in this proxy statement is presented for illustrative purposes only and is not necessarily indicative of what Agios’ actual financial position or results of operations would have been had the transaction been completed on the dates indicated. The unaudited pro forma financial information is subject to a number of assumptions (including, but not limited to, those related to industry performance and competition, general business, the financial data and related industries, and economic, market and financial conditions and additional matters specific to our business) that are inherently subjective and uncertain and are beyond the control of Agios. Therefore, our actual results and financial position after the transaction may differ materially and adversely from the unaudited pro forma combined condensed financial data that is included in this proxy statement. For further discussion, see the section entitled “Financial Information—Unaudited Pro Forma Financial Information.”

Risks Relating to the Remaining Company

Agios may not be able to realize the anticipated benefits of the transaction.

Agios may not be able to realize the anticipated benefits from the transaction, including potentially deploying the proceeds from the transaction to expand its genetically defined disease business. The ability of Agios to realize the anticipated benefits of the transaction and the success of the remaining company is subject to various risks and uncertainties, including the possibility of adverse clinical and other developments in respect of mitapivat or other pipeline products of the genetically defined disease business, the possibility that Agios may not be able to successfully develop and commercialize products based on PK activation and cellular metabolism and unanticipated changes in applicable laws and regulations that may adversely affect the genetically defined disease business.

Agios may also face new challenges operating as a smaller company as a result of the completion of the transaction, including:

 

   

maintaining employee morale and retaining key management and other employees;

 

   

retaining existing business and operational relationships, including with third parties, employees and other counterparties, as may be impacted by contracts containing consent and/or other provisions that may be triggered by the transaction, or with counterparties that otherwise prefer to transact with larger companies (or will only transact with smaller companies on less favorable terms); and

 

   

raising capital on favorable terms in debt or equity markets.

 

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Following the transaction, Agios will be a smaller, less diversified company.

The transaction will result in Agios being a smaller, less diversified company with a more limited business concentrated on genetically defined diseases. As a result, we may be more susceptible to changing market conditions, including fluctuations and risks particular to the markets for patients with genetically defined diseases, than a more diversified company, which could adversely affect our business, financial condition and results of operations. In addition, the diversification of our revenues, costs and cash flows will diminish following the transaction, such that our results of operations, cash flows, working capital and financing requirements may be subject to increased volatility and our ability to fund capital expenditures and investments or satisfy other financial commitments may be diminished.

Agios will have broad discretion as to the use of the proceeds from the transaction, and may not use the proceeds effectively.

We will have broad discretion with respect to the use of proceeds of the transaction, including for any of the purposes described in the section of this proxy statement titled “The Transaction—Effects on Agios if the Transaction is Completed and the Nature of Agios’ Business Following the Transaction.” The results and effectiveness of the use of proceeds are uncertain, and we could spend the proceeds in ways that do not improve our remaining business, financial condition or results of operations. Our failure to apply these funds effectively could have an adverse effect on its business, financial condition and results of operations.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Except for historical information, this proxy statement and the documents incorporated by reference in this proxy statement may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current plans and expectations and involve risks and uncertainties which are, in many instances, beyond our control, and which could cause actual results to differ materially from those included in or contemplated or implied by the forward-looking statements. Such risks and uncertainties include:

 

   

the occurrence of any event, change or other circumstance that could give rise to the termination of the purchase agreement;

 

   

the failure of Agios to obtain stockholder approval for the transaction or the failure to satisfy any of the other conditions to the completion of the transaction;

 

   

the effect of the announcement of the transaction on our ability to retain and hire key personnel and maintain relationships with our customers, suppliers, advertisers, partners and others with whom we do business, or on our operating results and businesses generally;

 

   

the risks associated with the disruption of management’s attention from ongoing business operations due to the transaction;

 

   

the ability to meet expectations regarding the timing and completion of the transaction, including with respect to receipt of required regulatory approvals;

 

   

the failure of Agios to receive milestone or royalty payments under the purchase agreement and the uncertainty of the timing of any receipt of any such payments;

 

   

the uncertainty of the results and effectiveness of the use of proceeds from the proposed transaction; and

 

   

other risks and uncertainties described in our reports and filings with the SEC, including the risks and uncertainties set forth in Item 1A under the heading Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019, our Quarterly Report on Form 10-Q for the fiscal quarter ended on September 30, 2020 filed with the SEC on November 5, 2020 and other subsequent periodic reports we file with the SEC.

While the list of factors presented here is considered representative, this list should not be considered to be a complete statement of all potential risks and uncertainties. Any forward-looking statements contained in this communication are made only as of the date of this proxy statement, and we undertake no obligation to update forward-looking statements to reflect developments or information obtained after the date hereof and disclaim any obligation to do so other than as may be required by applicable law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

 

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PARTIES TO THE TRANSACTION

Agios Pharmaceuticals, Inc.

Agios Pharmaceuticals, Inc.

88 Sidney Street

Cambridge, Massachusetts 02139

(617) 649-8600

Agios Pharmaceuticals, Inc. is focused on discovering and developing novel investigational medicines to treat malignant hematology, solid tumors and genetically defined diseases through scientific leadership in the field of cellular metabolism. In addition to an active research and discovery pipeline across these three therapeutic areas, Agios has two approved oncology precision medicines and multiple first-in-class investigational therapies in clinical and/or preclinical development.

Agios is a corporation organized under the laws of the State of Delaware. Shares of Agios common stock are listed on the Nasdaq Global Select Market (“NASDAQ”) under the symbol “AGIO.”

Our principal executive offices are located at 88 Sidney Street, Cambridge, Massachusetts 02139.

Servier Pharmaceuticals, LLC

Servier Pharmaceuticals, LLC

200 Pier Four Boulevard, 7th Floor

Boston, Massachusetts 02110

(888) 788-1735

Servier Pharmaceuticals, LLC is a commercial-stage pharmaceuticals company wholly-owned by the Servier Group with a passion for innovation and improving the lives of patients, their families and caregivers. It is committed to building a robust portfolio, starting with oncology, with future growth driven by innovation in other areas of unmet medical need, leveraging its and its affiliates global portfolio and seeking acquisitions, licensing deals and partnerships. Servier Pharmaceuticals has more than 125 employees, which operate cross-functionally to deliver current therapies that are now standard of care in the treatment of patients with acute lymphoblastic leukemia (“ALL”), while advancing a diverse pipeline that includes novel modalities addressing multiple tumor targets. Already a robust business, in the past two years, Servier Pharmaceutical’s net revenues increased by 18.5%, and Servier Pharmaceuticals launched a new product, Asparlas, also for ALL.

Servier Pharmaceuticals is a limited liability company organized under the laws of the State of Delaware. Its principal executive offices are located at 200 Pier Four Boulevard, 7th Floor, Boston, Massachusetts 02110.

Servier S.A.S.

Servier S.A.S.

50 rue Carnot

92284 Suresnes Cedex, France

33 1 55 72 60 00

Servier S.A.S. is the parent company of the Servier Group, a global pharmaceutical group governed by a non-profit foundation. With a strong international presence in 150 countries and a total revenue of 4.7 billion euros in the fiscal year ended September 30, 2020, the Servier Group employs 22,000 people worldwide. The Servier Group invests on average 25% of its total revenue (excluding generics) every year in research and development and uses all its profits for its development. Corporate growth is driven by its constant commitment in five areas of excellence: cardiovascular, immune-inflammatory, and neurodegenerative diseases, cancer and diabetes, as well as by its activities in high-quality generic drugs. The Servier Group also offers eHealth solutions beyond drug development.

Servier Parent is a French societe par actions simplifiee. Servier Parent has its principal executive offices located at 50 rue Carnot, 92284 Suresnes Cedex, France.

 

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THE SPECIAL MEETING

This proxy statement is being provided to the stockholders of Agios as part of a solicitation of proxies by the Agios Board for use at the special meeting to be held at the time and place specified below, and at any properly convened meeting following an adjournment or postponement thereof. This proxy statement, including the information incorporate herein by reference and the annexes attached hereto, provides stockholders of Agios with the information they need to know to be able to vote or instruct their vote to be cast at the special meeting.

Date, Time and Place

The Agios special meeting is scheduled to be held on March 25, 2021, at 9:00 a.m. (Eastern Time). You may attend online via live webcast by registering in advance at www.proxydocs.com/AGIO prior to the deadline of 5:00 p.m. (Eastern Time) on March 23, 2021 and following the further instructions provided via email, including your unique links that will allow you access to the special meeting. Please be sure to follow instructions found on your proxy card and/or voting instruction form and subsequent instructions that will be delivered to you via email. As part of our precautions regarding the coronavirus or COVID-19, the special meeting will be held solely by means of remote communication rather than in person.

Attendance at the Agios Special Meeting

Online registration for the special meeting will begin on or around February 11, 2021. In order to attend the special meeting online, you must register in advance at www.proxydocs.com/AGIO prior to the deadline of March 23, 2021 at 5:00 p.m. (Eastern Time). You should allow ample time for the online registration.

Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you access to the special meeting. Please be sure to follow instructions found on your proxy card and/or voting instruction form and subsequent instructions that will be delivered to you via email.

The webcast of the special meeting will start at 9:00 a.m. (Eastern Time) on March 25, 2021. Instructions on how to attend and participate in the meeting online will be sent to you via email, upon completing your registration.

The online meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong Wi-Fi connection if they intend to participate in the special meeting online. Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the special meeting.

If you encounter any difficulties accessing the virtual meeting during registration or at the time of the virtual meeting, please contact technical support by following the instructions provided to you upon registration for the special meeting.

Purpose of the Special Meeting

At the special meeting, Agios stockholders will be asked to consider and vote on the transaction proposal.

Completion of the transaction under the terms of the purchase agreement is conditioned on approval of the transaction by the holders of a majority of outstanding Agios common stock.

Agios does not expect a vote to be taken on any other matters at the special meeting or any adjournment or postponement thereof.

 

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Recommendation of the Agios Board

After careful consideration, the Agios Board has unanimously determined that the terms of the transactions contemplated by the purchase agreement, including the transaction, are expedient and in the best interests of Agios.

Certain factors considered by the Agios Board in making such unanimous determination and approval are described in the section entitled “The Transaction—Recommendation of the Agios Board and Reasons for the Transaction.” The Agios Board unanimously recommends that stockholders vote “FOR” the transaction proposal.

Record Date; Agios Stockholders Entitled to Vote

Only holders of record of Agios common stock at the close of business on February 8, 2021, the record date for the special meeting, will be entitled to notice of, and to vote at, the special meeting or any adjournments or postponements of the special meeting. At the close of business on the record date, 69,361,718 shares of Agios common stock were issued and outstanding.

Holders of record of Agios common stock are entitled to one vote for each share of Agios common stock they own at the close of business on the record date.

Quorum

The presence at the special meeting, virtually or by proxy, of the holders of a majority of the shares of Agios common stock issued and outstanding and entitled to vote on the record date will constitute a quorum. Any shares of Agios common stock held by Agios or by any of its subsidiaries are not considered to be outstanding for purposes of determining a quorum. There must be a quorum for business to be conducted at the special meeting. Failure of a quorum to be represented at the special meeting will necessitate an adjournment or postponement of the special meeting. If you submit a properly executed proxy card, even if you abstain from voting, your shares will be counted for purposes of calculating whether a quorum is present at the special meeting.

Required Vote

The transaction proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Agios common stock entitled to vote to approve the transaction proposal. An abstention will have the same effect as a vote “AGAINST” the transaction proposal.

Voting by Agios’ Directors and Executive Officers

As of the close of business on the record date, the directors and executive officers of Agios were entitled to vote 586,310 shares of Agios common stock, or approximately 1% of the shares Agios common stock issued and outstanding on that date and entitled to vote at the special meeting.

Abstentions and Broker Non-Votes

An abstention occurs when a stockholder attends a meeting, virtually or by proxy, but abstains from voting. At the special meeting, abstentions will be counted in determining whether a quorum is present. Abstentions and a failure to vote your shares of Agios common stock (including the failure of a record owner to execute and return a proxy card and the failure of a beneficial owner of shares held in “street name” by a broker to give voting instructions to the broker) will have the same effect as a vote “AGAINST” the transaction proposal.

If no instruction as to how to vote is given (including an instruction to abstain) in an executed, duly returned and not revoked proxy, the proxy will be voted “FOR” the transaction proposal.

 

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Brokers, bankers and other nominees who hold shares on behalf of their customers may not give a proxy to Agios to vote those shares with respect to the transaction proposal without specific instructions from their customers, as banks, brokers and other nominees do not have discretionary voting power on “non-routine” matters like the transaction proposal. When a bank, broker or other nominee refrains from voting your shares on a particular proposal because the bank, broker or other nominee has not received your instructions and has discretionary authority to vote on the “routine” matters to be considered, it is called a “broker non-vote.” Because there are no routine matters to be considered at the special meeting, there should be no broker non-votes.

Failure to Vote

If you are a registered stockholder and you do not sign and return your proxy card or vote by telephone, over the internet or virtually, your shares will not be voted at the special meeting and will not be counted for purposes of determining whether a quorum exists. A failure to vote your shares of Agios common stock (including the failure of a record owner to execute and return a proxy card and the failure of a beneficial owner of shares held in “street name” by a broker to give voting instructions to the broker) will have the same effect as a vote “AGAINST” the transaction proposal.

If your shares are held in “street name” and you do not issue instructions to your broker, your broker may vote your shares at its discretion on routine matters, but may not vote your shares on non-routine matters. All of the proposals in this proxy statement are non-routine matters. Accordingly, if your shares are held in street name and you do not issue instructions to your broker, your shares will not be voted at the special meeting and will not be counted for purposes of determining whether a quorum exists. Broker non-votes will have the same effect as a vote “AGAINST” the transaction proposal. For shares of Agios common stock held in “street name,” only shares of common stock affirmatively voted “FOR” the transaction proposal will be counted as a vote in favor of such proposal.

Voting at the Special Meeting

You may authorize the persons named as proxies on the proxy card to vote your shares by returning the proxy card by mail, through the internet, or by telephone. Although Agios offers multiple different voting methods, Agios encourages you to vote over the internet or by phone as Agios believes they are the most cost-effective methods. We also recommend that you vote as soon as possible, even if you are planning to attend the special meeting virtually, so that the vote count will not be delayed. If you choose to vote your shares over the internet or by telephone, there is no need for you to mail back your proxy card.

If you plan to attend the special meeting and wish to vote virtually, you must register in advance at www.proxydocs.com/AGIO prior to the deadline of 5:00 p.m. (Eastern Time) on March 23, 2021. Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you access to the special meeting. Please be sure to follow instructions found on your proxy card and/or voting instruction form and subsequent instructions that will be delivered to you via email.

To Vote over the Internet:

To vote over the internet, follow the instructions printed on your proxy card. If you vote over the internet, you do not have to mail in a proxy card.

To Vote by Telephone:

To vote by telephone, follow the instructions printed on your proxy card. If you vote by telephone, you do not have to mail in a proxy card.

 

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To Vote by Proxy Card:

To vote by proxy card, complete and sign the proxy card and mail it to the address indicated on the proxy card.

If you sign and return your signed proxy card without indicating how you want your shares of Agios common stock to be voted, your shares of Agios common stock will be voted “FOR” the transaction proposal. Proxy cards that are returned without a signature will not be counted as present at the special meeting and cannot be voted.

If your shares are held by your broker, bank or other nominee, you will receive a form from your broker, bank or other nominee seeking instruction as to how your shares should be voted. You should contact your broker, bank or other nominee with questions about how to provide or revoke your instructions.

Revocation of Proxies

If you are an Agios stockholder of record, you may revoke your proxy and change your vote by following one of the below procedures:

 

   

Following instructions found on your proxy card and/or voting instruction form and voting over the internet or by telephone. Only your latest internet or telephone vote submitted prior to the special meeting is counted. You may not change your vote prior to the special meeting over the internet or by telephone after March 25, 2021, Eastern Time, on 9:00 a.m.

 

   

Sign, date and complete a new proxy card and send it by mail to Inspector of Elections for Agios Pharmaceuticals, Inc., c/o Mediant Communications, P.O. Box 8016, Cary, NC 27512-9903. Mediant must receive the proxy card no later than March 24, 2021. Only your latest dated and timely received proxy will be counted.

 

   

Registering for the special meeting and virtually attending the special meeting and voting online during the special meeting. Virtually attending the special meeting alone, without voting online during the special meeting, will not revoke your internet vote, telephone vote or proxy submitted by mail, as the case may be.

If your shares are held in “street name,” you may submit new voting instructions with a later date by contacting your bank, brokerage firm, or other nominee. After registering in advance and following instructions found on your proxy card and/or voting instruction form and subsequent instructions that will be delivered to you via email, you may also vote online during the special meeting, which will have the effect of revoking any previously submitted voting instructions.

Solicitation of Proxies

The Agios Board is soliciting your proxy, and Agios will bear the cost of soliciting proxies. Innisfree has been retained to assist with the solicitation of proxies. Innisfree will be paid a solicitation fee of $30,000 and will be reimbursed for its reasonable out-of-pocket expenses for these and other advisory services in connection with the special meeting. Forms of proxies and proxy materials may also be distributed through brokers, custodians, and other like parties to the beneficial owners of shares of Agios common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail or other electronic medium by Innisfree or Agios and its directors and officers.

Assistance

If you encounter any difficulties accessing the meeting online during the check-in or meeting time, please call the technical support number that will be posted online on the special meeting login page.

 

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Tabulation of Votes

Representatives of Mediant Communications Inc. will tabulate the votes and act as inspectors of election.

Adjournment

Whether or not a quorum is present, the chairman of the special meeting may adjourn the special meeting to another place, date or time.

Agios is not required to notify any stockholder of any adjournment of less than 30 days if the time and place of the adjourned meeting, and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned meeting, Agios may transact any business that might have been transacted at the original special meeting.

Questions and Additional Information

If you have any questions about the special meeting, require assistance with submitting your proxy or otherwise voting your shares of our common stock, or would like copies of any of the documents referred to in this proxy statement, please contact Agios’ proxy solicitor at:

 

 

LOGO

INNISFREE M&A INCORPORATED

501 Madison Avenue, 20th Floor

New York, New York 10022

Stockholders May Call TOLL-FREE: (877) 825-8772

Banks and Brokers May Call Collect: (212) 750-5833

 

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THE TRANSACTION

The following is a discussion of the transaction. The description of the purchase agreement in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the purchase agreement, which is attached as Annex A to this proxy statement. This summary does not purport to be complete and may not contain all of the information about the transaction that is important to you. You are encouraged to read the purchase agreement carefully and in its entirety, as it is the legal documents that governs the transaction.

Background of the Transaction

The Agios Board and Company management team regularly evaluate the Company’s performance, risks, strategy and competitive position, as well as potential opportunities for business combinations, acquisitions, divestitures and other financial and strategic alternatives to enhance shareholder value.

As part of that review, the Agios Board held a meeting on September 24 and 25, 2019, where the Agios Board and Company management reviewed the Company’s 2019 long-range plan, including the development pipeline for the Company’s oncology business and its genetically defined disease business. As part of that review, the Agios Board and Company management concluded that mitapivat, which is a product in development in the genetically defined disease business, represented the Company’s most compelling value creation opportunity among its current clinical programs because of mitapivat’s potential as a treatment for PK deficiency, thalassemia and sickle cell disease as well as because of the increasingly competitive and rapidly evolving oncology landscape, particularly with respect to acute myeloid leukemia (“AML”).

On December 8, 2019, Agios publicly announced that, based on a preliminary analysis of a Phase 2 trial, it had established clinical proof-of-concept with respect to mitapivat in patients with non-transfusion dependent thalassemia.

On December 10, 2019, the Agios Board held a meeting. At the meeting, the Agios Board and Company management continued to discuss the Company’s long-range plans for the oncology business and the genetically defined disease business, including mitapivat. On the basis of these discussions and developments, the Agios Board authorized Agios management to engage in a comprehensive strategic review of the Company’s assets, aimed at maximizing the potential of the Company’s PK/cellular metabolism platform, achieving superior outcomes for patients and delivering sustainable, long-term value to shareholders. The Agios Board directed Agios management to consider a variety of strategic alternatives, including, among others, a potential separation or sale of some or all of its oncology business so that the Company could focus on its genetically defined disease business.

During the first half of 2020, Agios management engaged in a comprehensive strategic review of the Company’s assets, taking into consideration, among other things, recent financial and market data, industry trends and conditions, recent Company milestones, clinical trial performance and the competitive landscape across oncology and genetically defined diseases. As part of this strategic review process and at the direction of the Agios Board, during the first half of 2020 members of Agios management held discussions with four biopharmaceutical companies to determine whether they had any interest in acquiring some or all of the oncology business. Following discussions, each of the four biopharmaceutical companies informed Agios that it was not interested in acquiring the oncology business.

On June 12, 2020, Agios announced that, based on a preliminary analysis in a Phase 1 trial, it had established clinical proof of concept with respect to mitapivat for patients with sickle cell disease.

Later in June 2020, members of Agios management presented at an industry conference to discuss trends in the biopharmaceutical industry and recent updates, including clinical developments, with respect to Agios. At the

 

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conference, members of Agios management and Servier management discussed potential partnership opportunities between the two companies, including with respect to certain of its product candidates. Members of Agios management and Servier management continued those discussions later in June 2020, and during those discussions it was also mentioned that Agios might consider a separation of the oncology business.

At a meeting of the Agios Board held on July 21, 2020, members of the Agios Board discussed the recent positive developments with respect to mitapivat and the prospects of the Company’s pipeline products. The Agios Board discussed that, if an appropriate price were paid for the oncology business, a sale of the oncology business could enhance shareholder value by (i) allowing management to focus on the genetically defined disease business, including mitapivat, (ii) enabling each business to pursue its own distinctive strategy and goals, as opposed to competing with each other for capital and management attention, and (iii) providing capital to further invest in the genetically defined disease business. On this basis, the Agios Board authorized Agios management to explore whether other parties would potentially be interested in an acquisition of some or all of the oncology business, including by providing them with confidential information and requesting preliminary indications of interest. In connection with that exploration, Agios was assisted by representatives of Goldman Sachs & Co. LLC (“Goldman Sachs”) and Morgan Stanley & Co. LLC (“Morgan Stanley”) as financial advisors and Wachtell, Lipton, Rosen & Katz (“Wachtell Lipton”) as legal advisor.

In July and August 2020, Agios management, with the assistance of representatives of Goldman Sachs and Morgan Stanley, contacted 14 additional companies, including Servier, to determine their interest in a potential acquisition of the oncology business. Of these 14 companies, 12 companies expressed a potential interest in an acquisition and entered into a confidentiality agreement with Agios. Agios offered to provide management presentations about the oncology business to these 12 companies, and 11 companies accepted the offer. After Agios provided management presentations to these 11 companies, 10 of these companies continued to express interest in a potential acquisition of the oncology business.

On August 21, 2020, Agios sent to these 10 companies a letter informing them that, if they were interested in acquiring the oncology business, they should submit a preliminary indication of interest by September 16, 2020. The preliminary indication of interest should include a proposed price and the key assumptions underlying the proposed price. Based on the preliminary indications of interest, Agios would then determine which parties, if any, would be invited to participate in the next phase of the process, which would include additional access to due diligence information and a form of purchase agreement.

By mid-September 2020, four parties had submitted preliminary indications of interest to Agios. Servier submitted a preliminary indication of interest to acquire the oncology business for $2 billion in cash. The indication of interest noted that it was based on its initial review of the due diligence information provided to date, and that its valuation was based on several of its internal assumptions, including estimates of the likelihood of registrations of vorasidenib in key markets and life-cycle management opportunities for TIBSOVO®. Each of the other three preliminary indications of interest included a meaningfully lower purchase price. A biopharmaceutical company (“Party B”) submitted a preliminary indication of interest to acquire the oncology business for cash, with a portion of the purchase price being paid only if certain regulatory milestones were achieved. A financial sponsor (“Party C”) submitted a preliminary indication of interest to acquire the oncology business for a combination of cash and equity in a publicly traded company in Agios’ industry (which publicly traded company was not identified in the preliminary indication of interest), with a portion of the purchase price being paid only if certain regulatory or commercial milestones were achieved. A biopharmaceutical company (“Party D”) submitted a preliminary indication of interest to acquire only TIBSOVO® and certain pipeline programs of the oncology business for cash, with a portion of the purchase price being paid only if certain clinical and regulatory were achieved.

On September 21, 2020, the Company publicly announced the results of the final overall survival analysis from its global Phase 3 ClarIDHy trial of TIBSOVO® in previously treated cholangiocarcinoma patients with an

 

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isocitrate dehydrogenase 1 (IDH1) mutation. A consistent trend in improved overall survival was observed in patients treated with TIBSOVO® compared to those randomized to placebo, but was not statistically significant.

Later on September 21, 2020, the Agios Board held a meeting to discuss, among other things, the preliminary indications of interest received by the Company and to review the potential valuation of the oncology business. The Agios Board and Company management also discussed the strategic rationale for a potential sale of the oncology business and timing considerations for any transaction. Company management noted that further discussion on these topics would be held at the next meeting of the Agios Board.

On September 23, 2020, at the direction of Agios management representatives of Goldman Sachs and Morgan Stanley informed representatives of Lazard and Servier that Servier would be invited to the next phase of the process. Representatives of Goldman Sachs and Morgan Stanley indicated that Agios had received multiple proposals for its oncology business, and that it was the Company’s expectation that all parties with whom it was still engaging would materially improve their proposals after conducting further due diligence.

On October 1, 2020, the Agios Board held a meeting to discuss, among other things, the strategic review process and the preliminary indications of interest received by the Company. Members of Agios management and representatives of Goldman Sachs, Morgan Stanley and Wachtell Lipton were in attendance at the meeting for the portion of the meeting relating to the strategic review process. Members of Agios management reviewed with the Agios Board the oncology business and the genetically defined disease business, including respective risks and potential catalysts. Members of Agios management then presented an overview of the preliminary indications of interest received to date in connection with the potential sale of some or all of the oncology business. They also reviewed Agios management’s financial analysis of the Company, the oncology business on a standalone basis and the remaining Company assuming that it divested its oncology business, in each case based on different key assumptions. The Agios Board and Company management then discussed the potential process for the potential transaction. They discussed the expected availability in late November 2020 of Phase 3 data from the Company’s ACTIVATE trial of mitapivat in adult patients with PK deficiency who are not regularly transfused, and that positive Phase 3 data would reduce the risks associated with selling the oncology business in order to focus on the genetically defined disease business. After discussion, the Agios Board authorized management to continue its discussions with Servier and Party B, including to determine whether such discussions could lead them to provide additional value for the oncology business, and determined that revised indications of interest should be requested in late November so that the Company could consider the results of the ACTIVATE trial before making a decision to sell the oncology business.

On October 9, 2020, Dr. Jackie Fouse, the chief executive officer of Agios, held a telephone call with Olivier Laureau, President of Servier. During the call, Dr. Fouse and Mr. Laureau discussed the complementary nature of Agios’ and Servier’s oncology businesses and the compelling strategic rationale for the potential transaction. Dr. Fouse informed Mr. Laureau that Agios had received multiple proposals for its oncology business, and that it was the Company’s expectation that all parties with whom it was still engaging would materially improve their proposals after conducting further due diligence. Mr. Laureau asked whether Agios would be willing to consider royalties and milestone payments as a form of consideration. Dr. Fouse indicated that there are several ways to express value, with upfront cash consideration a clear preference but that the Company would consider whatever Servier proposed as its most compelling offer.

On October 12, 2020, after internal discussion, Agios sent to Servier a process letter inviting it to submit a revised bid for the oncology business. The letter requested that a revised bid be submitted toward the end of November 2020. The process letter indicated that Agios would be loading a form of purchase agreement to the virtual data room, and that Servier should submit a marked copy of the purchase agreement along with the final revised indication of interest. Agios communicated to Party B that Party B needed to improve the purchase price in its preliminary indication of interest in order to be invited to the next phase of the process, and that Agios would be willing to permit Party B to conduct limited additional diligence with the expectation that it would improve such purchase price.

 

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On October 16, 2020, the Company publicly announced the withdrawal of its European Marketing Authorization Application for TIBSOVO® for the treatment of adult patients with relapsed or refractory AML with an IDH1 mutation. The Company’s decision was based on feedback from the European Medicine Agency’s Committee for Medicinal Products for Human Use that the available clinical data from the Company’s single arm, uncontrolled phase 1 study did not sufficiently support a positive benefit-risk balance for the proposed indication.

On October 23, 2020, on behalf of Agios, representatives of Morgan Stanley and Goldman Sachs sent an initial draft of the purchase agreement to Lazard, financial advisor to Servier, via the virtual data room. Throughout October 2020 and early November 2020, representatives of Agios and members of the Agios management continued to provide due diligence materials and hold due diligence sessions with Servier and Party B in anticipation of receiving final indications of interest from each party. Representatives of Agios also had several discussions with Servier and Party B regarding the terms of their respective preliminary indications of interest and areas in which each could be improved to be more valuable to Agios shareholders.

On November 3, 2020, Party B contacted Agios to indicate that, after conducting additional diligence, Party B concluded that its interest was primarily limited to TIBSOVO® rather than the entire oncology business, and, therefore, it was not willing to increase its proposed purchase price from its preliminary indication of interest. Party B further indicated that it would be interested in moving forward to the extent that Agios was willing to consider a transaction primarily limited to TIBSOVO®.

On November 12, 2020, on behalf of Servier, representatives of Lazard sent a revised draft of the purchase agreement to representatives of Goldman Sachs and Morgan Stanley. The revised draft provided, among other things, that (i) Agios would retain all historical liabilities of the oncology business, (ii) Agios would be required to indemnify Servier for breaches of certain representations and warranties contained in the purchase agreement and would be required to indemnify Servier for other specific matters to be identified, (iii) most of the representations and warranties in the purchase agreement would be tested at a materiality standard (instead of a material adverse effect standard) for purposes of determining whether Servier would be obligated to close, (iv) Servier would only commit to divest assets or agree to conduct restrictions to resolve objections by antitrust regulators with respect to TIBSOVO® (as opposed to any oncology asset), (v) Agios would not have a right to terminate the agreement for a superior proposal and instead would be required to submit the transaction to its shareholders, (vi) in the event that Servier terminated the agreement because the Agios Board changed its recommendation and in certain other circumstances, Agios would be required to pay Servier a termination fee equal to 4.0% of the purchase price, and (vii) Agios would be restricted from potential oncological applications of its remaining portfolio for a period of time.

On November 16, 2020, representatives of Goldman Sachs and Morgan Stanley on behalf of Agios sent to Servier a document highlighting key issues in the draft purchase agreement and indicated the ways in which Servier could revise the draft purchase agreement to improve its proposal. The document, among other things, described Agios’ position that (i) the oncology business would be sold as a going concern, and therefore the purchaser would generally assume all pre-closing liabilities related to the oncology business, (ii) the sale would be effected on a “public company”-style basis and, therefore, representations and warranties in the purchase agreement would not survive the closing, (iii) most of the representations and warranties in the purchase agreement would be tested at a material adverse effect standard for purposes of determining whether the purchaser would be obligated to close, (iv) the purchaser would commit to take any and all actions necessary to obtain regulatory approval for the transaction, (v) Agios would have a right to terminate the agreement for a superior proposal, (vi) any termination fee payable by Agios to the purchaser should be lower than 4.0% of the purchase price, and (vii) Agios would not be restricted from potential oncological applications of its remaining portfolio.

On November 21, 2020, Servier submitted its revised indication of interest, along with a further revised draft of the purchase agreement, to Agios. Servier’s revised indication of interest provided for the acquisition of

 

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the oncology business for a combination of (i) a $1.7 billion upfront cash payment and (ii) a $150 million sales milestone payment if U.S. net sales of TIBSOVO® reached or exceeded $350 million in any calendar year prior to 2024 (or, in the alternative, a $75 million sales milestone payment if U.S. annual net sales reached or exceeded $350 million only in calendar year 2024), (iii) a royalty payment equal to 10% of U.S. annual net sales of TIBSOVO® for five years following achievement of the $150 million sales milestone for TIBSOVO® described above (or for four years following achievement of the $75 million sales milestone described above) and (iv) a $150 million regulatory milestone payment on the occurrence of both FDA approval of vorasidenib on or before January 1, 2027 and the first commercial sale of vorasidenib in the United States following such FDA approval. Despite the reduction in the upfront cash consideration, Servier’s revised indication of interest continued to provide substantially more consideration than the consideration reflected in the initial indications of interest of Parties B, C and D.

Servier’s revised draft of the purchase agreement continued to contain most of the terms that were raised as concerns by Agios. Servier’s revised draft of the purchase agreement provided that (i) Agios would retain all historical liabilities of the oncology business, (ii) Agios would be required to indemnify Servier for breaches of certain representations and warranties contained in the purchase agreement and would be required to indemnify Servier for other specific matters to be identified, (iii) most of the representations and warranties in the purchase agreement would be tested at a materiality standard (instead of a material adverse effect standard) for purposes of determining whether Servier would be obligated to close, (iv) Servier would only commit to divest assets or agree to conduct restrictions to resolve objections by antitrust regulators with respect to TIBSOVO® and vorasidenib (as opposed to any oncology asset), (v) Agios would not have a right to terminate the agreement for a superior proposal and instead would be required to submit the transaction to its shareholders, (vi) in the event that Servier terminated the agreement because the Agios Board changed its recommendation and in certain other circumstances, Agios would be required to pay Servier a termination fee equal to 4.0% of the purchase price, and (vii) Agios would be restricted from potential oncological applications of its remaining portfolio for a period of time.

On November 23, 2020, the Agios Board held a meeting to discuss Servier’s revised indication of interest. Members of Agios management and representatives of Goldman Sachs, Morgan Stanley and Wachtell Lipton were in attendance. At the meeting, Agios management summarized the terms of Servier’s revised indication of interest and discussed how such terms compared to Servier’s initial indication of interest. Agios management also compared it to the other preliminary indications of interest that the Company had received, noting that Servier’s preliminary indication of interest was the most attractive from a value perspective and, in the view of management, also had the highest likelihood of consummation given the strategic fit and importance of the transaction for Servier. Agios management and representatives of Wachtell Lipton then summarized the status of negotiations of the draft purchase agreement and key open items in the purchase agreement. Representatives of Goldman Sachs and Morgan Stanley reviewed their preliminary financial analyses of the potential transaction with respect to the oncology business on a standalone basis. They also discussed how the terms of Servier’s revised indication of interest compared to these financial analyses. Agios management then reviewed different alternatives of how the Company might respond to the revised proposal, including ways that the proposal could be revised to address the concern that the Agios Board wanted to capture additional upside in the event that vorasidenib was successful. The directors provided their input on the different alternatives, and, after discussion, the Agios Board authorized management to prepare a potential counterproposal to provide to Servier.

On November 24, 2020, the Agios Board held a meeting to review with Agios management potential counterproposals to Servier. Following discussion, the Agios Board authorized management to present a counterproposal containing the following financial terms: (i) an increase in the upfront cash payment from $1.7 billion to $1.85 billion, (ii) the elimination of sales of milestones for TIBSOVO®, (iii) revising the royalty payment for TIBSOVO® so that it would be equal to 5% of all worldwide net sales of TIBSOVO® following the closing through the loss of exclusivity, (iv) keeping the $150 million regulatory milestone payment, but triggered only upon the occurrence of FDA approval of vorasidenib on or before January 1, 2027 and not additionally conditioned upon the first commercial sale of vorasidenib, and (v) adding a royalty payment equal to 15% of worldwide net sales of vorasidenib from FDA approval through the loss of exclusivity.

 

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Also on November 24, 2020, representatives of Goldman Sachs provided a letter to Agios confirming that in the two years preceding the date of the letter, the Investment Banking Division of Goldman Sachs had not been engaged by Servier, its affiliates or certain significant shareholders of Servier to provide financial advisory or underwriting services for which Goldman Sachs had recognized compensation and confirmed that nothing would limit Goldman Sachs’s ability to fulfill its responsibilities as financial advisor to Agios in connection with the engagement of Goldman Sachs as financial advisor in connection with the proposed transaction with Servier.

Also on November 24, 2020, representatives of Morgan Stanley provided a letter to Agios confirming that in the two years preceding November 2, 2020, Morgan Stanley had not been engaged by Servier to provide financial advisory or financing assignments for which Morgan Stanley has recognized compensation and confirmed that Morgan Stanley was not aware of anything that would limit Morgan Stanley’s ability to fulfill its responsibilities as financial advisor to Agios in connection with the engagement of Morgan Stanley as financial advisor to Agios in connection with the proposed transaction with Servier.

On November 25, 2020, at the direction of the Agios Board and Company management, representatives of Goldman Sachs and Morgan Stanley sent the counterproposal discussed at the November 24, 2020 board meeting.

On November 29, 2020, Dr. Fouse and Mr. Laureau spoke by phone. During the call, Dr. Fouse indicated to Mr. Laureau that the Company did not view Servier’s revised indication of interest as sufficient, and that the Company wanted to determine whether there were financial terms that could provide a basis for the parties to continue discussions. Mr. Laureau indicated that Servier was considering Agios’ counterproposal and would provide a response shortly.

On November 30, 2020, on behalf of Servier, representatives of Lazard sent to representatives of Goldman Sachs and Morgan Stanley a revised proposal in response to Agios’ counterproposal. Lazard communicated that this represented Servier’s best and final proposal. The final proposal contemplated that Servier would acquire the oncology business for a combination of: (i) an upfront cash payment of $1.8 billion, (ii) a royalty equal to 5% of U.S. net sales of TIBSOVO® following the closing and until loss of exclusivity, (iii) a regulatory milestone payment of $200 million if Vorasidenib is approved by the FDA on or before January 1, 2027 and (iv) a royalty equal to 15% of U.S. net sales of Vorasidenib following FDA approval of vorasidenib and through loss of exclusivity.

Later that day, Agios management sent to the Agios Board the final proposal provided by Servier.

On December 1, 2020, Agios announced results of its global Phase 3 ACTIVATE trial of mitapivat. Agios announced that treatment with mitapivat demonstrated a statistically significant, sustained increase in hemoglobin compared to placebo, and that the safety profile observed in the study was generally consistent with previously published data.

Later on December 1, 2020, the Agios Board held a meeting. Members of Agios management were in attendance. Agios management reviewed Servier’s final proposal, and how the terms thereof compared to Servier’s prior proposal and the Agios counterproposal. The Agios Board was supportive of continuing discussions with Servier on the basis outlined in the final proposal, but only if the significant issues in the draft purchase agreement could be resolved in a satisfactory manner.

On December 2, 2020, Dr. Fouse and Mr. Laureau spoke by phone. During the call, Dr. Fouse communicated that Agios would be willing to continue discussions on the basis outlined in Servier’s final proposal, but only if the significant issues in the draft purchase agreement could be resolved in a satisfactory manner. She noted that many of the issues previously outlined in the November 16, 2020 high-level feedback document had not been addressed in Servier’s revised draft of the purchase agreement. Dr. Fouse and Mr. Laureau agreed that it was advisable for their respective advisors to engage on the terms of the purchase agreement.

 

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On December 3, 2020, on behalf of Agios, representatives of Wachtell Lipton sent to representatives of Baker McKenzie a revised draft of the purchase agreement. The revised draft purchase agreement provided that (i) Servier would generally assume all pre-closing liabilities related to the oncology business, (ii) representations and warranties in the purchase agreement would not survive the closing, (iii) most of the representations and warranties in the purchase agreement would be tested at a material adverse effect standard for purposes of determining whether Servier would be obligated to close, (iv) Servier would commit to take any and all actions necessary to obtain regulatory approval for the transaction, (v) Agios would have a right to terminate the agreement for a superior proposal, (vi) in the event that Servier terminated the agreement because the Agios Board changed its recommendation and in certain other circumstances, Agios would be required to pay Servier a termination fee equal to 2.5% of the purchase price, and (vii) Agios would not be restricted from potential oncological applications of its remaining portfolio.

On December 5 and 6, 2020, representatives of Agios, Servier, Wachtell Lipton and Baker McKenzie had several teleconference calls to discuss the key issues in the draft purchase agreement.

On December 8, 2020, on behalf of Servier, representatives of Baker McKenzie sent to representatives of Wachtell Lipton a revised draft of the purchase agreement. The revised draft purchase agreement provided that (i) Servier’s position on the scope of any pre-closing liabilities of the oncology business to be assumed by it would be determined at a later point, but prior to signing, following completion of the underwriting process for its representation and warranty insurance policy for the transaction, (ii) Servier’s position on whether any representations would survive closing would be determined at a later point, but prior to signing, following completion of the underwriting process for its representation and warranty insurance policy for the transaction, and (iii) most of the representations and warranties in the purchase agreement would be tested at a material adverse effect standard for purposes of determining whether Servier would be obligated to close, (iv) Servier would commit to take any and all actions necessary to obtain regulatory approval for the transaction, (v) Agios would have a right to terminate the agreement for a superior proposal, (vi) in the event that Servier terminated the purchase agreement because the Agios Board changed its recommendation and in certain other circumstances, Agios would be required to pay Servier a termination fee equal to 2.5% of the purchase price and (vii) Agios would be restricted from potential oncological applications of its remaining portfolio for a period of time.

On December 10, 2020, the Agios Board held a meeting. Members of Agios management were in attendance, and representatives of Goldman Sachs, Morgan Stanley and Wachtell Lipton were in attendance for the portion of the meeting relating to the potential transaction. Representatives of Wachtell Lipton provided the Agios Board with an update on the negotiations between the parties regarding the purchase agreement, highlighting key issues to be resolved with Servier. Representatives of Goldman Sachs and Morgan Stanley then reviewed the financial terms of Servier’s final proposal and their preliminary financial analyses of the oncology business. The Agios Board then discussed the merits of proceeding with the transaction contemplated by Servier’s final proposal relative to other alternatives, including retaining the oncology business. The Agios Board also discussed potential use of the proceeds from the sale of the oncology business if the company were to determine to proceed with the Servier transaction. Finally, the Agios Board discussed different potential timing scenarios for an announcement for a transaction. Following discussion, the Agios Board authorized Agios management to continue to negotiate with Servier to determine whether the remaining open issues in the purchase agreement could be resolved.

Between December 10, 2020 and December 18, 2020, representatives of Agios management and Wachtell Lipton, on the one hand, and representatives of Servier management and Baker McKenzie, on the other hand, continued to negotiate the terms of the purchase agreement. Key issues that were negotiated included (i) the scope of historical liabilities of the oncology business to be retained by Agios, (ii) the scope of any indemnification to be provided by Agios to Servier for breaches of representations and warranties and other specified matters and (iii) whether Agios would be restricted from potential oncological applications of its remaining portfolio for a period of time.

 

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On December 18, 2020, the Agios Board held a meeting. Members of Agios management were in attendance. At the meeting, Dr. Fouse provided the Board with an update on negotiations between the parties regarding the purchase agreement. The Agios Board and Agios management then discussed different potential timing scenarios for an announcement for a transaction. Following discussion, the Agios Board authorized Agios management to continue to negotiate with Servier to determine whether the remaining open issues in the purchase agreement could be resolved, as well as to communicate with Servier to determine the timing of any announcement if those open issues could be resolved.

Between December 18, 2020 and December 20, 2020, representatives of Agios management and Wachtell Lipton, on the one hand, and representatives of Servier management and Baker McKenzie, on the other hand, continued to negotiate and resolved the remaining open points in the purchase agreement.

On December 19, 2020, Agios executed an engagement letter formalizing Goldman Sachs’s engagement to act as financial advisor to the Agios Board in connection with the potential transaction. The Agios Board considered the engagement letter and the disclosure letter provided by Goldman Sachs on November 24, 2020, and subsequently updated and provided to the Agios Board on December 20, 2020, and confirmed that nothing would limit Goldman Sachs’s ability to fulfill its potential responsibilities as a financial advisor to the Agios Board in connection with the potential transaction.

Also on December 19, 2020, Agios executed an engagement letter formalizing Morgan Stanley’s engagement to act as financial advisor to the Agios Board in connection with the potential transaction. The Agios Board considered the engagement letter and the disclosure letter provided by Morgan Stanley on November 24, 2020, and subsequently updated and provided to the Agios Board on December 20, 2020, and confirmed that nothing would limit Morgan Stanley’s ability to fulfill its potential responsibilities as a financial advisor to the Agios Board in connection with the potential transaction.

On December 20, 2020, the Agios Board held a meeting. Members of Agios management and representatives of Goldman Sachs, Morgan Stanley and Wachtell Lipton were in attendance. At the meeting, members of Agios management reviewed with the Agios Board the strategic rationale for the transaction. The Agios Board and management then discussed potential uses of proceeds from the transaction. Representatives of Goldman Sachs and Morgan Stanley reviewed for the Agios Board their firms’ respective financial analyses of the oncology business and the aggregate consideration to be paid in the transaction. At the request of the Agios Board, representatives of each of Goldman Sachs and Morgan Stanley rendered Goldman Sachs’s and Morgan Stanley’s oral opinions, respectively, each of which was subsequently confirmed in writing, that, in the case of Morgan Stanley’s opinion, as of the date of such opinion and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in Morgan Stanley’s written opinion, the aggregate consideration to be received by Agios pursuant to the purchase agreement was fair, from a financial point of view, to Agios, and, in the case of Goldman Sachs’s opinion, as of the date of such opinion and based upon and subject to the factors and assumptions set forth therein, the aggregate consideration to be paid to Agios pursuant to the purchase agreement was fair, from a financial point of view, to Agios. Representatives of Wachtell Lipton provided the Agios Board with a summary of the key terms of the proposed final version of the purchase agreement and reviewed with the directors their fiduciary duties under Delaware law generally and with respect to a sale of the oncology business. The Agios Board then unanimously (i) determined that the terms of the transactions contemplated by the purchase agreement, including the transaction, were expedient and in the best interests of Agios, (ii) approved the execution, delivery and performance by Agios of the purchase agreement and the consummation of the transactions contemplated thereby, including the transaction, and (iii) resolved to recommend that the stockholders of Agios approve the transaction and the other transactions contemplated by the purchase agreement.

Later that day, the parties executed the purchase agreement.

 

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On December 21, 2020, Agios and Servier each issued a press release announcing the execution of the purchase agreement.

Recommendation of the Agios Board and Reasons for the Transaction

In evaluating the purchase agreement and the transaction, the Agios Board consulted with Agios management and its financial and legal advisors and unanimously determined the terms of the transaction contemplated by the purchase agreement, including the asset sale, were expedient and in the best interests of Agios and resolved to recommend that stockholders vote to approve the transaction. In reaching this determination, the Agios Board considered a variety of factors, including the following:

 

   

Strategic Rationale

 

   

that the transaction enables Agios to focus on its genetically defined disease business, which has several promising pipeline products, including mitapivat, which has demonstrated encouraging results in clinical studies conducted to date in three hemolytic anemias, thereby allowing the Company to further leverage its core expertise in cellular metabolism and drive greater competitive differentiation across multiple genetically defined disease indications;

 

   

the view of the Agios Board that mitapivat represents the Company’s most compelling value creation opportunity given its potential as a treatment for PK deficiency, thalassemia and sickle cell disease, and given the increasingly competitive and rapidly evolving oncology landscape, particularly with respect to AML;

 

   

the view of the Agios Board that by separating the oncology business from the genetically defined disease business, the transaction provides each business with the flexibility needed to pursue its own distinctive strategy and goals, as opposed to competing with each other for capital and management attention;

 

   

the view of the Agios Board that the transaction will create value for stockholders by creating a more focused company;

 

   

that the transaction provides Agios with proceeds to both return significant value directly to the shareholders and invest in its genetically defined disease business and reduces the Company’s reliance on the capital markets to fund its research and development activities;

 

   

that by creating a company solely focused on its genetically defined disease business, Agios can use its equity-based compensation more effectively to attract and retain talent and encourage employees to innovate in its genetically defined disease business because equity performance will be more aligned with that business;

 

   

Transaction Terms

 

   

that the transaction provides Agios with $1.8 billion in cash at closing, $200 million in cash if a regulatory milestone for vorasidenib is achieved, a 5% royalty on U.S. net sales of TIBSOVO® and 15% of royalty on U.S. net sales of vorasidenib, thereby providing Agios with both certainty of value in the form of a significant upfront cash consideration and potential upside in the form of regulatory milestone payments and royalty payments;

 

   

the view of the Agios Board that the total consideration, on a risk-adjusted net present value basis, to be paid to Agios in connection with the transaction represented a fair and attractive valuation of the oncology business, including in the context of the recent historical and projected future performance of the oncology business;

 

   

the written opinion of Goldman Sachs, dated as of December 20, 2020, to the Agios Board that as of such date and subject to the factors and assumptions set forth therein, the aggregate consideration to be paid to Agios pursuant to the purchase agreement was fair, from a financial

 

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point of view, to Agios as more fully described under “The Transaction—Opinion of Agios’ Financial Advisors” (the full text of the written opinion of Goldman Sachs, dated December 20, 2020, is attached as Annex B to this proxy statement and is incorporated by reference herein in its entirety);

 

   

the written opinion of Morgan Stanley, dated as of December 20, 2020, to the Agios Board that, as of the date of such opinion and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in Morgan Stanley’s written opinion, the aggregate consideration to be received by Agios pursuant to the purchase agreement was fair, from a financial point of view, to Agios, as more fully described under “The Transaction—Opinion of Agios’ Financial Advisors” (the full text of the written opinion of Morgan Stanley, dated December 20, 2020, is attached as Annex C to this proxy statement and is incorporated by reference herein in its entirety);

 

   

that the purchase agreement requires that Servier use certain efforts to achieve the regulatory milestone for vorasidenib and commercial sales of vorasidenib and TIBSOVO®, and the view of the Agios Board that Servier would also have an incentive to achieve this milestone and these commercial sales;

 

   

the view of the Agios Board that the transaction is likely to be consummated because, among other things, the purchase agreement requires Servier to take any and all actions to obtain regulatory approvals for the transaction and the transaction is not subject to a financing condition;

 

   

that the transaction requires the approval of the Agios stockholders, and the Agios stockholders are free to approve or reject the transaction;

 

   

that the purchase agreement permits Agios, subject to certain conditions, to respond to and negotiate an unsolicited acquisition proposal for the oncology business or the entire company prior to the time the Agios stockholders approve the transaction;

 

   

that the purchase agreement permits the Agios Board, subject to certain conditions and in certain circumstances subject to payment of a $45 million termination fee, to (a) make an adverse recommendation change in response to a superior proposal or an intervening event and/or (b) terminate the purchase agreement in order to accept a superior proposal, as more fully described under “The Purchase Agreement—Termination of the Purchase Agreement”;

 

   

the view of the Agios Board that the $45 million termination fee would not preclude a third party from making an acquisition proposal for or pursuing a transaction with Agios or its oncology business;

 

   

the representations and warranties in the agreement terminate at closing, with recourse by Servier for breaches of representations generally limited to a representation and warranty insurance policy provided by third-party insurers;

 

   

Other Factors

 

   

that Agios conducted a thorough and diligent review of its strategic alternatives with significant outreach to potentially interested parties, including communicating with 18 potentially interested parties regarding the potential sale of the oncology business, and the transaction provides the most attractive terms of the submitted indications of interest;

 

   

that there were extensive negotiations between Agios and Servier regarding the terms of the transaction, as described under “Background of the Transaction,” and the view of the Agios Board that the transaction presented the best terms available for the oncology business; and

 

   

trends and competitive developments in the biopharmaceutical industry.

 

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In evaluating the purchase agreement and the transaction, the Agios Board consulted with Agios management and its financial and legal advisors, and also considered a variety of risks and other potentially negative factors relating to the purchase agreement and the transaction, including the following:

 

   

that a sale of the oncology business would reduce the diversification of risk that comes with having multiple business lines, and would concentrate short-term and medium-term risk on the prospects of its genetically defined disease portfolio, including mitapivat;

 

   

the risk of adverse clinical, regulatory or other events with respect to the pipeline products in Agios’ remaining portfolio after the sale of its oncology business;

 

   

that the transaction involves the sale of TIBSOVO®, Agios’ only revenue-producing product as of the date of the merger agreement;

 

   

that a portion of the potential total consideration under the terms of the purchase agreement is subject to achievement of certain regulatory milestones that may not be achieved;

 

   

that a portion of the potential total consideration under the terms of the purchase agreement is subject to U.S. net sales by Servier of TIBSOVO® and vorasidenib during their respective exclusivity period, and that such U.S. net sales may be less than expected;

 

   

that the purchase agreement prohibits Agios from soliciting alternative acquisition proposals, and restricts its ability to encourage or facilitate other alternative acquisition proposals, unless certain conditions are satisfied;

 

   

that the purchase agreement requires Agios to pay a termination fee of $45 million under certain circumstances, including the potential impact of such termination fee on the willingness of other potential acquirers to propose alternative transactions, although the Agios Board believed that the termination fee was reasonable and customary for a transaction of this size and would not preclude a potential acquirer from submitting a proposal to acquire the oncology business or the Company;

 

   

that the purchase agreement imposes restrictions on Agios’ operations between the date of the purchase agreement and the completion of the transaction, which could delay or prevent Agios from undertaking business opportunities that may arise, or taking other actions with respect to its operations that the Agios Board or management might believe were appropriate or desirable;

 

   

the risks relating to the ability of Agios to retain or recruit key management personnel or other key employees during the pendency of the transaction;

 

   

that Servier’s obligation to consummate the transaction is subject to conditions, and the possibility that such conditions may not be satisfied, including as a result of events outside of Agios’ control, and the fact that, if the transaction is not consummated:

 

   

Agios’ directors, officers and other employees will have potentially expended significant time and effort preparing for the transaction instead of operating Agios’ businesses during the pendency of the transaction;

 

   

Agios will have incurred significant transaction costs attempting to consummate the transaction;

 

   

Agios could experience a potentially significant loss of employees, customers, distributors, collaboration partners and other business partners; and

 

   

the trading price of Agios common stock could be materially and adversely affected;

 

   

the risk of litigation, injunctions or other legal proceedings related to the transactions contemplated by the merger agreement;

 

   

that the transaction will generally be taxable to Agios for U.S. federal income tax purposes; and

 

   

other factors described in the section of this proxy statement entitled “Risk Factors” and the matters described under “Cautionary Note Regarding Forward-Looking Statements.”

 

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The Agios Board determined that overall these potential risks and uncertainties are outweighed by the benefits that the Agios Board expects to achieve for Agios as a result of the transaction.

The foregoing description of the factors considered by the Agios Board is not intended to be exhaustive, but rather includes material factors considered by the Agios Board. The Agios Board also considered other factors in in reaching its unanimous determination that the terms of the transactions contemplated by the purchase agreement were expedient and in the best interests of Agios, and resolving to recommend that stockholders vote to approve the transaction. In reaching its decision and recommendation, the Agios Board did not quantify or assign any relative weights to the factors considered and individual directors may have given different weights to different factors.

The foregoing discussion of the information and factors considered by the Agios Board is forward-looking in nature. This information should be read in light of the factors set forth in the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

THE AGIOS BOARD UNANIMOUSLY RECOMMENDS THAT AGIOS STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY THE PURCHASE AGREEMENT.

Opinion of Agios’ Financial Advisors

Opinion of Goldman Sachs

At a meeting of the Agios Board held on December 20, 2020, Goldman Sachs rendered to the Agios Board its oral opinion, subsequently confirmed in its written opinion dated December 20, 2020, that, as of the date of the written opinion and based upon and subject to the factors and assumptions set forth therein, the aggregate of (i) $1,800,000,000 in cash upon the completion of the transaction, subject to the adjustments set forth in the purchase agreement, (ii) $200,000,000 in cash if the regulatory approval milestone (as defined in the purchase agreement) with respect to Vorasidenib fully occurs on or before January 1, 2027 and (iii) an earn-out payment (as defined in the purchase agreement) equal to 5% of the net sales (as defined in the purchase agreement) of TIBSOVO® (ivosidenib) during each net sales measurement period (as defined in the purchase agreement) and 15% of the net sales (as defined in the purchase agreement) of Vorasidenib during each net sales measurement period (as defined in the purchase agreement) (collectively, the “aggregate consideration”) to be paid to Agios as consideration for the oncology business pursuant to the purchase agreement was fair from a financial point of view to Agios.

The full text of the written opinion of Goldman Sachs, dated December 20, 2020, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Agios Board in connection with its consideration of the transaction. The Goldman Sachs opinion does not constitute a recommendation as to how any holder of shares of Agios common stock should vote with respect to the transaction or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

   

the purchase agreement;

 

   

the annual reports to stockholders and Annual Reports on Form 10-K of Agios for the five years ended December 31, 2019;

 

   

certain interim reports to stockholders and Quarterly Reports on Form 10-Q;

 

   

certain other communications from Agios to its stockholders;

 

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certain publicly available research analyst reports for Agios;

 

   

unaudited financial statements for the oncology business for the year ended December 31, 2019 and unaudited financial statements for the oncology business for the nine-month period ended September 30, 2020; and

 

   

certain financial projections prepared by the management of Agios for the oncology business, which are referred to in this section as the “oncology business projections”, as further described in the section of this proxy statement captioned “Certain Unaudited Prospective Financial Information”; and certain estimates of the amount of the adjustments, as prepared by the management of Agios and approved for Goldman Sachs’ use by Agios (the “adjustment estimates”).

Goldman Sachs also held discussions with members of senior management of Agios regarding their assessment of the strategic rationale for, and the potential benefits of, the transaction and the past and current business operations, financial condition and future prospects of the oncology business; reviewed the reported price and trading activity for shares of Agios common stock; reviewed the financial terms of certain recent business combinations in the biopharmaceutical industry; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering its opinion, Goldman Sachs, with the consent of Agios management, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the consent of Agios management that the oncology business projections and the adjustment estimates were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Agios. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Agios or any of its subsidiaries or the oncology business and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the completion of the transaction will be obtained without any adverse effect on Agios or the oncology business or on the expected benefits of the transaction in any way meaningful to its analysis. Goldman Sachs also assumed that the transaction will be consummated on the terms set forth in the purchase agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of Agios to engage in the transaction or the relative merits of the transaction as compared to any strategic alternatives that may be available to Agios, nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view, as of the date of the opinion, of the aggregate consideration to be paid to Agios for the oncology business pursuant to the purchase agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the purchase agreement or the transaction or any term or aspect of any other agreement or instrument contemplated by the purchase agreement or entered into or amended in connection with the transaction, including any ongoing obligations of Agios, any allocation of the aggregate consideration, including among the seller entities, the fairness of the transaction to, or any consideration received in connection therewith, by the holders of any class of securities, creditors or other constituencies of Agios, nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Agios, or class of such persons, in connection with the transaction, whether relative to the aggregate consideration to be paid to Agios for the oncology business pursuant to the purchase agreement or otherwise. Goldman Sachs did not express any opinion as to the prices at which shares of Agios common stock will trade at any time, as to the potential effects of volatility in the credit, financial and stock markets on Agios, the oncology business, Servier, Servier Parent or the transaction, or as to the impact of the transaction on the solvency or viability of Agios, the oncology business, Servier, Servier Parent or the ability of Agios, the oncology business, Servier, Servier Parent to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other

 

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conditions as in effect on, and the information made available to it as of, the date of its written opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its written opinion. Goldman Sachs’ advisory services and its opinion were provided for the information and assistance of the Agios Board in connection with its consideration of the transaction and such opinion does not constitute a recommendation as to how any holder of shares of Agios common stock should vote with respect to such transaction or any other matter. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

Summary of Financial Analyses

The following is a summary of the material financial analyses presented by Goldman Sachs to the Agios Board in connection with rendering to the Agios Board the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before December 18, 2020, the last trading day before the public announcement of the transaction (“last trading date”) and is not necessarily indicative of current market conditions.

Illustrative Sum-of-the-Parts Discounted Cash Flow Analysis

Using the oncology business projections, Goldman Sachs performed an illustrative sum-of-the-parts discounted cash flow (“DCF”) analysis to derive a range of stand-alone illustrative present values for the oncology business. In connection with this analysis, and as set forth below, Goldman Sachs performed separate DCF analyses with respect to each of the following product candidates of the oncology business, as well as the oncology business’s discovery platform and investigational new drugs (“new INDs”), the oncology business’s corporate costs, a tax true-up, the impact of future equity issuances and the benefits of the oncology business’ estimated future net operating losses (“NOLs”):

 

   

TIBSOVO;

 

   

Vorasidenib;

 

   

AG-270; and

 

   

Milestones related to TIBSOVO from a partnership with CStone Pharmaceuticals Co., Ltd. and a $20 million milestone from an illustrative partner of AG-270 per the management of Agios.

Relying on the oncology business projections and using a mid-year convention and discount rates ranging from 9.0% to 11.0%, reflecting estimates of the oncology business’ weighted average cost of capital, Goldman Sachs discounted to present value as of December 31, 2020, (i) the risk-adjusted estimates of the unlevered free cash flows to be generated from each product candidate described above, in each case for the period from December 31, 2020 to December 31, 2040, (ii) the risk-adjusted estimates of the free cash flows to be generated from the oncology business’s milestones related to TIBSOVO and AG-270 for the period from December 31, 2020 to December 31, 2040, (iii) the risk-adjusted estimates of the free cash flows to be generated from oncology business’s discovery platform and new INDs for the period from December 31, 2020 to December 31, 2042, (iv) the corporate costs of the oncology business, which had not been allocated to specific product candidates or the oncology business’s discovery platform, including capital expenditures and related depreciation and amortization, (v) a tax true-up to adjust for estimated taxes payable for the oncology business as a whole against taxes payable for each individual product candidate, the TIBSOVO and AG-270 milestones and the oncology business’s discovery platform and new INDs, (vi) the benefits to be derived by the oncology business from its utilization of the estimated future NOLs generated by the oncology business and (vii) the impact of two potential future equity issuances by Agios of $350 million in 2021 and $300 million in 2022, including cash raised and the resulting dilution, to derive a range of illustrative present values for each product candidate, for the TIBSOVO

 

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and AG-270 milestones, the oncology business’s discovery platform and new INDs, a tax true up, the oncology business’s future NOLs, the oncology business’ corporate costs and the impact of future equity issuances in 2021 and 2022.

Goldman Sachs calculated a terminal value for the oncology business’ discovery platform and new INDs by applying a perpetuity growth rate of 3% to the risk-adjusted estimate of the terminal year unlevered free cash flow to be generated from the oncology business’s discovery platform and new INDs as reflected in the oncology business projections. Goldman Sachs also calculated a terminal value for the product candidates and other value drivers by applying a perpetuity growth rate of negative 10% to the risk-adjusted estimate of the terminal year unlevered free cash flow to be generated from the oncology business’ product candidates and other value drivers as reflected in the oncology business projections. Goldman Sachs derived the discount rates referenced above by application of the capital asset pricing model (“CAPM”), which requires certain business-specific inputs, including the business’s target capital structure, weightings, future applicable marginal cash, tax rate and a beta for the business, as well as certain financial metrics for the United States financial markets generally. The perpetuity growth rates applied to the oncology business’s discovery platform and new INDs, the product candidates and the other value drivers were estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the oncology business projections and market expectations regarding long term real growth of gross domestic product and inflation. Goldman Sachs then derived a range of illustrative enterprise values for the oncology business by adding (a) the ranges of illustrative present values it derived as described above, and (b) the net cash of $0 for the oncology business as provided by the management of Agios, as reflected in the oncology business, to derive a range of illustrative enterprise values for the oncology business of $1.161 billion to $1.836 billion. Goldman Sachs noted that the net present value of the aggregate consideration to be paid to Agios for the oncology business in the transaction was approximately $2.110 billion.

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to the oncology business, Agios or Servier or the contemplated transactions.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the Agios Board as to the fairness from a financial point of view of the aggregate consideration to be paid to Agios for the oncology business pursuant to the transaction. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of the oncology business, Agios, Servier, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The aggregate consideration was determined through arm’s-length negotiations between Agios and Servier and was approved by the Agios Board. Goldman Sachs provided advice to Agios during these negotiations. Goldman Sachs did not, however, recommend any specific consideration to Agios or the Agios Board or that any specific consideration constituted the only appropriate consideration for the transaction.

As described above, Goldman Sachs’ opinion to the Agios Board was one of many factors taken into consideration by the Agios Board in making its determination to approve the transaction. The foregoing summary

 

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does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Agios, Servier, Servier Parent and any of their respective affiliates and third parties, or any currency or commodity that may be involved in the transaction contemplated by the purchase agreement. Goldman Sachs acted as financial advisor to Agios in connection with, and participated in certain of the negotiations leading to, the transaction contemplated by the purchase agreement. Goldman Sachs has provided certain financial advisory and/or underwriting services to Agios and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted as joint bookrunner with respect to the public offering by Agios of 9,487,500 shares of Agios common stock in November 2019. During the two year period ended December 20, 2020, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Agios and/or its affiliates of approximately $7.0 million. During the two year period ended December 20, 2020, the Investment Banking Division of Goldman Sachs has not been engaged by Servier or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to Agios, Servier, Servier Parent and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation.

The Agios Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the transaction. Pursuant to a letter agreement dated December 19, 2020, Agios engaged Goldman Sachs to act as its financial advisor in connection with the transaction. The engagement letter between Agios and Goldman Sachs provides for a transaction fee that is estimated, based on the information available as of the date of the announcement of the transaction, at approximately $22.2 million, $2 million of which became payable upon execution of the purchase agreement, and the remainder of which is contingent upon completion of the transaction. In addition, Agios has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Opinion of Morgan Stanley

The Agios Board retained Morgan Stanley to provide it with financial advisory services and a financial opinion in connection with the transaction. On December 20, 2020, Morgan Stanley rendered its oral opinion, which was subsequently confirmed in writing, to the Agios Board to the effect that, as of that date, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in Morgan Stanley’s written opinion, the aggregate of (i) $1,800,000,000 in cash upon the completion of the transaction, subject to the adjustments set forth in the purchase agreement, (ii) $200,000,000 in cash if the regulatory approval milestone (as defined in the purchase agreement) with respect to Vorasidenib fully occurs on or before January 1, 2027, and (iii) an earn-out payment (as defined in the purchase agreement) equal to 5% of the net sales (as defined in the purchase agreement) of TIBSOVO® (ivosidenib) during each net sales measurement period (as defined in the purchase agreement) and 15% of the net sales (as defined in the purchase agreement) of Vorasidenib during each net sales measurement period (as defined in the purchase agreement) to be received by Agios pursuant to the purchase agreement was fair, from a financial point of view, to Agios.

 

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The full text of the written opinion of Morgan Stanley, dated as of December 20, 2020, is attached as Annex C and is incorporated by reference into this proxy statement in its entirety. You are encouraged to read the opinion in its entirety for a discussion of the various assumptions made, procedures followed, matters considered and qualifications and limitations upon the scope of the review undertaken by Morgan Stanley in rendering its opinion. Morgan Stanley’s opinion was directed to the Agios Board, in its capacity as such, and addressed only the fairness from a financial point of view of the aggregate consideration to be received by Agios pursuant to the purchase agreement, as of the date of such written opinion. It did not address any other aspects or implications of the transaction, and was not intended to and did not express any opinion or recommendation as to how the stockholders of Agios should vote at the special meeting to be held in connection with the transaction. The summary of the opinion of Morgan Stanley set forth below is qualified in its entirety by reference to the full text of the opinion.

In connection with rendering its opinion, Morgan Stanley, among other things:

 

   

reviewed certain publicly available financial statements and other business and financial information of Agios;

 

   

reviewed certain internal financial statements and other financial and operating data concerning the oncology business;

 

   

reviewed certain financial projections prepared by the management of Agios for the oncology business, which are referred to in this section as the “oncology business projections”, as further described in the section of this proxy statement captioned “Certain Unaudited Prospective Financial Information”;

 

   

discussed the past and current operations and financial condition and the prospects of the oncology business with senior executives of Agios;

 

   

compared the financial performance of the oncology business as set forth in the oncology business projections with that of certain other publicly-traded companies comparable with the oncology business;

 

   

reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;

 

   

participated in certain discussions and negotiations among representatives of Agios and Servier and their financial advisors;

 

   

reviewed the draft, dated December 20, 2020, of the purchase agreement; and

 

   

performed such other analyses, reviewed such other information and considered such other factors as Morgan Stanley deemed appropriate.

Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to Morgan Stanley by Agios and formed a substantial basis for Morgan Stanley’s opinion. With respect to the oncology business projections, Morgan Stanley assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Agios of the future financial performance of the oncology business. Morgan Stanley assumed no responsibility for and expressed no view as to any such projections or the assumptions on which they were based. Although Morgan Stanley included the earn-out payment and the regulatory approval milestone payment in certain of its analyses, in each instance based on estimates and assumptions that the management of the Company directed it to use, Morgan Stanley expressed no opinion as to the likelihood that the revenue or other milestones upon which the earn-out payment and the regulatory approval milestone payment are conditioned will be achieved or whether the earn-out payment and the regulatory approval milestone payment will be paid. In addition, Morgan Stanley assumed that the transaction will be consummated in accordance with the terms set forth in the purchase agreement without any waiver, amendment or delay of any terms or conditions, including, among other things, that the definitive purchase

 

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agreement would not differ in any material respect from the draft thereof furnished to Morgan Stanley. Morgan Stanley did not express any view on, and Morgan Stanley’s opinion did not address, any other term or aspect of the purchase agreement or the transaction contemplated thereby or any term or aspect of any other agreement or instrument contemplated by the purchase agreement or entered into or amended in connection therewith. Morgan Stanley assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the transaction, no delays, limitations, conditions or restrictions would be imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the transaction. Morgan Stanley is not a legal, tax, or regulatory advisor. Morgan Stanley is a financial advisor only and relied upon, without independent verification, the assessment of Agios and its legal, tax and regulatory advisors with respect to legal, tax, and regulatory matters. Morgan Stanley expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of Agios’ officers, directors or employees, or any class of such persons, relative to the aggregate consideration to be received by Agios in the transaction. Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities of Agios or the oncology business, nor was Morgan Stanley furnished with any such valuations or appraisals. Morgan Stanley’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Morgan Stanley as of, December 20, 2020. Events occurring after December 20, 2020 may affect Morgan Stanley’s opinion and the assumptions used in preparing it, and Morgan Stanley did not assume any obligation to update, revise or reaffirm its opinion.

Summary of Financial Analyses

The following is a summary of the material financial analyses performed by Morgan Stanley in connection with its preparation of its oral opinion as of December 20, 2020 and its written opinion letter dated December 20, 2020 that were rendered and delivered, respectively, to the Agios Board. The following summary is not a complete description of Morgan Stanley’s opinion or the financial analyses performed and factors considered by Morgan Stanley in connection with its opinion, nor does the order of analyses described represent the relative importance or weight given to those analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before December 18, 2020, the last trading day prior to the date of the meeting of the Agios Board at which Morgan Stanley rendered its oral opinion. Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. The analyses listed in the tables and described below must be considered as a whole; considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Morgan Stanley’s opinion. Furthermore, mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using the data referred to below.

In performing the financial analyses summarized below and arriving at its opinion, Morgan Stanley used and relied upon the oncology business projections as provided by the management of Agios, as more fully described in “Certain Unaudited Prospective Financial Information” beginning on page 42, which was approved by the management of Agios for Morgan Stanley’s use in connection with its financial analyses.

Sum-of-the-Parts Discounted Cash Flow Analysis

Morgan Stanley performed a sum-of-the-parts discounted cash flow analysis, which is designed to imply a value of a company in its entirety based on the separate valuation of the company’s business segments. A discounted cash flow analysis is a traditional valuation methodology that is used to derive the implied value of an asset by calculating the present value of the estimated unlevered free cash flows and terminal value of such asset. “Unlevered free cash flows” refers to a calculation of the future cash flows generated by the asset without including in such calculation any debt servicing costs. “Present value” refers to the current value of the future cash flows generated by the asset, and is obtained by discounting those cash flows back to the present using a discount rate that takes into account macro-economic assumptions and estimates of risk, the opportunity cost of

 

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capital, expected returns and other appropriate factors. “Terminal value” refers to the present value of all future cash flows generated by the asset for periods beyond the projections period.

Morgan Stanley used the oncology business projections for purposes of its discounted cash flow analysis, as more fully described below. Relying on the oncology business projections, Morgan Stanley first calculated (i) the risk-adjusted estimated unlevered free cash flows to be generated by the oncology business’ product candidates TIBSOVO, Vorasidenib and AG-270, for the period from December 31, 2020 through December 31, 2040, (ii) the risk-adjusted free cash flows to be generated by milestones related to TIBSOVO from a partnership with CStone Pharmaceuticals Co., Ltd and a $20 million milestone from an illustrative partner of AG-270 for the period from December 31, 2020 to December 31, 2040, and (iii) the risk-adjusted free cash flows to be generated by the oncology business’s discovery platform and investigational new drugs (“new INDs”) for the period from December 31, 2020 through December 31, 2042. The risk-adjusted estimated unlevered free cash flows were calculated as revenue, less cost of goods sold, less operating expenses (including stock based compensation expenses), less taxes (without taking into account the benefits estimated by the management of Agios to be derived by the oncology business from its utilization of the oncology business’ estimated net operating loss carryforwards as reflected in the oncology business projections), less capital expenditures, plus depreciation and amortization, less changes in net working capital, to be generated from each asset above, risk-adjusted to reflect the management of Agios’ estimate of the probability of success for each product candidate, in each case, as set forth in the oncology business projections. Morgan Stanley then derived illustrative net present values as of December 31, 2020 using the mid-year discount convention and discount rates ranging between 9.2% and 11.2% of (i) the unlevered free cash flows of the oncology business’s product candidates, milestones and discovery platform and new INDs, as described above, (ii) the corporate costs and expenses as set forth in the oncology business projections that had not been allocated to specific product candidates or the oncology business’s discovery platform, including capital expenditures and related depreciation and amortization, (iii) the impact of a tax true-up to adjust for estimated taxes payable for the oncology business as a whole against taxes payable for each of the oncology business’s product candidates, TIBSOVO and AG-270 milestones, and the oncology business’s discovery platform and new INDs, (iv) the benefits of the utilization of estimated future net operating losses estimated by the management of Agios to be derived by the oncology business as reflected in the oncology business projections, and (v) the impact of two potential future equity issuances by the oncology business of $350 million in 2021 and $300 million in 2022, including cash raised and the resulting dilution.

The range of discount rates was selected, upon the application of Morgan Stanley’s professional judgment and experience, to reflect the oncology business’s estimated weighted average cost of capital and cost of equity, which estimates were derived by application of the capital asset pricing model, which takes into account certain oncology business-specific metrics, including the oncology business’s capital structure, an assumed tax rate and predicted beta (based on a select set of oncology business peers), as well as certain financial metrics for the financial markets generally. Morgan Stanley also calculated a terminal value for the oncology business’ product candidates and other assets by applying a perpetuity growth rate of negative 10% to the risk-adjusted estimated unlevered free cash flows of the oncology business’ product candidates and other assets. Morgan Stanley further calculated a terminal value for the oncology business’ discovery platform and new INDs by applying a perpetuity growth rate of 3% to the risk-adjusted estimated free cash flows to be generated from the oncology business’ discovery platform and new INDs. The perpetuity growth rate applied in each case was selected by the management of Agios. Morgan Stanley calculated a range of enterprise values for the oncology business by adding together the range of illustrative net present values derived above and the net cash of $0 for the oncology business as reflected in the oncology business projections to calculate a range of implied enterprise values for the oncology business of $1.107 billion to $1.746 billion. Morgan Stanley noted that the net present value of the aggregate consideration to be received by Agios for the oncology business in the transaction was approximately $2.110 billion.

 

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Precedent Transaction Analysis

For reference only, and not as a component of its fairness analysis, Morgan Stanley performed a precedent transactions analysis with respect to the oncology business, which is designed to imply a value of a company based on publicly available financial information of selected transactions.

Morgan Stanley reviewed publicly available statistics for selected transactions in the oncology-focused biopharmaceutical industry with stock, cash or mixed cash and stock consideration announced between 2016 and December 20, 2020 with transaction values between $1 billion and $6 billion. Morgan Stanley selected such transactions because of certain shared characteristics with the transaction based on Morgan Stanley’s professional judgment and experience. For each transaction in the analysis, Morgan Stanley noted the ratio of the transaction value of the target company to each of the target company’s 5-year forward net sales.

The following is the list of such transactions reviewed:

 

Target

  

Acquirer

  

Announcement

  

Transaction

Value/5-Year

Forward Net Sales(1)

Forty Seven, Inc.    Gilead Sciences, Inc.    March 2020    3.9x
ArQule, Inc.    Merck & Co., Inc.    December 2019    10.9x
Synthorx, Inc.    Sanofi SA    December 2019    NM
TESARO, Inc.    GlaxoSmithKline plc    December 2018    3.0x(2)
Endocyte, Inc.    Novartis AG    October 2018    3.0x
ARMO BioSciences, Inc.    Eli Lilly and Company    May 2018    24.4x
Ignyta, Inc.    Roche Holding Ltd.    December 2017    3.5x
Advanced Accelerator Applications S.A.    Novartis AG    October 2017    3.6x
ARIAD Pharmaceuticals, Inc.    Takeda Pharmaceutical Company Ltd.    January 2017    5.5x
Celator Pharmaceuticals, Inc.    Jazz Pharmaceuticals plc    May 2016    4.1x(3)

Median

         3.9x

Mean

         6.9x

Quartile 1

         3.5x

Quartile 3

         5.5x

 

(1)

Reflects risk-adjusted net sales forecasts prepared by the management of target.

(2)

Tesaro net sales estimate based on conservative management case disclosed in filing.

(3)

Celator net sales estimate based on management base case and computed from probability of success implied by stated risk-adjusted and unadjusted cash flows.

Based on its analysis of the relevant metrics for each of the comparable transactions and upon the application of its professional experience and judgment, Morgan Stanley selected a representative range for the ratio of aggregate transaction value to 5-year forward net sales of 3.5x – 5.5x and applied this range to the oncology business’ 2025E net sales, based on the oncology business projections, to derive an implied enterprise value range for the oncology business of $995 million to $1.563 billion.

Morgan Stanley noted that the net present value of the aggregate consideration to be received by Agios for the oncology business in the transaction was approximately $2.110 billion.

No company or transaction used in the precedent transaction analysis is identical to the oncology business or the transaction, or directly comparable in business mix, size or other metrics. Accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning differences between the oncology business, Servier and the transaction and the companies and transactions being compared

 

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and other factors that would affect the value of the companies and transactions to which the oncology business and Servier are being compared. In selecting the precedent transactions, Morgan Stanley made numerous judgments and assumptions with respect to size, business mix, industry performance, general business, regulatory, economic, market and financial conditions and other matters, many of which are beyond the control of the oncology business, Agios or Servier. These include, among other things, the impact of competition on the oncology business, Agios’ or Servier’s business and the industry generally, industry growth and the absence of any adverse material change in the financial condition and prospects of the oncology business, Agios, Servier, the industry or the financial markets in general.

Product-Level Sum-of-the-Parts Analysis Based on Street Estimates

For reference only, and not as a component of its fairness analysis, Morgan Stanley reviewed the discounted cash flow valuations for the oncology business’ product candidates, TIBSOVO and Vorasidenib, based on Wall Street research analyst estimates. Morgan Stanley then derived a reference range of implied enterprise values (excluding corporate overhead and other corporate costs) based on the lowest and the highest Wall Street research analyst estimates for each product candidate to derive an implied enterprise value reference range for the oncology business of $745 million to $2.884 billion. Morgan Stanley noted that the net present value of the aggregate consideration to be received by Agios for the Oncology Business in the transaction is approximately $2.110 billion.

General

In connection with the review of the transaction by the Agios Board, Morgan Stanley performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Morgan Stanley considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Morgan Stanley believes that selecting any portion of its analyses, without considering all analyses as a whole, would create an incomplete view of the process underlying its analyses and opinion. In addition, Morgan Stanley may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Morgan Stanley’s view of the actual value of the oncology business.

In performing its analyses, Morgan Stanley made numerous assumptions with regard to industry performance, general business, regulatory, economic, market and financial conditions and other matters, which are beyond the control of Agios. These include, among other things, the impact of competition on the oncology business and the industry generally, industry growth and the absence of any adverse material change in the financial condition and prospects of the oncology business and the industry and in the financial markets in general. Any estimates contained in Morgan Stanley’s analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.

Morgan Stanley conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the aggregate consideration to be received by Agios pursuant to the purchase agreement and in connection with the delivery of its opinion to the Agios Board.

The aggregate consideration was determined by Agios and Servier through arm’s-length negotiations between Agios and Servier and was approved by the Agios Board. Morgan Stanley provided financial advice to the Agios Board during these negotiations but did not, however, recommend any specific form or amount of consideration to Agios or the Agios Board, nor did Morgan Stanley opine that any specific form or amount of consideration constituted the only appropriate consideration for the transaction. Morgan Stanley’s opinion was not intended to, and does not, constitute advice or a recommendation as to how the stockholders of Agios should vote at the special meeting to be held in connection with the transaction.

 

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Morgan Stanley’s opinion and its presentation to the Agios Board was one of many factors taken into consideration by the Agios Board in deciding to approve the purchase agreement and the transactions contemplated thereby. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the Agios Board with respect to the aggregate consideration or of whether the Agios Board would have been willing to agree to a different aggregate consideration. Morgan Stanley’s opinion was approved by a committee of Morgan Stanley investment banking and other professionals in accordance with Morgan Stanley’s customary practice.

The Agios Board retained Morgan Stanley based upon Morgan Stanley’s qualifications, expertise and reputation, its knowledge of and involvement in recent transactions in the biopharmaceutical industry, and its knowledge and understanding of the business and affairs of the oncology business. Morgan Stanley is a global financial services firm engaged in the securities, investment management and individual wealth management businesses. Its securities business is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives trading and prime brokerage, as well as providing investment banking, financing and financial advisory services. Morgan Stanley, its affiliates, directors and officers may at any time invest on a principal basis or manage funds that invest, hold long or short positions, finance positions, and may trade or otherwise structure and effect transactions, for their own account or the accounts of their customers, in debt or equity securities or loans of Agios, the oncology business, Servier, or any other company, or any currency or commodity, that may be involved in the transaction, or any related derivative instrument.

Under the terms of its engagement letter, Morgan Stanley provided the Agios Board with financial advisory services and a financial opinion, described in this section and attached to this proxy statement as Annex C, in connection with the transaction, and Agios has agreed to pay Morgan Stanley a fee for its services in an amount estimated, as of the date of Morgan Stanley’s written opinion, to be approximately $22.2 million, $2 million of which became payable upon the execution of the purchase agreement and the remainder of which is contingent upon the completion of the transaction. Agios has also agreed to reimburse Morgan Stanley for its reasonable expenses incurred from time to time in connection with its engagement. In addition, Agios has agreed to indemnify Morgan Stanley and its affiliates, its and their respective directors, officers, employees and agents, and each other person, if any, controlling Morgan Stanley or any of its affiliates, against any losses, claims, damages or liabilities, relating to, arising out of or in connection with Morgan Stanley’s engagement, including certain liabilities under the federal securities laws.

In the two years prior to the date of its opinion, Morgan Stanley has not provided financial advisory or financing services to Agios or Servier or their respective affiliates. Morgan Stanley may seek to provide financial advisory and financing services to Agios and Servier and their respective affiliates in the future and would expect to receive fees for the rendering of these services.

Certain Unaudited Prospective Financial Information

Agios does not, as a matter of course, develop or publicly disclose long-term projections as to future performance, revenues, earnings or other results due to, among other reasons, the unpredictability and uncertainty of the underlying assumptions and estimates. However, in connection with its comprehensive strategic review, Agios management provided certain unaudited prospective financial information for the oncology business (the “oncology business projections”) to (1) the Agios Board in connection with its evaluation of the transaction and to representatives of Goldman Sachs and Morgan Stanley and (2) Servier in its connection with its evaluation of the transaction. The oncology business projections reflect a risk-adjusted outlook and were based on certain assumptions about the probability of technical success and regulatory approval, epidemiology, timing of commercial launch, sales ramp, pricing, reimbursement, market size, market share, competition, contractual relationships, market exclusivity, estimated costs and expenses, effective tax rate and utilization of net operating losses, ability to raise future capital, and other relevant factors relating to the oncology business and its product candidates. The Agios Board directed Goldman Sachs and Morgan Stanley to use the oncology business projections in performing their respective financial analyses in connection with their respective opinions as described in the section “—Opinion of Agios’ Financial Advisors”.

 

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The oncology business projections were not prepared with a view toward public disclosure and the summary thereof is included in this proxy statement only because such information was made available as described above. The oncology business projections were not prepared with a view toward compliance with U.S. Generally Accepted Accounting Principles (“GAAP”), the published guidelines of the SEC regarding projections and forward-looking statements or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information. The oncology business projections included in this document has been prepared by, and is the responsibility of, the Company’s management. PricewaterhouseCoopers LLP, our independent registered public accounting firm, has not audited, reviewed, examined, compiled, nor applied agreed-upon procedures with respect to, the accompanying oncology business projections and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report on the financial statements of Agios, incorporated by reference on our Current Report on Form 8-K filed on January 29, 2021, relates to the Company’s previously issued financial statements. It does not extend to the oncology business projections and should not be read to do so. The oncology business projections were prepared solely for internal use of Agios, Goldman Sachs, Morgan Stanley, and Servier and are subjective in many respects.

Although the oncology business projections are presented with numerical specificity, they reflect numerous assumptions and estimates as to future events that our management believed were reasonable at the time the oncology business projections were prepared, taking into account the relevant information available to Agios management at the time. However, this information is not fact and should not be relied upon as being necessarily indicative of actual future results. Important factors that may affect actual results and cause the oncology business projections not to be achieved include general economic conditions, prevailing interest rates, accuracy of certain accounting assumptions, changes in actual or projected cash flows, competitive pressures, changes in tax laws and matters specific to the oncology business. The oncology business projections are forward-looking statements and should be read in conjunction with the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements.” In addition, the oncology business projections do not take into account any circumstances or events occurring after the date that they were prepared. As a result, there can be no assurance that the oncology business projections will be realized, and actual results may be materially better or worse than those contemplated in the oncology business projections. The inclusion of this information should not be regarded as an indication that the Agios Board, Agios, Goldman Sachs, Morgan Stanley, Servier or any other recipient of these oncology business projections considered, or now considers, that actual future results will necessarily reflect the oncology business projections. The oncology business projections are not included in this proxy statement in order to induce any Agios stockholder to vote in favor of the transaction proposal or to influence any Agios stockholder to make any investment decision with respect to the transaction.

The oncology business projections should be evaluated, if at all, in conjunction with the financial statements of Agios and the oncology business and other information regarding Agios and the oncology business contained in our public filings with the SEC.

Except to the extent required by applicable federal securities laws, we do not intend, and expressly disclaim any responsibility, to update or otherwise revise the oncology business projections to reflect circumstances existing after the date the oncology business projections were prepared or to reflect the occurrence of future events or changes in general economic or industry conditions, even in the event that any of the assumptions underlying any of the oncology business projections are shown to be in error.

In light of the foregoing factors and the uncertainties inherent in the oncology business projections, Agios stockholders are cautioned not to unduly rely on any of the oncology business projections included in this proxy statement.

Certain of the measures included in the oncology business projections may be considered non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Agios may not be comparable to similarly titled amounts used by other companies.

 

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The following table summarizes the unaudited prospective financial information for the oncology business provided to the Agios Board in connection with its evaluation of the transaction and to representatives of Goldman Sachs and Morgan Stanley for use in connection with their respective financial analyses and their respective written opinions as described in the section “—Opinion of Agios’ Financial Advisors”:

Oncology Business

($ in millions USD)

 

     Fiscal Year  
  

  2021  

   

  2022  

   

  2023  

   

  2024  

   

  2025  

   

  2026  

    

  2027  

    

  2028  

 

Net Sales

   $ 169     $ 176     $ 183     $ 237     $ 284     $    358      $    525      $ 678  

Free Cash Flow

   $ (122   $ (132   $ (127   $ (97   $ (66   $ 33      $ 181      $ 304  

 

     Fiscal Year  
  

  2029  

    

  2030  

    

  2031  

    

  2032  

    

  2033  

    

  2034  

    

  2035  

    

  2036  

 

Net Sales

   $ 786      $ 867      $ 934      $ 991      $ 933      $    869      $    901      $ 965  

Free Cash Flow

   $ 324      $ 356      $ 393      $ 420      $ 392      $ 342      $ 354      $ 400  

 

     Fiscal Year  
  

  2037  

    

  2038  

    

  2039  

    

  2040  

 

Net Sales

   $ 968      $ 1,000      $ 1,069      $ 704  

Free Cash Flow

   $ 401      $ 410      $ 445      $ 215  

“Net Sales” represents the sum of (i) estimated sales of TIBSOVO®, vorasidenib, AG-270 and other products that are currently or will be investigational new drugs of the oncology business, each as adjusted for, among other things, chargebacks, rebates, distributor fees, GPO administrative fees, prompt pay discounts, patient assistance programs and returns, plus (ii) estimated milestones payable pursuant to contracts of the oncology business existing as of the date of the purchase agreement, and, in the cases of foregoing clauses (i) and (ii), as further adjusted by Agios management to reflect, among other things, the risk of adverse developments with respect to the Company’s clinical and commercial advancement of its products and product candidates, competition, and changes in law or regulation.

“Free Cash Flow” represents Net Sales of the oncology business as adjusted for, among other things, (i) costs of goods sold, research and development expenses, sales, general and administrative expenses, taxes (as adjusted for net operating losses), changes in net working capital, capital expenditures and depreciation and amortization with respect to new investigational new drugs and (ii) the risk of adverse developments with respect to the Company’s clinical and commercial advancement of its products and product candidates, competition, and changes in law or regulation.

The following table summarizes the unaudited prospective financial information for TIBSOVO® provided to Servier in connection with its evaluation of the transaction:

TIBSOVO

($ in millions USD)

 

     Fiscal Year  
     2020      2021  

Net Product Revenue

   $ 116      $ 170  

“Net Product Revenue” represents estimated revenue from the sale of TIBSOVO® as adjusted for, among other things, chargebacks, rebates, distributor fees, GPO administrative fees, prompt pay discounts, patient assistance programs and returns.

 

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Interests of Agios’ Directors and Executive Officers in the Transaction

After the transaction, it is expected that all of the directors and executive officers of Agios will continue to provide services as directors and executive officers, respectively, of Agios. Agios will continue to provide indemnification and insurance coverage to the directors and executive officers of Agios.

None of Agios’ directors or executive officers is a party to, or participates in, any plan, program, or arrangement of Agios that provides such director or executive officer with any kind of compensation that is enhanced by or otherwise triggered by the completion of the transaction.

Regulatory Clearances and Approvals Required for the Transaction

HSR Act. The transaction is subject to the requirements of the HSR Act, which prohibits Agios and Servier from completing the transaction until required information and materials are furnished to the DOJ and the FTC and the HSR Act waiting period under the HSR Act is terminated or expires. Servier and Agios submitted the requisite notification and report forms under the HSR Act on January 19 and 20, 2021, respectively.

Antitrust Laws of Germany. The transaction is subject to the approval of appropriate regulators in Germany under the antitrust and competition laws of Germany. The requisite report forms were submitted under such antitrust and competition laws on January 26, 2021.

In addition, antitrust, competition and investment authorities, including authorities outside of the United States and Germany, may take action under the laws of their jurisdictions, which could include seeking to enjoin the completion of the transaction. For more information about regulatory approvals relating to the transaction, see the section entitled “The Purchase Agreement—Conditions to the Completion of the Transaction.”

There can be no assurance that all of the regulatory approvals that might be required to consummate the transaction will be sought or obtained and, if obtained, there can be no assurance as to the timing of any such approvals, the parties’ ability to obtain the approvals on satisfactory terms, or that such regulatory bodies or private parties will not seek to take legal action to enjoin the completion of the transaction.

Accounting Treatment

Under generally accepted accounting principles, upon completion of the transaction, we will remove the net assets and liabilities related to the oncology business from our consolidated balance sheet. The results of operations of the oncology business will be treated as discontinued operations.

Appraisal Rights

No appraisal rights or dissenters’ rights are available to our stockholders under Delaware law or our certificate of incorporation or bylaws in connection with the transaction.

Effects on Agios if the Transaction Is Completed and the Nature of Agios’ Business Following the Transaction

If the transaction is completed, we will no longer operate the oncology business and the Agios Board expects to use the proceeds from the completion of the transaction to focus on advancing our genetically defined disease business and returning valuing to Agios stockholders. Notwithstanding this present expectation, the Agios Board may use the proceeds of the transaction for other purposes for the benefit of Agios and its stockholders, and in connection therewith may find it necessary or advisable to use portions of the proceeds from the transaction for different or presently non-contemplated purposes.

The transaction will not alter the rights, privileges or nature of the Agios common stock. A stockholder who owns shares of our common stock immediately prior to the completion of the transaction will continue to hold the same number of shares immediately following the completion of the transaction.

 

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THE PURCHASE AGREEMENT

The following is a summary of the material terms and conditions of the purchase agreement. This summary does not purport to be complete and may not contain all of the information about the purchase agreement that is important to you. This summary is qualified in its entirety by reference to the complete text of the purchase agreement, a copy of which is attached to this proxy statement as Annex A. We encourage you to read the purchase agreement carefully and in its entirety because it is the legal document that governs the transaction.

Purchase and Sale of Assets

Purchased Assets

Upon the terms and subject to the conditions of the purchase agreement, Agios is required to, and will cause its subsidiaries to, sell, assign, transfer and convey to Servier (or its designated entities) all of its and its subsidiaries’ right, title and interest as of the completion of the transaction in the following (the “purchased assets”):

 

   

(i) each contract to Agios or any subsidiary of Agios is a party that is exclusively related to the oncology business (other than specified excluded contracts) or set forth in the Agios disclosure letter to the purchase agreement, and (ii) those portions of any shared contract to which Agios or any subsidiary of Agios is a party that relates to both the oncology business and the genetically defined diseases business to the extent related to the oncology business;

 

   

any and all intellectual property (i) primarily used, or held primarily for use, in the operation of the oncology business or (ii) set forth in the Agios disclosure letter to the purchase agreement, in each case other specified names and marks related to Agios;

 

   

any and all tangible personal property primarily used, or held primarily for use, in the operation of the oncology business;

 

   

any and all accounts receivable and other current assets (including prepaid expenses) of the oncology business as of immediately prior to the completion of the transaction, other than cash and cash equivalents;

 

   

any and all raw materials (including all bulk active pharmaceutical ingredients, constituent substances, materials, biomaterials (including study tissues, plasma, serum, and slides, drug substance and drug product, chemical compounds synthetized in relevant medicinal chemistry series and related records, reagents, cell lines, and standards), stores and supplies, as well as any trade and sample inventory), works-in-process, finished products and other finished goods, supplies, packaging materials, operating supplies and inventory on consignment, in transit or deposited in a warehouse, and other inventories, in each case primarily used, or held primarily for use, by the oncology business;

 

   

any and all permits, including product registrations, primarily related to or used for the oncology business or otherwise primarily related to research or development of certain products related to the oncology business;

 

   

certain data and information related to the purchased assets, including data to the extent related to any product registrations included in the purchased assets and all pre-clinical data and information, completed clinical and nonclinical reports (together with raw data sets associated with such reports) to the extent related to clinical trials of the oncology business of which Agios or its subsidiaries is a sponsor;

 

   

any and all promotional materials primarily related to, primarily used in or primarily held for use in the oncology business, including certain materials set forth in the Agios disclosure letter to the purchase agreement, and any and all medical affairs, education or other similar non-promotional materials primarily related to, primarily used in or primarily held for use in the oncology business;

 

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all data and databases of personal data related to the oncology business, subject to specified exceptions with respect to the conveyance of such purchased assets;

 

   

all rights under all confidentiality agreements with prospective purchasers of the oncology business to the extent related to the oncology business;

 

   

any and all claims, warranty rights, deposit rights, prepaid expense rights, claims for refunds, indemnity rights, defenses, causes of actions (including rights to remedies and damages) and rights of set-off against third parties to the extent relating to or arising out of the purchased assets or the assumed liabilities (defined below) (other than any retained claim and any claims or defenses to the extent relating to any excluded assets (defined below)), including with respect to past, present and future violation, misappropriation or infringement of the intellectual property of the oncology business and rights to damages and other remedies therefor;

 

   

any and all rights under insurance programs and policies maintained by third party providers with respect to clinical trials and related services primarily related to the oncology business;

 

   

any and all documents, instruments, papers, books and records to the extent related to the oncology business and in the possession or control of Agios or its subsidiaries;

 

   

all attorney work-product protections, attorney-client privileges and other legal protections related to the oncology business, the purchased assets or the assumed liabilities;

 

   

all goodwill of the oncology business as a going concern; and

 

   

any other assets exclusively used, or held exclusively for use, in the operation of the oncology business (other than any assets identified as excluded assets).

Excluded Assets

Upon the terms and subject to the conditions of the purchase agreement, the following assets (the “excluded assets”) will not be transferred to Servier and will be retained by Agios following the closing:

 

   

any and all legal and beneficial interest in the share capital or equity interest of any person;

 

   

any and all contracts and portions of contracts, including contracts set forth in the Agios disclosure letter, other than the contracts that are purchased assets;

 

   

any and all owned and leased real property and other interests in real property;

 

   

any and all intellectual property, other than intellectual property of the oncology business that is a purchased asset;

 

   

any and all tangible personal property, other than tangible personal property that is a purchased asset;

 

   

any and all raw materials, work-in-process, finished goods, supplies and other inventories, other than the inventory that is a purchased asset;

 

   

any and all accounts receivable and other current assets (including prepaid expenses), other than the current assets of the oncology business that are purchased assets;

 

   

any and all cash and cash equivalents;

 

   

any and all permits, other than those specifically identified as purchased assets;

 

   

any and all claims and defenses (including any retained claims), other than the claims and defenses specifically identified as purchased assets;

 

   

any and all documents, instruments, papers, books and records not specifically identified as purchased assets;

 

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any and all loans and advances, if any, by Agios or its subsidiaries to any of their affiliates or otherwise to the oncology business;

 

   

any and all refunds or credits of or against certain excluded business taxes;

 

   

any and all tax returns and other books and records related to taxes of, paid or payable by Agios, its subsidiaries or any of their respective affiliates, other than those exclusively related to the purchased assets, the assumed liabilities or the oncology business;

 

   

any and all insurance policies and binders and interests in insurance pools and programs and self-insurance arrangements whether or not related to the oncology business, for all periods before, through and after the completion of the transaction, including any and all refunds and credits due or to become due thereunder and any and all claims, rights to make claims and rights to proceeds on any such insurance policies, binders and interests for all periods before, through and after the completion of the transaction;

 

   

except for the purchased assets, any and all assets, business lines, properties, rights, contracts and claims of Agios or any of its subsidiaries not exclusively used, or held exclusively for use, in the operation of the oncology business (including all assets, business lines, properties, rights, contracts and claims constituting ownership interests in, or that are exclusively used or exclusively held for use in or exclusively related to, the genetically defined disease business);

 

   

all insurance policies of Agios and its affiliates relating to product liability, product defects, product recalls and personal injury as of the date of the purchase agreement, including policies providing excess coverage thereto; and

 

   

certain assets set forth on the Agios disclosure letter.

Assumption and Transfer of Liabilities

Assumed Liabilities

Subject to the terms and subject to the conditions of the purchase agreement, at the completion of the transaction, Servier and its designees are required to assume and agree to pay, satisfy, discharge and perform all of the liabilities of Agios and its subsidiaries related to or arising out of the purchased assets or the oncology business (the “assumed liabilities”), other than the liabilities identified as retained liabilities (defined below), in each case whether accruing or arising prior to, on or after the completion of the transaction, including the following:

 

   

any and all liabilities relating to or arising out of the ownership, use or conduct of the oncology business or the purchased assets, whether accruing or arising before, on or after the closing date, whether known or unknown, fixed or contingent, asserted or unasserted, and not satisfied or extinguished as of the closing date, including any and all liabilities in respect of any proceedings related thereto, other than the retained liabilities;

 

   

any and all liabilities relating to or arising out of the contracts (or portions thereof) that are purchased assets;

 

   

any and all liabilities relating to or arising out of the design, manufacture, testing, marketing, distribution, use or sale of products;

 

   

except for certain liabilities that are expressly retained by Agios, any and all liabilities for product liability, product warranty, product recall, product defect and personal injury from Products or clinical trials related to the oncology business;

 

   

any and all liabilities with respect to any return, repair, warranty or similar liabilities relating to products, projects and services of the oncology business that were designed, planned, managed, constructed, supervised, manufactured or sold on, prior to or after the closing date;

 

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any and all liabilities for (i) taxes for which Servier is responsible under the terms of the purchase agreement and (ii) taxes of, relating to or imposed with respect to the purchased assets, the assumed liabilities or the oncology business, in each case, other than certain excluded taxes of the oncology business;

 

   

any and all liabilities in respect of or relating to transferred employees, other than (i) with respect to workers compensation claims being paid as of the closing date, (ii) claims for unpaid wages by Agios or its affiliates to transferred employees prior to the closing date, and (iii) certain expressly contemplated retained liabilities;

 

   

any and all liabilities for which Servier or its affiliates expressly has responsibility pursuant to the purchase agreement, including with respect to substituted guarantees relating to the oncology business; and

 

   

any and all accounts payable and other current liabilities included in the calculation of the closing working capital for purposes of the working capital adjustment to the purchase price.

Retained Liabilities

Upon the terms and subject to the conditions of the purchase agreement, Agios and its affiliates will retain and be responsible for, and Servier will not assume, the following liabilities of Agios and its subsidiaries (the “retained liabilities”):

 

   

any indebtedness of Agios or its subsidiaries as of the completion of the transaction;

 

   

any liabilities for which Agios or any of its subsidiaries expressly has responsibility pursuant to the purchase agreement;

 

   

all liabilities to the extent arising out of or related to the excluded assets (other than any liabilities for which Servier or any of its affiliates expressly has responsibility pursuant to the terms of the purchase agreement or any other transaction document, and other than liabilities that are separately allocated pursuant to any other agreement or transaction related to such excluded assets between Agios or any of its affiliates, on the one hand, and Servier or any of its affiliates, on the other hand, including any commercial or other agreements unrelated to the purchase agreement, as applicable);

 

   

except as otherwise contemplated by the purchase agreement, all liabilities relating to or arising out of any Agios benefit plan and all liabilities arising under or in connection with an employee benefit plan, program, policy or arrangement sponsored, maintained or contributed to by any ERISA affiliates;

 

   

all liabilities related to (i) any former employees of the oncology business or (ii) any employee of the oncology business (other than those liabilities with respect to transferred employees expressly assumed by Servier);

 

   

all liabilities for certain excluded taxes not assumed by Servier, including with respect to the oncology business to the extent allocable to pre-closing tax periods;

 

   

all liabilities for transfer taxes for which Agios is responsible under the purchase agreement;

 

   

all financial obligations of Agios under the Royalty Purchase Agreement, dated June 11, 2020, by and between Agios and RPI 2019 Intermediate Finance Trust;

 

   

all liabilities for claims made prior to the completion of the transaction for product liability, product warranty, product recall, product defect and personal injury from products or clinical trials related to the oncology business, to the extent constituting covered losses or coverable losses under specified insurance policies retained by Agios (regardless of whether actually paid by the insurer and regardless of whether included in any deductible) and not in excess of the aggregate limit of such policies;

 

   

all criminal liabilities and obligations and all civil penalties of Agios and its affiliates arising from criminal proceedings or breaches by Agios or its affiliates of criminal laws, but solely to the extent

 

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such liabilities and obligations are excluded from coverage under the terms of the representation and warranty insurance policy; and

 

   

fees and expenses of brokers, finders, outside counsel, financial advisors, accountants, consultants and other professional advisors incurred by Agios or any of its affiliates specifically in connection with the sale process and the negotiation, execution and performance of the purchase agreement and the other transaction documents and the transactions contemplated thereby and any other similar processes which occurred with any other person.

Consideration for the Transaction

As consideration for the transaction, Servier has agreed to pay to Agios consideration as described below.

Upfront Cash Consideration

At the completion of the transaction, Servier will pay to Agios 1,800,000,000 in cash, subject to (i) an increase (or decrease) based on the working capital of the oncology business at the completion of the transaction in excess of (or less than) a target working capital amount of $15,800,000 and (ii) a decrease of $3,561,652, which represents a reimbursement to Servier for a portion of the costs and expenses, including premium, payable to obtain the representation and warranty insurance policy.

Vorasidenib Regulatory Milestone Payment

If the completion of the transaction occurs, Servier will pay to Agios $200,000,000 in cash if the regulatory approval milestone (as defined below) occurs on or before January 1, 2027.

The “regulatory approval milestone” is:

 

   

Vorasidenib being granted approval for a new drug application from the FDA for the United States with an approved label that specifically permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an IDH1 or IDH2 mutation; and

 

   

if, and only if, such approval for a new drug application requires the approval of a vorasidenib companion diagnostic test, the vorasidenib companion diagnostic test being granted a premarket approval from the FDA for the United States (provided that any accelerated approval by the FDA of vorasidenib or the vorasidenib companion diagnostic test will not be deemed to satisfy this bullet point or the preceding bullet point).

Following the closing date, Servier will use, and will cause its affiliates to use, specified efforts in the purchase agreement to achieve the regulatory approval milestone.

Royalty Payments

Servier has also agreed to pay to Agios the following royalties:

 

   

a royalty payment of 5% of the net sales (as defined in the purchase agreement) of TIBSOVO® (ivosidenib) in the United States, to be paid from the completion of the transaction through its loss of exclusivity; and

 

   

a royalty payment of 15% of the net sales (as defined in the purchase agreement) of vorasidenib in the United States, to be paid from the first commercial sale of vorasidenib through its loss of exclusivity.

A loss of exclusivity for both TIBSOVO® and vorasidenib will be the later of (i) the last to expire of the U.S. composition of matter patents for such product and (ii) the expiration of any regulatory exclusivity granted by a U.S. governmental entity that confers an exclusive commercialization period for such product.

 

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The purchase agreement defines net sales in respect of TIBSOVO® and vorasidenib to be the gross amount invoiced by the entities selling such products for the sale or other commercial disposition of such products anywhere within the U.S. minus certain permitted deductions, which include, among others:

 

   

price reductions or deductions, retroactive or otherwise, imposed by, negotiated with or otherwise incurred with respect to governmental entities or other payees;

 

   

chargebacks, rebates and other amounts paid or incurred on sale of the applicable product;

 

   

rebates and administrative fees paid or incurred to wholesalers, specialty distributors, distributors, medical healthcare organizations, group purchasing organizations, specialty pharmacies, pharmaceutical benefit managers, Medicare Prescription Drug Plans or trade customers;

 

   

transportation, freight, postage, importation, shipping insurance and other handling expenses; and

 

   

to the extent agreed by the parties in writing acting in good faith, any other specifically identifiable appropriate allowances or deductions that were actually credited and that are similar to the deductions set forth in the purchase agreement.

In addition, subject to certain exceptions, if at any time between the closing date and the end of a loss of exclusivity of TIBSOVO® or vorasidenib, Servier makes third party license payments with respect to such product, Servier may credit the amount equal to 50% of such payments against the amounts payable to Agios under the royalty with respect to such product.

In the event that TIBSOVO® and vorasidenib is sold in the U.S. in the form of a combination product, the net sales of such combination product will include only the net sales attributable to TIBSOVO® and vorasidenib, as applicable, pursuant to a formula set forth in the purchase agreement.

During the applicable royalty period for each such product, Servier will, will cause its affiliates to and will instruct any other entity selling such products to, use specified efforts to commercialize, sell and market TIBSOVO® and vorasidenib in the U.S., except that Servier will not be required to set the prices prior to any loss of exclusivity in a manner that is inconsistent with its long-term business plan and objectives for each such product, and neither Servier, nor any of its affiliates, will be prohibited from researching, developing, or commercializing any product that competes with TIBSOVO® and vorasidenib.

The purchase agreement defines the efforts required to be made by Servier with respect to the commercialization, sale and marketing of TIBSOVO® and vorasidenib to be the efforts of a person to carry out its obligations in a diligent manner using such effort and employing such resources normally used by Servier and its affiliates (taken together) relating to the research, development or commercialization of a product, that is of similar market potential at a similar stage in its development or product life, taking into account all scientific, commercial and other actors that Servier or its affiliates would normally take into account, including issues of market exclusivity (including patent coverage, regulatory and other exclusivity), safety and efficacy, product profile, expected cost and time of development, the competitiveness of alternate products in the marketplace or under development, the launch or sales of a generic or biosimilar product, the regulatory structure involved (including likelihood of regulatory approval), and the profitability of the applicable product (including pricing and reimbursement status achieved), including efforts by Servier and its affiliates to apply for and secure any eligible extensions for the patent rights with respect to TIBSOVO® and vorasidenib, including patent term extensions, but excluding the initiation of any clinical trials for TIBSOVO® or vorasidenib that are not ongoing as of December 20, 2020 or any development activities with respect to TIBSOVO® outside of continuation of clinical trials ongoing as of December 20, 2020.

Closing Date of the Transaction

Unless otherwise mutually agreed in writing by Agios and Servier, the closing of the transaction will occur on the third business day following the satisfaction or waiver of the conditions set forth in the purchase

 

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agreement and described in the section entitled “—Conditions to the Completion of the Transaction” (other than those conditions that by their nature are to be satisfied at the completion of the transaction). Servier and Agios further agree to discuss in good faith completing the transaction on the last business day of the calendar month in which the last of the closing conditions have been satisfied (other than those conditions that by their nature are to be satisfied at the completion of the transaction).

As of the date of this proxy statement, we expect to complete the transaction at the end of the first quarter or in the beginning of the second quarter of 2021. The transaction is subject to certain conditions, and it is possible that factors outside the control of Agios or Servier could result in the transaction being completed at a later time, or not at all. There may be a substantial amount of time between the special meeting and the completion of the transaction. We expect to complete the transaction promptly following the satisfaction, or waiver, of all required conditions set forth in the purchase agreement.

Representations and Warranties

Agios’ representations and warranties to Servier in the purchase agreement relate to, among other things:

 

   

the organization, good standing and qualification of each of Agios and its subsidiaries;

 

   

the corporate power and authority;

 

   

the absence of conflicts;

 

   

approvals and filings in connection with the transaction;

 

   

the absence of proceedings and judgments;

 

   

certain financial information relating to the oncology business;

 

   

the absence of certain changes or events;

 

   

the sufficiency of the purchased assets;

 

   

the intellectual property of the oncology business;

 

   

material contracts;

 

   

product registrations, product regulatory compliance, product liability and recalls;

 

   

compliance with laws and permits;

 

   

environmental matters;

 

   

taxes;

 

   

employee benefit plans;

 

   

labor matters;

 

   

inventories of the oncology business;

 

   

material customers and suppliers;

 

   

notes and accounts receivable;

 

   

data privacy;

 

   

brokers;

 

   

the accuracy of information included in this proxy statement; and

 

   

the absence of representations made by Agios other than those set forth in the purchase agreement.

 

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Servier’s representations and warranties to Agios in the purchase agreement relate to, among other things:

 

   

the organization, valid existence and good standing;

 

   

the corporate power and authority;

 

   

the absence of conflicts;

 

   

approvals and filings in connection with the transaction;

 

   

the financial ability of Servier to perform its obligations under the purchase agreement;

 

   

the absence of proceedings and judgments;

 

   

compliance with laws and permits;

 

   

brokers;

 

   

the solvency of Servier and its affiliates;

 

   

the accuracy of information supplied by Servier and included in this proxy statement; and

 

   

acknowledgment that Agios and its subsidiaries, and any affiliates, representatives and other persons, make no representations or warranties other than those included in the purchase agreement.

None of the representations and warranties in the purchase agreement survive completion of the transaction.

Definition of “Business Material Adverse Effect”

Many of the representations and warranties in the purchase agreement made by Agios to Servier are qualified by a “business material adverse effect” standard for purposes of determining whether the relevant condition to closing, described in greater detail under “—Conditions to the Completion of the Transaction”, is satisfied (that is, they will not be deemed to be untrue or incorrect as of the closing date, as if such representations and warranties were made as of the closing date, unless their failure to be true or correct has had or would reasonably be expected to have a business material adverse effect).

For purposes of the purchase agreement, a “business material adverse effect” means any event, change, occurrence, development or effect that, individually or in the aggregate, (x) has a material adverse effect on the business, assets, financial condition or results of operations of the oncology business or condition of TIBSOVO®’s performance, taken as a whole, and (y) prohibits or prevents Agios or its affiliates from performing their obligations required to be performed by them at or prior to the completion of the transaction under the purchase agreement by the outside date, provided, however, that with respect to clause (x), any of the following will not be deemed, either alone or in combination, to constitute or contribute to, or be taken into account in determining the occurrence or existence of, such a business material adverse effect:

 

   

general changes, developments or conditions in the industries in which the oncology business operates, including competition in any of the geographic areas or product or services areas in which the oncology business operates;

 

   

general political, economic, business, monetary, financial or capital or credit market conditions or trends (including interest rates or the price of commodities or raw materials), including with respect to government spending, budgets and related matters;

 

   

changes in global, national or regional political conditions or trends, including the imposition of trade tariffs or other protective trade practices or any shutdown of any governmental entity, including the United States federal government, or any elections for office in any country or area (including the United States) (or the results thereof);

 

   

any act of civil unrest, riots, civil disobedience, war (whether or not declared) or terrorism (including by cyberattack or otherwise), including an outbreak or escalation of hostilities involving the United

 

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States or any other country or the declaration by the United States or any other country or jurisdiction of a national emergency, authorization to use military force or war (or the escalation or worsening of any such conditions or occurrences);

 

   

earthquakes, hurricanes, tsunamis, typhoons, lightning, hail storms, blizzards, tornadoes, droughts, floods, cyclones, arctic frosts, mudslides and wildfires, pandemics (including SARS-CoV-2 or COVID-19, and any evolutions or mutations thereof or related or associated epidemics, pandemics or disease outbreaks), epidemics or other outbreaks of diseases, weather developments or other natural or manmade disasters, or acts of God (or the escalation or worsening of any such events or occurrences);

 

   

any decline in the stock price of the shares of Agios common stock, or the failure of the financial or operating performance of Agios, its subsidiaries or the oncology business to meet internal, Servier or analyst projections, forecasts or budgets for any period (provided that the underlying facts causing such failure may be taken into account in determining whether a business material adverse effect has occurred);

 

   

any action taken at the written request of Servier;

 

   

the execution, announcement, pendency, performance or consummation of the purchase agreement, the transaction or the other transactions contemplated thereby, or the identity of Servier (including the impact on or any loss of employees of the oncology business, customers, suppliers, partners or collaborators, relationships with governmental entities or other business relationships resulting from any of the foregoing, and including, for the avoidance of doubt, any event, change or effect resulting or arising from or in connection with any actions required to be taken to obtained required regulatory approvals);

 

   

changes in any law (including any proposed law) or GAAP or other applicable accounting principles or standard or any interpretations of any of the foregoing, including any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, safety or similar law, directive, guidelines or recommendations promulgated by any governmental entity, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to COVID-19; and

 

   

any regulatory or clinical events, changes, occurrences, developments or effects relating to any product other than TIBSOVO® (including (A) any suspension, rejection, refusal of, request to refile or any delay in obtaining or making any regulatory application or filing relating to any product, (B) any negative regulatory actions, requests, recommendations or decisions of any governmental entity relating to any product, (C) any clinical studies, tests or results or announcements thereof with respect to any product, and (D) any delay, hold or termination of any clinical trial or any delay, hold or termination of any planned application for marketing approval with respect to any product, in each case other than with respect to TIBSOVO®);

provided that any adverse events, changes, occurrences, developments or effects resulting from the matters described in the first bullet, second bullet, third bullet, fourth bullet, fifth bullet and the ninth bullet above may be taken into account in determining whether there has been a business material adverse effect to the extent that they have a materially disproportionate effect on the oncology business relative to similarly situated businesses in the industries in which the oncology business operates (in which case only such incremental materially disproportionate effect may be taken into account in determining whether there has been a business material adverse effect).

Conduct of the Business Pending the Transaction

Agios has agreed to certain covenants in the purchase agreement restricting the conduct of its business between the date of the purchase agreement and the completion of the transaction (or any earlier termination of the purchase agreement).

 

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As a general matter, between the date of the purchase agreement and the completion of the transaction, except (i) as set forth in the Agios disclosure letter, (ii) as required by applicable law or as otherwise expressly contemplated by the terms of the purchase agreement, (iii) to the extent related to the excluded assets, the retained liabilities or the genetically defined disease business, (iv) as required or reasonably necessary to respond to COVID-19 (including the measured adopted with respect thereto), but excluding voluntary participation in any loans, bail-outs or government funding programs, or (v) as Servier may otherwise consent to (such consent not to be unreasonably withheld, conditioned or delayed), Agios will, and will cause its subsidiaries to, use commercially reasonable efforts to: (A) conduct the oncology business in the ordinary course, (B) preserve intact its current business organization and goodwill associated with the oncology business, (C) use commercially reasonable efforts to preserve the present relationships of Agios and its subsidiaries with employees of the oncology business, consultants, customers, suppliers, other business relations of the oncology business and governmental entities, and (D) dedicate efforts and resources to the development and registration of the products consistent with past practice of the oncology business (including dedicating such efforts with respect to existing submissions to regulatory authorities).

In addition, between the date of the purchase agreement and the completion of the transaction, except (i) as set forth in the Agios disclosure letter, (ii) as required by applicable law or as otherwise expressly contemplated by the terms of the purchase agreement, (iii) to the extent related to the excluded assets, the retained liabilities or the genetically defined disease business, (iv) as required or reasonably necessary to respond to COVID-19 (including the measured adopted with respect thereto), but excluding voluntary participation in any loans, bail-outs or government funding programs, or (v) as Servier may otherwise consent to (such consent not to be unreasonably withheld, conditioned or delayed), Agios will not, and will cause each of its subsidiaries not to, in each case solely with respect to the oncology business, take any of the following specified actions:

 

   

incur, create or assume any lien, other than specified permitted liens, with respect to any material asset of the oncology business, including any material purchased assets, other than (A) those that may be discharged at or prior to the completion of the transaction or (B) in the ordinary course of business;

 

   

acquire any assets or dispose, lease, license or transfer of any assets of the oncology business (other than intellectual property of the oncology business), including the purchased assets (other than intellectual property of the oncology business), in each case, other than (A) purchases and sales of inventory in the ordinary course of business, (B) transactions where the amount of upfront consideration paid or transferred in connection with such transactions would not exceed $2,000,000 in the aggregate or (C) intercompany acquisitions or dispositions;

 

   

acquire any corporation, partnership, limited liability company, other business organization or division thereof to be included in the purchased assets or the oncology business;

 

   

settle, or offer or propose to settle, any proceeding involving the oncology business or the purchased assets, except where such settlement would not impose any material equitable relief or other restriction on the oncology business and would not involve an admission of wrongdoing by Agios or any of its affiliates with respect to the oncology business or the purchased assets;

 

   

(A) amend any material term of, waive any material right under or voluntarily terminate (other than upon expiration in accordance with its terms), any material contract (as defined in the purchase agreement), or (B) enter into any contract that, if in effect on the date hereof, would be a material contract, other than, in each case of clauses (A) and (B), in the ordinary course of business;

 

   

make any material change in any method of financial accounting or financial accounting practice or policy applicable to the oncology business, other than such changes as are required by GAAP or applicable Law or are consistent with GAAP or otherwise apply generally to Agios;

 

   

terminate or fail to renew any existing permit or product registration that is material to the oncology business taken as a whole and included in the purchased assets;

 

   

make any commitments for capital expenditures in excess of $2,000,000 in the aggregate;

 

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make any material change to its policies or practices regarding collection of accounts receivable or payment of accounts payable;

 

   

materially increase the annual rate of total target direct compensation of any employee of the oncology business, except as required by law or the terms of any Agios benefit plan existing prior to the date of the purchase agreement;

 

   

(A) except for one currently open senior director position previously disclosed to Servier, hire any person who would be an employee of the oncology business holding a title of senior director or above, or promote any employee of the oncology business at or to the level of senior director or above, (B) except for cause, dismiss or give notice to terminate any employee of the oncology business (or person who, absent such dismissal or termination, would be an employee of the oncology business) holding a title of senior director or above, or (C) change the roles and responsibilities of any person that would be an employee of the oncology business if such determination were to occur as of signing in a manner that would cause such person to cease to be an employee of the oncology business as of the completion of the transaction;

 

   

sell, assign, transfer, license, terminate, cancel or abandon (without filing a continuation application, divisional application or request for continued examination) any material right in any intellectual property of the oncology business that Agios or any of its subsidiaries controls the prosecution of, or grant a sublicense under any material license agreement, in each case other than the grant of nonexclusive licenses and sublicenses in the ordinary course of business;

 

   

(A) transfer any asset of the oncology business to any affiliate of Agios that is not a subsidiary of Agios or (B) transfer the equity of any subsidiary of Agios that holds assets of the oncology business in a manner that such subsidiary ceases to be a subsidiary of Agios; and

 

   

engaging in research and development activities with respect to specified oncology programs.

Obligation to Call a Stockholders’ Meeting

Agios has agreed in the purchase agreement to take all actions necessary in accordance with applicable law and its certificate of incorporation and bylaws to duly call and give notice of, convene and hold a meeting of its stockholders for the purpose of obtaining stockholder approval of the transaction as soon as reasonably practicable following the resolution of any comments of the SEC or the staff of the SEC with respect to the preliminary proxy statement. Unless Agios shall has made an adverse recommendation change (defined below) in accordance with the purchase agreement, Agios is required to include its recommendation in favor of the transaction in the definitive proxy statement with respect thereto, and will solicit, and use its reasonable best efforts to obtain, the approval of the Agios stockholders for the transaction.

No Solicitation Covenant

Subject to certain exceptions, Agios has agreed that it will not, and will cause its subsidiaries and its and their respective officers and directors, not to, and will use reasonable best efforts to cause each of its and their respective employees and other representatives not to, directly or indirectly:

 

   

solicit, initiate, or knowingly encourage or knowingly facilitate (including by way of furnishing information which has not been previously publicly disseminated) any proposal or offer or any inquiries regarding the making of any proposal or offer, including any proposal or offer to its stockholders, that constitutes, or would reasonably be expected to lead to, an acquisition proposal;

 

   

engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any information in connection with or for the purpose of encouraging or facilitating, any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal (other than, in response to an unsolicited inquiry, to ascertain facts from the

 

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person making such acquisition proposal for the sole purpose of the Agios Board informing itself about such acquisition proposal and the person that made it and to refer the inquiring person to the non-solicitation obligations in the purchase agreement and to limit its conversation or other communication exclusively to such referral and such ascertaining of facts);

 

   

subject to the other provisions of the non-solicitation provisions set forth in the purchase agreement, (i) approve, recommend or enter into, or propose to approve, recommend or enter into, any competing acquisition agreement or (ii) approve, recommend or enter into, or propose to approve, recommend or enter into, any acquisition proposal; or

 

   

agree to do any of the foregoing.

Agios also will, and will cause its subsidiaries and its and their respective officers and directors to, use reasonable best efforts to cause each of its and their respective employees and other representatives to (i) immediately cease and cause to be terminated any discussions or negotiations with any persons (other than Servier and its affiliates and their respective representatives) that may be ongoing with respect to an acquisition proposal and (ii) terminate access to any physical or electronic data rooms relating to any acquisition proposal. As soon as reasonably practicable after the date of the purchase agreement, Agios will request that each counterparty (other than Servier or any of its affiliates) to a confidentiality agreement to which Agios is a party with a potential purchaser of the oncology business (or a material portion thereof) in connection with the sale process and to whom confidential information about the oncology business was furnished within the year prior to the date of the purchase agreement by or on behalf of Agios in connection with any actual or potential proposal by such person to acquire the oncology business (or any material portion thereof), to, and to cause such person’s applicable representatives to, promptly return or destroy all such confidential information to the extent required by such confidentiality agreements.

Notwithstanding anything to the contrary contained in the purchase agreement, if after the date of purchase agreement and prior to obtaining the required approval of Agios stockholders for the transaction, Agios receives a bona fide written acquisition proposal from any person that did not result from a breach of the non-solicitation obligations of the purchase agreement, that the Agios Board determines in good faith, after consultation with its outside financial advisors and outside legal counsel, constitutes or could reasonably be expected to lead to a superior proposal (as defined below), then Agios and its representatives may, in response to such acquisition proposal, and subject to certain conditions:

 

   

furnish, pursuant to an acceptable confidentiality agreement (as defined in the purchase agreement), information to the person that has made such acquisition proposal and its representatives; and

 

   

engage in or otherwise participate in discussions or negotiations with the person making such acquisition proposal and its representatives;

provided, (x) that prior to furnishing or causing to be furnished, any nonpublic information related to Agios, its subsidiaries or the oncology business to such person, Agios will, to the extent it has not already done so, enter into an acceptable confidentiality agreement with such person and (y) promptly (and in any event within 24 hours) following furnishing any such nonpublic information to any third party, furnish or make available such nonpublic information to Servier (to the extent such nonpublic information has not been previously so furnished or made available to Servier or its representatives).

Agios is required to promptly (and in any event within 24 hours after receipt by Agios) notify Servier in writing in the event that Agios or any of its subsidiaries or any of their respective representatives receives an acquisition proposal, including the identity of the person or group of persons making such acquisition proposal and the material terms and conditions of such acquisition proposal (including an unredacted copy of any written materials). Agios is required to keep Servier reasonably informed, on a prompt basis (and in any event within 48 hours after knowledge of the applicable developments by an officer or director of Agios), of any material amendments or material developments with respect to any such acquisition proposal (including any change to the

 

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economic terms thereof or other material changes thereto, and including by providing copies of any revised or new documents evidencing or delivered in connection therewith).

Any violation of the non-solicitation obligations set forth in the purchase agreement by any officer or director or, to the extent acting at the direction of Agios, employee or other representative of Agios or any of its subsidiaries shall be deemed to be a breach of the non-solicitation obligations set forth in the purchase agreement.

For the purposes of the purchase agreement, an “acquisition proposal” is any proposal, indication of interest or offer from any person or group of persons, other than Servier or any of its affiliates, relating to:

 

   

any direct or indirect acquisition or purchase (whether in a single transaction or a series of related transactions) of assets of the oncology business constituting 15% or more of the consolidated assets of the oncology business (excluding cash), or to which 15% or more of the net income, revenues or earnings of the oncology business on a consolidated basis are attributable for the most recent fiscal year in which audited financial statements are then available; and

 

   

any direct or indirect acquisition or issuance (whether in a single transaction or a series of related transactions) of 15% or more of any class of equity or voting securities of Agios (including by tender offer, exchange offer, merger, amalgamation, consolidation, share exchange, business combination, joint venture, reorganization, recapitalization, liquidation, dissolution or similar transaction or series of related transactions); provided that such proposal, indication of interest or offer will not be an acquisition proposal if either (i) the consummation of such acquisition or issuance is conditioned on the required approval by Agios stockholders of the transactions contemplated by the purchase agreement having been obtained or (ii) if such person or group of persons would acquire such equity or voting securities of Agios prior to the time of the Agios stockholders’ meeting, such person or group of persons agrees to vote such equity or voting securities in favor of the transactions contemplated by the purchase agreement.

For purposes of the purchase agreement, a “superior proposal” is any bona fide, written acquisition proposal made after the date of the purchase agreement (with all references to “15%” in the definition of acquisition proposal being references to “75%”), other than the purchase agreement and the transactions contemplated thereby, on terms that the Agios Board determines in good faith, after consultation with Agios’ outside financial advisors and outside legal counsel, taking into account the timing, likelihood of consummation, legal, financial, regulatory and other aspects of such proposal or offer, including the financing terms thereof, and such other factors as the Agios Board considers to be appropriate, to be more favorable to Agios or Agios’ stockholders from a financial point of view than the transactions contemplated by the purchase agreement (taking into account any revisions to the purchase agreement made by Servier pursuant to its matching rights under the purchase agreement).

Changes in Board Recommendation

Adverse Recommendation Change

Subject to specified exceptions (described below) the Agios Board may not (i) (A) change or withdraw (or modify or qualify) or authorize or resolve to or publicly propose or announce its intention to change, withhold or withdraw (or modify or qualify), in each case in any manner adverse to Servier, the Agios board recommendation in favor of the transaction, (B) approve, endorse, adopt, declare advisable, authorize or recommend to the stockholders of Agios, or resolve to or publicly propose or announce its intention to approve, endorse, adopt, declare advisable, authorize or recommend to the stockholders of Agios, any acquisition proposal, or (C) fail to recommend against any acquisition proposal that is a tender or exchange offer subject to Regulation 14D under the Exchange Act in a solicitation/recommendation statement on Schedule 14D-9 within ten business days of the commencement thereof pursuant to Rule 14d-2 of the Exchange Act (any action described in this clause (i), an

 

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“adverse recommendation change”) or (ii) authorize, cause or permit Agios or any of its subsidiaries to enter into any letter of intent, memorandum of understanding, agreement, commitment or agreement in principle with a counterparty making an acquisition proposal (other than an acceptable confidentiality agreement entered into in accordance with the terms of the purchase agreement) (a “competing acquisition agreement”) or resolve, agree or publicly propose to do any of the foregoing.

Superior Proposal

Prior to approval by the Agios stockholders of the transaction, and subject to certain additional conditions set forth in the purchase agreement, the Agios Board may (x) make an adverse recommendation change in response to a superior proposal or (y) cause Agios to terminate the purchase agreement to enter into a definitive agreement relating to such superior proposal, if (and only if) prior to taking such action, the Agios Board has determined in good faith, after consultation with its outside financial advisors and outside legal counsel, that an acquisition proposal made after the date of the purchase agreement in circumstances not involving a material breach of the non-solicitation obligations set forth in the purchase agreement constitutes a superior proposal and that a failure to take action could reasonably be expected to be inconsistent with the fiduciary duties of the Agios Board under applicable law; provided that, prior to taking such actions:

 

   

Agios has given Servier at least four business days’ prior written notice of its intention to take such action specifying, in reasonable detail, the reasons, and providing, to the extent not already provided to Servier, a copy of the superior proposal and a copy of any proposed competing acquisition agreements;

 

   

during such notice period, Agios agrees to negotiate in good faith with Servier, to the extent Servier wishes to negotiate, any revisions to the terms of the transaction proposed by Servier;

 

   

at the end of such notice period, the Agios Board will have considered any revisions to the terms of the purchase agreement proposed in writing by, and that are legally binding on, Servier, and will have determined in good faith, after consultation with its independent financial advisors and outside legal counsel, that the superior proposal would nevertheless continue to constitute a superior proposal and that the failure to make such an adverse recommendation change could reasonably be expected to be inconsistent with the Agios board’s fiduciary duties under applicable law; and

 

   

in the event of any change to any of the financial terms or any other material terms of such superior proposal, Agios will, in each case, have delivered to Servier an additional notice consistent with that described in the first bullet point above and a new notice period of two business days will commence, during which time Agios will be required to comply with the requirements described in this section anew with respect to such additional notice.

Whether or not there is an adverse recommendation change in connection with a superior proposal, unless the purchase agreement has otherwise been terminated in accordance with its terms, the Agios Board will submit the transaction for approval by the Agios stockholders.

Intervening Event

Prior to approval by the Agios stockholders of the transaction, and subject to certain additional conditions set forth in the purchase agreement, the Agios Board may make an adverse recommendation change in response to an intervening event if (and only if), prior to taking such action, the Agios Board has determined in good faith, after consultation with its outside financial advisors and outside legal counsel, that the failure to take such action would reasonably be expected to be inconsistent with the Agios Board’ fiduciary duties under applicable law; provided, that prior to making such an adverse recommendation change:

 

   

Agios has given Servier at least four business days prior written notice of its intention to take such action specifying, in reasonable detail, the reasons therefor, including a description of the intervening event;

 

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during such notice period, Agios agrees to negotiate in good faith with Servier, to the extent Servier wishes to negotiate, any revisions to the terms of the transactions contemplated hereby proposed by Servier in response to the underlying relevant facts and circumstances with respect to the intervening event;

 

   

after the notice period, the Agios Board will have considered any revisions to the terms of the purchase agreement proposed in writing by, and that are legally binding on, Servier, and will have determined in good faith, after consultation with outside legal counsel, that the failure to make an adverse recommendation change would reasonably be expected to be inconsistent with the Agios Board’ fiduciary duties under applicable law; and

 

   

in the event of any material change to the underlying relevant facts and circumstances with respect to the intervening event, Agios will have delivered to Servier an additional notice consistent with that described in the first bullet point above and a new notice period of two business days will commence, during which time Agios will be required to comply with the requirements described in this section anew with respect to such additional notice.

Whether or not there is an adverse recommendation change in connection with an intervening event, unless the purchase agreement has otherwise been terminated in accordance with its terms, the Agios Board will submit the transaction for approval by the Agios stockholders.

Required Efforts to Consummate the Transaction

Agios and Servier will, and will cause their respective affiliates to, use their respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under any applicable law to consummate and make effective in the most expeditious manner possible the transaction and the other transactions contemplated by the purchase agreement, including (i) the preparation and filing of all forms, registrations, filings and notices required to be filed to satisfy the conditions precedent to the purchase agreement and to consummate the transaction and the other transactions contemplated by the purchase agreement as soon as practicable and (ii) the execution and delivery of any additional instruments necessary to consummate the transaction and the other transactions contemplated by the purchase agreement and to fully carry out the purposes of the purchase agreement. Without limiting the foregoing, Servier and Agios will, and will cause their respective affiliates to, take all actions necessary to obtain (and will cooperate with each other in obtaining) any required regulatory approvals in connection with the transaction or the other transactions contemplated by the purchase agreement.

In addition, Servier and Agios will not, and will cause their respective affiliates not to, take any action that would reasonably be expected to impair or materially delay the obtaining of, or result in not obtaining, any regulatory approval necessary to be obtained prior to the completion of the transaction. Without limiting the foregoing, Servier will not, and will cause its affiliates not to, acquire or agree to acquire any business or corporation, partnership or other business organization or division thereof, or merge or consolidate with any other person, if such transaction would reasonably be expected to impair or materially delay the obtaining of, or result in not obtaining, any regulatory approval required to be obtained prior to the completion of the transaction.

Prior to the completion of the transaction, Servier and Agios will each keep the other apprised of the status of matters relating to the completion of the transaction and the other transactions contemplated by the purchase agreement and work cooperatively in connection with obtaining all required regulatory approvals. Each party will:

 

   

promptly consult with the other to provide any necessary information with respect to all filings made by such party or any of its affiliates with any governmental entity or any other information supplied by such party or any of its affiliates to, or correspondence with, a governmental entity in connection with the purchase agreement, the transaction and the other transactions contemplated thereby;

 

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subject to applicable confidentiality obligations, promptly inform the other party, and if in writing, furnish the other party with copies of (or, in the case of oral communications, advise the other party orally of) any communication received by such party or any of its affiliates or representatives from any governmental entity regarding the transaction and the other transactions contemplated by the purchase agreement, and permit the other party to review and discuss in advance, and consider in good faith the views of the other party in connection with, any proposed communication with any such governmental entity;

 

   

if such party or any affiliate or representative of such party receives a request for additional information or documentary material from any governmental entity with respect to the transaction or the other transactions contemplated by the purchase agreement, make, or cause to be made, promptly and after consultation with the other party, an appropriate response in compliance with such request; and

 

   

subject to applicable confidentiality obligations, will furnish the other party with copies of all correspondence and filings (and memoranda setting forth the substance thereof) between it or any of its affiliates or representatives, on the one hand, and any governmental entity, on the other hand, with respect to the purchase agreement and the transaction or the other transactions contemplated thereby, and furnish the other party with such necessary information and reasonable assistance as the other party may reasonably request in connection with its preparation of filings to any such governmental entity.

In addition, neither party nor its respective affiliates or its representatives will participate in any meeting with any governmental entity in connection with the purchase agreement and the transaction or the other transactions contemplated thereby (or make oral submissions at meetings or in telephone or other conversations) unless it consults with the other party in advance and, to the extent not prohibited by such governmental entity, gives the other party the opportunity to attend and participate thereat.

Servier has further agreed to, and to cause its affiliates to, take all such action as may be necessary to avoid or eliminate each and every impediment under any applicable law with respect to the contemplated transactions and to resolve such objections, if any, as any governmental entity or any other person may assert under any applicable law with respect to the transactions contemplated by the purchase agreement, so as to enable the closing to occur as soon as reasonably possible (and in any event prior to the outside date). In furtherance of the foregoing, Servier will:

 

   

proffer to and agree to sell, divest, lease, license, transfer, dispose of or otherwise encumber or hold separate, before or after the closing, any assets, licenses, regulatory applications, operations, rights, product lines, businesses or interests therein of the oncology business or of Servier or its affiliates (and consent to any sale, divestiture, lease, license, transfer, disposition or other encumbering by Agios or its subsidiaries of any assets of the oncology business or to any agreement by any of Agios or its subsidiaries to take any of the foregoing actions); and

 

   

agree to make any changes (including through a licensing arrangement) or restriction on, or other impairment of Servier’s ability to own, retain or operate, any such assets, licenses, regulatory applications, operations, rights, product lines, businesses or interests therein or Servier’s ability to vote, transfer, receive dividends, or otherwise exercise full ownership rights with respect to ownership interests in the oncology business or of Servier or its affiliates, including any actions that may be required to be taken to neutralize, mitigate or resolve any organizational conflict of interest.

Notwithstanding the obligations described in the above two bullet points, (i) Servier and its affiliates will not be obligated to take or agree to take any action unless the effectiveness of such agreement or action is conditioned upon the completion of the transaction and (ii) without prejudice to the foregoing, Agios and its affiliates will not take or agree or commit to take any action to sell, divest, lease, license, transfer, dispose of or otherwise encumber or hold separate any purchased assets or otherwise with respect to the oncology business related to any regulatory approval without Servier’s written consent. In addition, Agios and its affiliates will not

 

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be obligated to take or agree or commit to take any action (x) that is not conditioned on the completion of the transaction or (y) that relates to any excluded assets or the genetically defined diseases business, and in no event will Agios or any of its affiliates be required to be the licensing, selling, divesting, leasing, transferring, disposing or encumbering party under any such agreements unless required by the relevant governmental entity or applicable law, and, in any case, Agios and its affiliates will have no direct or indirect obligation or liability in respect of any such agreements, transactions or relationships, including any indemnification obligations, for which Agios and its affiliates are not fully indemnified by Servier.

Servier has further agreed to provide such security and assurances as to financial capability, resources and creditworthiness as may be reasonably requested by any governmental entity or other third party whose approval is sought in connection with the transaction and the other transactions contemplated by the purchase agreement. Whether or not the transaction is completed, Servier will be responsible for all fees and payments to any third party or any governmental entity in order to obtain any approvals pursuant to the purchase agreement, other than the fees of and payments to Agios’ legal and professional advisors.

None of Agios, its subsidiaries or any of their respective affiliates will be required to pay or commit to pay any amount or incur any obligation in favor of or offer or grant any accommodation to any person to obtain any approval. None of Agios, its subsidiaries, or any of their respective affiliates will have any liability to Servier or any of its affiliates arising out of or relating to the failure to obtain any approvals that may be required in connection with the transaction and the other transactions contemplated by the purchase agreement or because of the termination of any contract or any default under, or acceleration or termination of or loss of any benefit under, any contract or other purchased asset as a result thereof.

Employee Benefits Matters

Within sixty days after the date of the purchase agreement, Servier has agreed to, or to cause one of its affiliates or designees to, offer employment to all oncology business employees listed on a schedule to the purchase agreement, with such employment to commence immediately upon the closing. Agios and its affiliates will consult with Servier on communications, cooperate with and use commercially reasonable efforts to assist Servier and its affiliates, and, subject to restrictions, provide all relevant information necessary for Servier to offer such employment. Oncology business employees who accept offers of employment from Servier or an affiliate of Servier are referred to as “transferred employees.” Any oncology business employee who is on disability or other leave as of the closing and who presents themselves for work within six months following the closing will be offered employment with Servier or any affiliate thereof in accordance with this paragraph upon his or her presentment for work and will become a transferred employee as the date of acceptance of the offer.

For a period of twelve months following the closing (the “protected period”), Servier will, or will cause its affiliates to, provide to each transferred employee: (i) hourly wages and annual base salaries which are no less favorable than those the transferred employees received immediately prior to the closing; (ii) with respect to any bonus performance cycle that begins during the protected period, annual cash bonus and cash incentive opportunities which are no less favorable with respect to target bonus as a percentage of salary than the potential target amount provided to the transferred employees immediately prior to the closing date; (iii) annual long-term incentive opportunities set forth in a schedule to the purchase agreement; (iv) a primary work location that is not greater than 30 miles from the employee’s primary work location as of immediately prior to the closing; and (v) employee benefits that are substantially comparable, in the aggregate, to those provided to such transferred employees immediately prior to the closing.

In addition, if, during the protected period, a transferred employee’s employment is terminated under circumstances which would have entitled such employee to severance benefits under the Agios’ severance policy, Servier will provide to such transferred employee severance benefits that are no less favorable than the greater of the severance benefits that would have been payable under the Agios severance policy and the severance benefits applicable to similarly situated employees of Servier or its affiliates. The employment compensation, benefits

 

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and terms required to be provided by Servier or one of its affiliates in their totality constitute a “comparable offer.” The offers of employment from Servier will maintain the oncology business employee’s then-current titles. In addition, during the protected period, Servier will maintain the title and substantially similar scope of responsibilities of each transferred employee, in each case to the extent specified in such transferred employee’s offer, at the same or higher levels.

Agios and its affiliates: (i) will, within 30 calendar days after the closing, terminate the employment of any oncology business employee who rejects a comparable offer, (ii) will not, during the period of 18 months after the closing, without the prior written consent of Servier, re-employ any such employee and (iii) will be solely responsible for any severance or other similar termination payments or benefits payable to any such employee. Servier and its affiliates will be solely responsible for any severance or other similar termination payments or benefits payable to any oncology business employee who does not become an employee of Servier or its affiliates because such employee rejects or does not accept an offer that is not a comparable offer.

Agios and its affiliates will (i) retain all obligations to provide coverage required under the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Section 601 et seq. of ERISA and at Section 4980B of the Code (“COBRA”) with respect to each “M&A qualified beneficiary” as that term is defined under COBRA and (ii) retain all obligations for health insurance claims incurred under the applicable Agios benefit plan(s) prior to the closing.

With respect to any cash incentive compensation payable under each incentive compensation plan or arrangement in which any transferred employee participates in the calendar year in which the closing occurs in connection with the employee’s services to the oncology business, Agios:

 

   

will pay a cash bonus based on calendar year 2021 performance to each transferred employee through closing, prorated amount equal to the amount they would have earned under the Annual Bonus Plan;

 

   

Servier will provide each transferred employee with a bonus opportunity for the period between closing and September 30, 2021; and

 

   

Servier will: (i) be responsible for the payment of any sales incentive bonus payable to any transferred employee under the Agios benefit plan that provides for a quarterly cash bonus (the “Agios sales plan”) for the calendar quarter that includes the closing; and (ii) for each calendar quarter beginning during the protected period, Servier will, or will cause its affiliates to, continue to provide each transferred employee who, as of immediately prior to the closing, participated in the Agios sales plan, with the opportunity to earn the same amount of cash bonuses that they would have been entitled to earn under the Agios sales plan during such period.

Financing

The consummation of the transaction is not subject to any financing conditions. Servier represents that it has sufficient cash on hand and short-term investments to pay the purchase price and commits to take or cause to be taken all actions necessary, proper or advisable to obtain sufficient funds for the transactions contemplated by the purchase agreement.

Representation and Warranty Insurance Policy

Concurrently with the execution of the purchase agreement, Servier conditionally bound a buyer-side representation and warranty insurance policy to be issued to Servier providing coverage for breaches or inaccuracies of the representations and warranties in the purchase agreement (the “representation and warranty insurance policy”). Servier is required to bear all costs and expenses related to the representation and warranty insurance policy, including the premium, retention, deductible, broker fee, underwriting fee, due diligence fee, carrier commissions, underwriting costs, and surplus lines taxes and fees (except that Agios, through an adjustment to the purchase price, reimburses Servier for 50% of such costs).

 

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Other Covenants

The purchase agreement contains other covenants relating to confidentiality, access to information, publicity, intercompany accounts and intercompany agreements, know-how transfer, financial obligations, intellectual property, insurance, litigation support, misdirected invoices and payments, non-solicitation of employees, misallocated assets, registrations, mail and other communications, bulk transfer laws, notifications and consents, pharmacovigilance matters, transfer of clinical studies, financial information, asset information and the representation and warranty insurance policy.

Conditions to the Completion of the Transaction

Each party’s obligation to complete the transaction is subject to the satisfaction, or (to the extent permitted by law) waiver, of certain conditions, including:

 

   

the waiting period required under the HSR Act for the consummation of the transaction having expired or been terminated, and the approval by regulatory authorities in Germany under the antitrust laws of Germany having been received and obtained;

 

   

the absence of any judgment or law issued or enacted by any governmental entity of competent jurisdiction, in each case that has been entered and remains and effect that prevents, enjoins, renders illegal or prohibits the consummation of the transaction; and

 

   

approval by the Agios stockholders of the transaction proposal.

The obligations of Agios to complete the transaction are also subject to the satisfaction, or waiver, of the following conditions:

 

   

(i) the representations of Servier set forth in the purchase agreement (other than with respect to authority to enter into the purchase agreement) being true and correct on and as of the date of the completion of the transaction (the “closing date”) as if made on and as of the closing date (or, in the case of representations and warranties that are made as of a specific date, as of such date), except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, materially impair, hinder or delay the ability of Servier or its affiliates to perform their obligations under purchase agreement and the other transaction documents or to consummate the transactions contemplated thereby (a “purchaser material adverse effect”), and (ii) the representations of Servier set forth in the purchase agreement with respect to authority to enter into the purchase agreement being true and correct in all material respects on and as of the closing date as if made on and as of the closing date (or, in the case of representations and warranties that are made as of a specific date, as of such date);

 

   

the performance in all material respects by Servier on or before the closing date of its covenants and agreements in the purchase agreement; and

 

   

the receipt by Agios of an officer’s certificate, signed on behalf of Servier by an executive officer of Servier, dated as of the closing date, stating that the two conditions above have been satisfied.

The obligations of Servier to complete the transaction are also subject to the satisfaction, or waiver, of the following conditions:

 

   

(i) the representations and warranties of Agios set forth in the purchase agreement (other than the fundamental representations (defined below)) having been true and correct as of the date of the purchase agreement and the closing date as if made on and as of the closing date (or, in the case of representations and warranties that are made as of a specific date, as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any materiality or “business material adverse effect” qualifications set forth therein) would not have, individually or in the aggregate, a business material adverse effect, (ii) the representations of Agios in

 

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the purchase agreement in respect of organization and standing, authority, the absence of conflicts with governing documents, sufficiency of assets and certain retained oncology programs (collectively, the “fundamental representations”) having been true and correct in all material respects as of the date of the purchase agreement and as of the closing date as if made on and as of the closing date (or, in the case of representations and warranties that are made as of a specific date, as of such date), and (iii) the representation and warranty of Agios in respect of the absence of a business material adverse effect having been true and correct in all respects as of the date of the purchase agreement and as of the closing date as if made on and as of the closing date;

 

   

the performance in all material respects by Agios on or before the closing date of its covenants and agreements in the purchase agreement; and

 

   

the receipt by Servier of an officer’s certificate, signed on behalf of Agios by an executive officer of Agios, dated as of the closing date, stating that the two conditions above have been satisfied.

Termination of the Purchase Agreement

The purchase agreement may be terminated at any time prior to the completion of the transaction:

 

   

by mutual written consent of Agios and Servier;

 

   

by either Agios or Servier if:

 

   

the other party materially breached any of its representations, warranties, covenants or agreements contained in the purchase agreement, and such breach would give rise to the failure of certain closing conditions of that party, and has not been cured by the earlier of (i) the date that is 60 days after the date the non-breaching party has notified the breaching party in writing of such breach stating the non-breaching party’s intention to terminate the purchase agreement in connection therewith and the basis for such termination and (ii) the outside date; provided that a party may not terminate in this manner if that party has materially breached any of its representations, warranties, covenants or agreements contained in the purchase agreement;

 

   

the closing has not occurred on or prior to September 20, 2021 (the “outside date”); provided that if, on the outside date, the condition to closing related to antitrust approvals has not been satisfied or waived, then the outside date will automatically be extended to December 20, 2021; provided, further that this termination right will not be available to (i) any party whose failure to perform any covenant or agreement or whose breach or representation or warranty under the purchase agreement has been the cause of, or resulted in, the failure of the closing to occur on or before such date or (ii) any party during the pendency of any proceeding brought by the other party for specific performance of the purchase agreement;

 

   

a judgment issued by a governmental entity of competent jurisdiction permanently prevents the consummation of the transaction, and such judgment becomes final and nonappealable; provided that this termination right will not be available to any party whose failure to perform any covenant or agreement or whose breach or representation or warranty under the purchase agreement has been the cause of, or resulted in, the issuance of such judgment;

 

   

the meeting of Agios stockholders (as it may be adjourned or postponed) at which a vote on the transaction proposal was taken has concluded and such approval has not been obtained;

 

   

by Servier, prior to the approval of the transaction proposal, in the event that Agios makes an adverse recommendation change (defined below); or

 

   

by Agios, prior to the approval of the transaction proposal, in order to enter into definitive agreements with respect to a superior proposal.

 

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Termination Fee Payable by Agios

Agios has agreed to pay to Servier the termination fee of $45 million in cash in the following circumstances:

 

   

Agios terminates the purchase agreement prior to the approval of the transaction proposal in order to enter into definitive agreements with respect to a superior proposal;

 

   

Servier terminates the purchase agreement prior to the approval of the transaction proposal, in the event that Agios makes an adverse recommendation change; or

 

   

If (i) after the date of the purchase agreement, an acquisition proposal (disregarding the proviso in the definition of thereof in the purchase agreement) has been publicly announced or made known and not withdrawn (or, in the case of a termination pursuant in connection with reaching the outside date, shall have become known to the Agios Board), (ii) thereafter the purchase agreement is terminated by Servier or Agios due to failure to obtain Agios stockholder approval of the transaction proposal or by Servier pursuant as a result of a breach of Agios’ covenants occurring after the earlier of announcement or knowledge of the acquisition proposal and (iii) and at any time on or prior to the one-year anniversary of such termination, Agios or any of its subsidiaries completes or enters a definitive agreement providing for, or consummates, a transaction that constitutes an acquisition proposal (with all references to “fifteen percent” in the definition of acquisition proposal being deemed to be references to “fifty percent ” and disregarding the proviso in the definition of acquisition proposal).

The purchase agreement provides that, if the termination fee becomes due and payable, following such termination and payment of the termination fee in full together with certain collection fees and expenses, if any, neither Agios nor any of its affiliates or representatives will have any further liability in connection with purchase agreement or the termination thereof, other than with respect to claims for fraud.

In no event will Agios be obligated to pay the termination fee on more than one occasion.

Survival

The representations and warranties of the parties in the purchase agreement and in any certificate delivered pursuant to the purchase agreement will not survive the closing. The covenants and agreements contained in the purchase agreement that (i) require performance prior to the closing (and any rights arising out of any breach of such covenants and agreements) will survive until the three-month anniversary of the closing, and (ii) are to be performed, in whole or in part, at or after the closing will survive the closing for the period provided in such covenants and agreements, if any, or until fully performed (provided that Servier’s covenants and agreements with respect to the payment of the purchase price and the royalties will survive indefinitely).

Agios’ obligation to retain, and indemnify and hold harmless Servier, its affiliates and their successors (the “purchaser indemnified parties”) for, any retained liabilities, and Servier’s obligation to assume, and indemnify and hold harmless Agios, its affiliates and their successors (the “seller indemnified parties”) for any assumed liabilities, as well as any covenants and agreements of the parties that by their terms provide for indemnification or reimbursement or allocate fees, payments, costs or expenses as between the parties, will survive indefinitely.

Agios’ indemnification obligations related to any non-compliance with good clinical practices found from audits of certain clinical studies to the extent conducted by Servier (the “GCP indemnity”), will survive until the first anniversary of the closing date.

The purchase agreement does not limit any party’s ability to bring a proceeding against the other party in the event of fraud (as defined in the purchase agreement).

 

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Indemnification

From and after the closing, Agios is required to indemnify the purchaser indemnified parties for certain losses actually incurred or suffered by any of the purchaser indemnified parties, to the extent resulting from or arising out of:

 

   

any breach of any covenant or agreement of Agios in the purchase agreement that survives the closing, for the period it survives, not to exceed the final purchase price;

 

   

any retained liability; and

 

   

the GCP indemnity, excluding specified covered losses unless and until the aggregate amount of specified covered losses with respect thereto exceeds $13,500,000, and then only to the extent of such excess (and in no event will Agios be liable for an aggregate amount of specified covered losses in excess of $200,000,000).

Agios will not be required to indemnify or hold harmless any purchaser indemnified party against, or reimburse any purchaser indemnified party for, any covered losses to the extent such losses or the related liabilities are actually reflected, reserved, accrued, recorded or included in the business financial information, the closing working capital or the adjustment amount as finally determined pursuant to the purchase agreement.

From and after the closing, Servier is required to indemnify the seller indemnified parties from certain losses actually incurred or suffered by any of the seller indemnified parties, to the extent resulting from or arising out of:

 

   

any breach of any covenant or agreement of Servier in the purchase agreement that survives the closing, for the period it survives, not to exceed the final purchase price (other than any obligation of Servier for a breach of its obligations with respect to the royalties on TIBSOVO® and vorasidenib); and

 

   

any assumed liability.

Fees and Expenses

Except as otherwise provided in the purchase agreement, whether or not the completion of the transaction takes place, all costs and expenses incurred in connection with the purchase agreement, the transaction and the other transactions contemplated thereby will be paid by the party incurring such expense.

Amendments, Waivers

The purchase agreement may not be amended except by an instrument in writing signed on behalf of each of the parties. By an instrument in writing, Servier, on the one hand, or Agios, on the other hand, may waive compliance by the other with any term or provision of the purchase agreement that the other party was or is obligated to comply with or perform. Such waiver or failure to insist on strict compliance with such term or provision will not operate as a waiver of, or estoppel with respect to, any subsequent or other failure of compliance.

Governing Law and Venue, Waiver of Jury Trial

The parties agreed that the purchase agreement will be governed by, and construed and enforced in accordance with Delaware law, without any regard to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. In addition, each of the parties (i) in the event that any dispute arises out of the purchase agreement or the transaction or the other transactions contemplated thereby, submits to the exclusive personal jurisdiction of the Court of Chancery of the State of Delaware and any state appellate court therefrom

 

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within the State of Delaware, or in the event (but only in the event) that such court does not have subject matter jurisdiction over the applicable proceeding, any state or federal court within the State of Delaware; (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court; (iii) agrees that it will not bring any proceeding relating to the purchase agreement, the transaction or the other transactions contemplated thereby in any court other than the above-named courts; and (iv) agrees that it will not seek to assert by way of motion, as a defense or otherwise, that any such proceeding (A) is brought in an inconvenient forum, (B) should be transferred or removed to any court other than the above-named courts, (C) should be stayed by reason of the pendency of some other proceeding in any court other than the above-named courts or (D) that the purchase agreement or the subject matter hereof may not be enforced in or by the above-named courts.

Each party agreed to waive any right such party may have to trial by jury in any action, proceeding or counterclaim brought by either of them against the other arising out of or in any way connected with the purchase agreement, any executed agreements in connection therewith, the administration therefore, the asset sale or any of the other transactions contemplated therein.

Other Transaction Documents

At the completion of the transaction, Agios and Servier expect to enter into the additional transaction documents described below.

Transition Services Agreement and Transition Distribution Services Agreement

No later than 60 days following the execution of the purchase agreement, the parties will negotiate in good faith (i) the exhibits to a transition services agreement (which exhibits will include the services and pricing for services to be provided pursuant to the transition services agreement) and (ii) an agreement with respect to distribution and administration services for the products for a transitional period from the completion of the transaction until the transfer of the applicable product registration or such other date as agreed in such agreement (the “transition distribution services agreement”).

From and after the completion of the transaction, and until the expiration or termination of the transition services agreement or transition distribution services agreement, as applicable, in the event that Agios or any its affiliates sell, transfer or convey their respective rights in and to any material portion of the assets of the genetically defined disease business required for performance of Agios’ or its affiliates’ obligations under the transition services agreement or the transition distribution services agreement, Agios will either (i) require as a condition of such sale, transfer or conveyance that the applicable purchaser of such assets assume all relevant obligations of Agios or its affiliates under the applicable agreement, or (ii) implement alternative arrangements for the performance of its obligations under the applicable agreement in a manner reasonably acceptable to Servier.

Pharmacovigilance Agreement

Unless the parties agree that the applicable services will be provided and any other applicable matters will be addressed solely pursuant to the transition services agreement, no later than February 3, 2021, the parties will negotiate in good faith an agreement to formalize their respective responsibilities with regard to the safety data exchange and pharmacovigilance for the products on commercially reasonable terms.

Clinical Study Transfer Agreement

Unless the parties agree that the applicable services will be provided and any other applicable matters will be addressed solely pursuant to the transition services agreement, no later than February 3, 2021, the parties will negotiate in good faith an agreement detailing the transfer of sponsorship of ongoing clinical studies, including the preparation of technical documentation allowing change of sponsorship to be sent to governmental entities, ethics committee and institutional review boards.

 

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FINANCIAL INFORMATION

Financial Statements of Agios and the Oncology Business

See the section of this proxy statement entitled “Unaudited Combined Financial Statements of the Oncology Business” for the unaudited financial statements of the oncology business for the years ended December 31, 2019 and December 31, 2018, as well as the unaudited interim financial statements of oncology business for the nine-month period ended September 30, 2020.

The audited historical financial statements of Agios and its subsidiaries for the years ended December 31, 2019 and December 31, 2018 contained in Agios’ Current Report on Form 8-K filed on January 29, 2021 are incorporated by reference into this proxy statement. The unaudited historical financial statements of Agios and its subsidiaries for the nine months ended September 30, 2020 are contained in Agios’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, and are incorporated by reference into this proxy statement.

Unaudited Pro Forma Financial Information

The following unaudited pro forma condensed combined financial statements are intended to show how the transaction might have affected the historical financial statements of Agios if the transaction had been completed at an earlier time as indicated therein, and such unaudited pro forma condensed combined financial statements are derived from, and should be read in conjunction with our historical financial statements and notes thereto, as presented in our Current Report on Form 8-K filed with the SEC on January 29, 2021 (which Current Report includes a consolidated balance sheet and statements of operations of Agios for the periods indicated therein) and Quarterly Report on Form 10-Q filed for the nine months ended September 30, 2020 with the SEC on November 5, 2020, each of which are incorporated herein by reference and the historical unaudited combined financial statements of the oncology business included elsewhere in this proxy statement. The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses”. The unaudited pro forma condensed combined balance sheet as of September 30, 2020 assumes the transaction had occurred on September 30, 2020. The unaudited pro forma condensed combined statements of operations for the nine-months ended September 30, 2020 and years ended December 31, 2019 and December 31, 2018 give effect to the transaction as if it had occurred as of January 1, 2018.

Article 11 of Regulation S-X requires that pro forma financial information include the following pro forma adjustments to the historical financial of the registrant as follows:

 

   

Transaction Accounting Adjustments – Adjustments that reflect only the application of required accounting to the acquisition, disposition, or other transaction.

 

   

Autonomous Entity Adjustments – Adjustments that are necessary to reflect the operations and financial position of the registrant as an autonomous entity when the registrant was previously part of another entity.

There are no autonomous entity adjustments included in the unaudited pro forma condensed combined financial statements because Agios currently operates, and after the completion of the transaction will continue to operate, as an independent, standalone entity.

The transaction accounting adjustments to reflect the transaction in the unaudited pro forma condensed combined financial statements include:

 

   

the sale of the operations, assets and liabilities of the oncology business pursuant to the purchase agreement;

 

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adjustments required to reclassify the oncology business as discontinued operations; and

 

   

adjustments required to record the estimated impact of the cash proceeds received in connection with the transaction, net of transaction costs, income taxes paid, and warranty insurance policy reimbursement.

In addition, Regulation S-X permits registrants to reflect adjustments that depict synergies and dis-synergies of the acquisitions and dispositions for which pro forma effect is being given. We have determined not to reflect such adjustments because we do not believe to present such adjustments would enhance an understanding of the pro forma effects of the transaction.

The effects of recording certain adjustments associated with contingent consideration and royalty revenue related to vorasidenib and TIBSOVO® have been excluded as these amounts have been accounted for as a gain contingency in accordance with ASC 450, Contingencies, as the contingent receivable will be recognized in earnings after the contingency is resolved. Additionally, the potential effects of the Company’s present expectation to return value to Agios stockholders after the completion of the transaction have been excluded as management and the board of directors have not yet voted or determined a formal plan on how to achieve this return to value and this type of projection of management’s actions is excluded from Article 11 of Regulation S-X. Lastly, the estimated pre-tax gain of $1.98 billion on the sale of the oncology business has been excluded as this amount pertains to discontinued operations and does not reflect the impact on income from continuing operations.

The unaudited pro forma condensed combined financial statement information is presented for informational purposes only and is based upon estimates by Agios’ management, which are based upon available information and certain assumptions that Agios’ management believes are reasonable as of the date of this proxy statement. The unaudited pro forma condensed combined financial statements are not intended to be indicative of the actual financial position or results of operations that would have been achieved had the transaction been consummated as of the periods indicated above, nor does it purport to indicate results which may be attained in the future. Actual amounts could differ materially from these estimates.

The unaudited pro forma condensed combined balance sheet as at September 30, 2020 and the unaudited pro forma condensed combined statement of operations for the nine-months ended September 30, 2020 and years ended December 31, 2019 and December 31, 2018 should be read in conjunction with the notes thereto.

 

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Agios Pharmaceuticals, Inc.

Pro Forma Condensed Combined Balance Sheet

As of September 30, 2020

(Unaudited)

 

(In thousands, except share and per share data)

  Historical
Agios

(A)
    Transaction
Accounting
Adjustments
(Sale of
Oncology
Business)

(B)
    Transaction
Accounting
Adjustments

(Discontinued
Operations)

(C)
    Notes     Additional
Transaction
Accounting
Adjustments

(D)
    Notes     Pro Forma
Agios
 

Assets

             

Current assets:

             

Cash and cash equivalents

  $ 104,855     $ —       $         —         $ 1,696,438       (i   $ 1,801,293  

Marketable securities

    500,684       —         —           —           500,684  

Accounts receivable, net

    18,989       (18,989     —           —           —    

Collaboration receivable – related party

    2,334       (2,334     —           —           —    

Collaboration receivable – other

    1,992       (1,992     —           —           —    

Inventory

    11,371       (11,371     —           —           —    

Prepaid expenses and other current assets

    28,861       (11,743     —           —           17,118  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total current assets

    669,086       (46,429     —           1,696,438       2,319,095  

Marketable securities

    116,889       —         —           —           116,889  

Operating lease assets

    86,952       —         —           —           86,952  

Property and equipment, net

    33,495       (171     —           171       (ii )     33,495  

Financing lease assets

    677       —         —           —           677  

Other assets

    1,350       (1,350     —           —           —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total assets

  $ 908,449     $ (47,950   $ —         $ 1,696,609       $ 2,557,108  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Liabilities and stockholders’ equity

             

Current liabilities:

             

Accounts payable

  $ 12,853     $ (6,077   $ —         $ —         $ 6,776  

Accrued expenses

    49,724       (26,823     —           —           22,901  

Operating lease liabilities

    6,881       —         —           —           6,881  

Financing lease liabilities

    313       —         —           —           313  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total current liabilities

    69,771       (32,900     —           —           36,871  

Operating lease liabilities, net of current portion

    99,693       —         —           —           99,693  

Financing lease liabilities, net of current portion

    412       —         —           —           412  

Liability related to the sale of future revenue, net of debt issuance costs

    258,121       (258,121     —           —           —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total liabilities

    427,997       (291,021     —           —           136,976  

Commitments and contingent liabilities

             

Stockholders’ equity:

             

Preferred stock, $0.001 par value; 25,000,000 shares authorized; no shares issued or outstanding at September 30, 2020

    —         —         —           —           —    

Common stock, $0.001 par value; 125,000,000 shares authorized; 69,198,063 shares issued and outstanding at September 30, 2020

    69       —         —           —           69  

Additional paid-in capital

    2,225,538       —         —           —           2,225,538  

Accumulated other comprehensive income

    663       —         —           —           663  

(Accumulated deficit) Retained earnings

    (1,745,818     243,071       —           1,696,609         193,862  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total stockholders’ equity

    480,452       243,071       —           1,696,609         2,420,132  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total liabilities and stockholders’ equity

  $ 908,449     $ (47,950   $ —         $ 1,696,609       $ 2,557,108  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

See accompanying Notes to Pro Forma Condensed Combined Financial Statements.

 

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Agios Pharmaceuticals, Inc.

Pro Forma Condensed Combined Statement of Operations

For the Nine Months ended September 30, 2020

(Unaudited)

 

(In thousands, except share and per share
data)

  Historical
Agios

(A)
    Transaction
Accounting
Adjustments
(Sale of
Oncology
Business)

(B)
    Transaction
Accounting
Adjustments

(Discontinued
Operations)

(C)
    Notes     Additional
Transaction
Accounting
Adjustments

(D)
    Notes     Pro Forma
Agios
 

Revenues:

             

Product revenue, net

  $ 81,971     $ (81,971 )   $ —         $         —         $ —    

Collaboration revenue – related party

    67,038       (67,038     —           —           —    

Collaboration revenue – other

    2,786       (2,786     —           —           —    

Royalty revenue – related party

    7,356       (7,356     —           —           —    
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Total revenue

    159,151       (159,151     —           —           —    
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Cost and expenses:

             

Cost of sales

    1,846       (1,846     —           —           —    

Research and development

    271,728       (167,315     62,101       (i )     —           166,514  

Selling, general and administrative

    109,292       (77,097     56,997       (ii )     —           89,192  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Total cost and expenses

    382,866       (246,258     119,098         —           255,706  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Loss from operations

    (223,715     87,107     (119,098       —           (255,706

Interest income, net

    5,820       —         —           —           5,820  

Non-cash interest expense for the sale of future revenue

    (11,818     11,818     —           —           —    
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Net loss

  $ (229,713   $ 98,925     $ (119,098     $ —         $ (249,886
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Net loss per share – basic and diluted

  $ (3.33             $ (3.63
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Weighted-average number of common shares used in computing net loss per share – basic and diluted

    68,905,853                 68,905,853  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

See accompanying Notes to Pro Forma Condensed Combined Financial Statements.

 

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Agios Pharmaceuticals, Inc.

Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2019

(Unaudited)

 

(In thousands, except share and per share
data)

  Historical
Agios

(A)
    Transaction
Accounting
Adjustments
(Sale of
Oncology
Business)

(B)
    Transaction
Accounting
Adjustments

(Discontinued
Operations)

(C)
    Notes     Additional
Transaction
Accounting
Adjustments

(D)
    Notes     Pro Forma
Agios
 

Revenues:

             

Product revenue, net

  $ 59,851   $ (59,851   $ —         $        —         $ —    

Collaboration revenue – related party

    39,257     (39,257     —           —           —    

Collaboration revenue – other

    8,262     (8,262     —           —           —    

Royalty revenue – related party

    10,542     (10,542     —           —           —    
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Total revenue

    117,912     (117,912     —           —           —    
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Cost and expenses:

             

Cost of sales

    1,317     (1,317     —           —           —    

Research and development

    410,894     (282,028     91,942     (i )     —           220,808  

Selling, general and administrative

    132,034     (99,847     69,820     (ii     —           102,007  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Total cost and expenses

    544,245     (383,192     161,762       —           322,815  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Loss from operations

    (426,333     265,280       (161,762       —           (322,815

Interest income, net

    14,861     —         —           —           14,861  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Net loss

  $ (411,472   $ 265,280     $ (161,762     $ —         $ (307,954
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Net loss per share – basic and diluted

  $ (6.86             $ (5.13
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Weighted-average number of common shares used in computing net loss per share – basic and diluted

    59,994,539                 59,994,539  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

See accompanying Notes to Pro Forma Condensed Combined Financial Statements.

 

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Agios Pharmaceuticals, Inc.

Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2018

(Unaudited)

 

(In thousands, except share and per share
data)

  Historical
Agios

(A)
    Transaction
Accounting
Adjustments
(Sale of
Oncology
Business)

(B)
    Transaction
Accounting
Adjustments

(Discontinued
Operations)

(C)
    Notes     Additional
Transaction
Accounting
Adjustments

(D)
    Notes     Pro Forma
Agios
 

Revenues:

             

Product revenue, net

  $ 13,841   $ (13,841   $ —         $         —         $ —    

Collaboration revenue – related party

    60,661     (60,661     —           —           —    

Collaboration revenue – other

    12,670     (12,670     —           —           —    

Royalty revenue – related party

    7,215     (7,215     —           —           —    
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Total revenue

    94,387     (94,387     —           —           —    
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Cost and expenses:

             

Cost of sales

    1,397     (1,397     —           —           —    

Research and development

    341,324     (224,978     68,658     (i     —           185,004  

Selling, general and administrative

    114,145     (89,423     58,191     (ii     —           82,913  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Total cost and expenses

    456,866     (315,798     126,849         —           267,917  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Loss from operations

    (362,479     221,411       (126,849           (267,917

Interest income, net

    16,451     —         —           —           16,451  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Net loss

  $ (346,028   $ 221,411     $ (126,849     $ —         $ (251,466
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Net loss per share – basic and diluted

  $ (6.03             $ (4.38
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

Weighted-average number of common shares used in computing net loss per share – basic and diluted

    57,418,300                 57,418,300  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

See accompanying Notes to Pro Forma Condensed Combined Financial Statements.

 

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Agios Pharmaceuticals, Inc.

Notes to Pro Forma Condensed Combined Financial Statements

(Unaudited)

On December 20, 2020, Agios entered into the purchase agreement to sell its oncology business to Servier. Pursuant to the terms of the purchase agreement, Servier has agreed to pay to Agios (i) $1,800,000,000 in cash payable upon completion of the transaction, subject to adjustments based on closing levels of working capital of the oncology business and amounts payable in respect of a representation and warranty insurance policy, (ii) $200,000,000 in cash if a regulatory milestone for vorasidenib is achieved, (iii) a royalty of 5% of U.S. net sales of TIBSOVO® from the completion of the transaction through its loss of exclusivity and (iv) a royalty of 15% of U.S. net sales of vorasidenib from the first commercial sale of vorasidenib through its loss of exclusivity.

The unaudited pro forma combined financial statements reflect the following notes and adjustments:

 

(A)

Reflects the condensed consolidated balance sheet as of September 30, 2020 and consolidated statement of operations for the nine months ended September 30, 2020 and consolidated statement of operations for the years ended December 31, 2019 and 2018, reported in our Form 10-Q filed on November 5, 2020 and our Current Report on Form 8-K filed on January 29, 2021 (which Current Report includes a consolidated balance sheet and statements of operations of Agios for the periods indicated therein), respectively.

 

(B)

Reflects the unaudited condensed combined balance sheet of the oncology business as of September 30, 2020 and unaudited condensed combined statements of operations of the oncology business for the nine months ended September 30, 2020 and years ended December 31, 2019 and 2018 as disclosed in the condensed combined financial statements of the oncology business included elsewhere within this proxy statement.

 

(C)

Reflects the adjustments required to reclassify the unaudited condensed combined financial statements presentation of the oncology business to a presentation in accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations. Specific adjustments related to this presentation include the following:

 

  i.

Adjustments have been made to research and development expenses to reflect the differences in presentation between the amounts in the combined financial statements of the oncology business, which includes costs that were directly attributable and indirect expenses that were reasonably allocable to the oncology business, and the amounts required to be included in discontinued operations, which excludes indirect costs and costs that will continue to be recognized by Agios on an ongoing basis. The adjustments were determined by reviewing the expense types and descriptions, along with the purchase and sale agreement, in order to remove any indirect costs allocated to the oncology business and costs that will have a continuing impact on Agios after the transaction.

 

  ii.

Adjustments have been made to selling, general and administrative expenses to reflect the oncology business, which includes costs that were directly attributable and indirect expenses that were reasonably allocable to the oncology business, and the amounts required to be included in discontinued operations, which excludes indirect costs and costs that will continue to be recognized by Agios on an ongoing basis. The adjustments were determined by reviewing the expense types and descriptions, along with the purchase and sale agreement, in order to remove any indirect costs allocated to the oncology business and costs that will have a continuing impact on Agios after the transaction.

 

(D)

Reflects the additional transaction accounting adjustments which show how the Transaction might have affected Agios’ historical financial statements if the transaction had been completed at an earlier time.

 

  i.

To record the estimated net cash proceeds from the transaction of $1,800,000,000, subject to certain adjustments for the working capital of the oncology business at the completion of the transaction, less (a) estimated transaction costs of $60,000,000 that are likely to be incurred as part of the consummation of the transaction in 2021, (b) the expected tax effects of the estimated federal and state

 

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  income taxes paid of $40,000,000 related to the gain on the transaction, and (c) $3,561,652 related to a reimbursement to Servier for a portion of the costs and expenses, including premium, payable to obtain the representation and warranty insurance policy. The expected tax effects are calculated based on the amount of taxable gain considering the use of historical net operating losses in place to reduce taxable income, using the applicable statutory income tax rates in the respective jurisdictions, except in jurisdictions for where there was a valuation allowance in place, which resulted in the use of a 0% tax rate. The estimated gain on sale has been excluded from the pro forma information as this amount pertains to discontinued operations and does not reflect the impact on income from continuing operations.

 

  ii.

To record the effects of certain property and equipment that is used by the oncology business, but is not part of the Transaction and is anticipated to be retained by Agios.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

This table shows as of January 20, 2021: (i) the beneficial owners of more than five percent of Agios common stock and the number of shares they beneficially owned based on information provided in their most recent filings with the SEC; and (ii) the number of shares each director and each named executive officer and all directors and executive officers as a group beneficially owned, as reported by each person. The percentage of shares beneficially owned is computed on the basis of 69,303,863 shares of our common stock outstanding as of January 20, 2021. Unless otherwise indicated, the address of all listed stockholders is c/o Agios Pharmaceuticals, Inc., 88 Sidney Street, Cambridge, MA 02139. Each of the stockholders listed has sole voting and investment power with respect to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable.

 

     Shares of
Common
Stock
Owned
     +      Common
Stock
Underlying
Options and
Other Rights
Acquirable
Within
60 Days
     =      Total Beneficial
Ownership
 

Name of Beneficial Owner

   Number      Percentage  

5% Stockholders

                 

Wellington Management Group LLP(1)

     7,975,823           —             7,975,823        11.51

Entities affiliated with Celgene Corporation(2)

     7,121,658           —             7,121,658        10.28

The Vanguard Group(3)

     5,606,855           —             5,606,855        8.09

Entities affiliated with Fidelity Management & Research Company(4)

     4,542,806                  —             4,542,806        6.55

BB Biotech AG(5)

     3,896,954           —             3,896,954        5.67

BlackRock, Inc.(6)

     3,893,394           —             3,893,394        5.66

Named Executive Officers and Directors

                 

Jonathan Biller

     10,293           24,632           34,955        *  

Scott Biller, Ph.D.(7)

     84,914           218,114           303,028        *  

Christopher Bowden, M.D.

     8,381           193,242           201,623        *  

Jacqualyn A. Fouse, Ph.D.

     50,428           249,600           300,028        *  

Andrew Hirsch

     —             207,288           207,288        *  

David P. Schenkein, M.D.(8)

     454,907           763,636           1,218,543        1.74

Paul J. Clancy

     3,278           82,019           85,297        *  

Ian T. Clark

     3,278           38,619           41,897        *  

Kaye Foster

     5,478           51,518           56,966        *  

Maykin Ho, Ph.D.

     3,278           51,869           55,147        *  

John M. Maraganore, Ph.D.

     30,172           63,744           93,916        *  

David Scadden, M.D.

     3,849           37,617           41,466        *  

All executive officers and directors as a group (12 persons)

     586,310           1,645,719           2,232,029        3.1

 

*

Less than 1%.

(1)

Based solely on a Schedule 13G/A filed with the SEC on January 8, 2020. Wellington Management Group LLP (“Wellington”), Wellington Group Holdings LLP and Wellington Investment Advisors Holdings LLP are each deemed to be the beneficial owner of 7,975,823 shares of common stock, with respect to which each entity reported shared voting power over 7,896,557 shares and shared dispositive power over 7,975,823 shares. Wellington Management Company LLP is deemed to be the beneficial owner of 7,889,788 shares of common stock, with respect to which it reported shared voting power over 7,883,937 shares and shared dispositive power over 7,889,788 shares. The shares are owned of record by clients of the following investment advisers (the “Wellington Investment Advisers”): Wellington Management Company LLP, Wellington Management Canada LLC, Wellington Management Singapore Pte Ltd., Wellington

 

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  Management Hong Kong Ltd, Wellington Management International Ltd, Wellington Management Japan Pte Ltd and Wellington Management Australia Pty Ltd. Wellington Investment Advisors Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington. The address of Wellington is 280 Congress Street, Boston, MA 02210.
(2)

Based solely on a Schedule 13D/A filed with the SEC on November 14, 2019. Consists of 4,010,926 shares of common stock held by Celgene European Investment Company LLC (“Celgene LLC”), 708,333 shares of common stock held by Celgene Alpine Investment Co., LLC (“Celgene Alpine LLC”), 624,575 shares of common stock held by Celgene Switzerland LLC and 1,777,824 shares of common stock held by Celgene Corporation (“Celgene”). Celgene LLC, Celgene Alpine LLC and Celgene Switzerland LLC are wholly-owned subsidiaries of Celgene. Celgene LLC has shared voting and dispositive power over 4,010,926 shares of common stock, Celgene Alpine LLC has shared voting and dispositive power over 708,333 shares of common stock, Celgene Switzerland LLC has shares voting and dispositive power over 624,575 shares of common stock and Celgene has sole voting and dispositive power over 1,777,824 shares of common stock and shared voting and dispositive power over 5,343,834 shares of common stock. The address of Celgene Corporation is 86 Morris Avenue, Summit, NJ 07901.

(3)

Based solely on a Schedule 13G/A filed with the SEC on February 12, 2020. The Vanguard Group (“Vanguard”) is deemed to be the beneficial owner of 5,606,855 shares of common stock, with respect to which it reported sole voting power over 31,554 shares, shared voting power over 14,769 shares, sole dispositive power over 5,568,635 shares and shared dispositive power over 38,220 shares. Includes 23,451 shares beneficially owned by Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc. as a result of Vanguard Fiduciary Trust Company serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 22,872 shares as a result of Vanguard Investments Australia, Ltd. serving as investment manager of Australian investment offerings. The address of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355.

(4)

Based solely on a Schedule 13G/A filed with the SEC on August 10, 2020. FMR LLC and Abigail P. Johnson are each the beneficial owners of 4,542,806 shares of common stock. FMR LLC has sole voting power over 806,633 shares of common stock and sole dispositive power over 4,452,806 shares of common stock. The address of FMR LLC is 245 Summer Street, Boston, MA 02210.

(5)

Based solely on a Schedule 13G/A filed with the SEC on February 14, 2020. BB Biotech AG (“BB Biotech”) and its wholly-owned subsidiary Biotech Target N.V. (“Biotech Target”) share voting and dispositive power over 3,896,954 shares of common stock. The address of BB Biotech is Schwertstrasse 6, CH-8200 Schaffhausen, Switzerland and the address of Biotech Target is Ara Hill Top Building, Unit A-5, Pletterijweg Oost 1, Curacao.

(6)

Based solely on a Schedule 13G filed with the SEC on February 7, 2020 by BlackRock, Inc. (“BlackRock”) and certain of its subsidiaries. BlackRock is deemed to be the beneficial owner of 3,893,394 shares of common stock, with respect to which it reported sole voting power over 3,654,890 shares and sole dispositive power over 3,893,394 shares. The address of BlackRock 55 East 52nd Street, New York, NY 10055.

(7)

Includes shares of common stock held by a trust of which the reporting person is trustee and beneficiary.

(8)

Includes shares of common stock held by the David P. Schenkein 2004 Revocable Trust and shares of common stock held by the Amy P. Schenkein 2004 Revocable Trust.

 

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MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS

The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single annual report or proxy statement, as applicable, addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies.

Agios and some brokers may be householding our proxy materials by delivering a single set of proxy materials to multiple stockholders who request a copy and share an address, unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If at any time you no longer wish to participate in householding and would prefer to receive a separate proxy statement, please notify your broker if your shares are held in a brokerage account or Agios if you are a stockholder of record. You can notify us by sending a written request to our Secretary at 88 Sidney Street, Cambridge, Massachusetts 02139, or calling (617) 649-8600. Stockholders who share a single address, but receive multiple copies of the proxy statement, may request that in the future they receive a single copy by notifying Agios at the telephone and address set forth in the prior sentence. In addition, Agios will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the proxy statement to a stockholder at a shared address to which a single copy of the documents was delivered pursuant to a prior request.

 

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STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING

To be included in the proxy statement for the 2021 annual meeting, Agios must receive proposals no later than December 17, 2020. Proposals for inclusion in the proxy statement must comply with the Exchange Act, including Rule 14a-8, as well as with Agios’ bylaws.

Pursuant to Agios’ bylaws, stockholders may present director nominations or other proposals that are proper subjects for consideration at an annual meeting. Agios’ bylaws require that, to be timely, a stockholder’s notice must be received in writing by the Secretary at the principal executive office of the corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 20 days, or delayed by more than 60 days, from the first anniversary of the preceding year’s annual meeting, or if no annual meeting was held in the preceding year, a stockholder’s notice must be so received not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of (x) the 90th day prior to such annual meeting and (y) the tenth day following the day on which notice of the date of such annual meeting was mailed or public disclosure of the date of such annual meeting was made, whichever first occurs. In no event will the adjournment or postponement of an annual meeting (or the public disclosure thereof) commence a new time period (or extend any time period) for the giving of a stockholder’s notice.

These provisions are intended to allow all stockholders to have an opportunity to consider business expected to be raised at the annual meeting.

 

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WHERE YOU CAN FIND MORE INFORMATION

Agios is subject to the reporting requirements of the Exchange Act. Accordingly, Agios files annual, quarterly and current reports, proxy statements and other information with the SEC. Agios’ SEC filings are available to the public at the internet website maintained by the SEC at www.sec.gov. Agios also makes available free of charge through its website its periodic reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, its definitive proxy statements and Section 16 reports on Forms 3, 4 and 5, as soon as reasonably practicable after it electronically files such reports or amendments with, or furnishes them to, the SEC. Agios’ internet website address is www.agios.com. The information located on, or hyperlinked or otherwise connected to, Agios’ website is not, and will not be deemed to be, a part of this proxy statement or incorporated into any other filings that we make with the SEC.

The SEC allows Agios to “incorporate by reference” the information we file with the SEC into this proxy statement, which means that we can disclose important information to you by referring you to other documents filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement, except that information that we file later with the SEC will automatically update and supersede this information. This proxy statement incorporates by reference the documents listed below that have been previously filed with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules):

 

   

Agios’ Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed February 19, 2020 (excluding the audited historical financial statements of Agios and its subsidiaries contained therein);

 

   

Agios’ Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2020, filed April 30, 2020, June 30, 2020, filed July 30, 2020, and September 30, 2020, filed November 5, 2020; and

 

   

Agios’ Current Reports on Form 8-K filed with the SEC on May 29, 2020, June 12, 2020, September 8, 2020, September 21, 2020, December 1, 2020, December 7, 2020, December 21, 2020, December 22, 2020, January 11, 2021, January 26, 2021 and January 29, 2021.

We also incorporate by reference into this proxy statement additional documents that Agios may file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, from the date of this proxy statement until the date of the special meeting; provided, however, that we are not incorporating by reference any additional documents or information furnished and not filed with the SEC.

You may request a copy of documents incorporated by reference at no cost, by writing or telephoning the office of the Secretary at Agios Pharmaceuticals, Inc., 88 Sidney Street, Cambridge, Massachusetts 02139, or calling (617) 649-8600.

THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT TO VOTE YOUR SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED FEBRUARY 11, 2021. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.

 

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UNAUDITED COMBINED FINANCIAL STATEMENTS OF

THE ONCOLOGY BUSINESS

The accompanying unaudited combined financial statements of the oncology business represent a portion of certain operations of Agios Pharmaceuticals, Inc. and its consolidated subsidiaries (“Agios”, “we”, “our” or the “Company”). These financial statements have been prepared using information from Agios’ historical accounting records and do not purport to reflect the financial position and results of operations that would have resulted if the oncology business had been a separate, standalone business during the periods presented. Although management has estimated allocations to reflect all historical results of operations for the oncology business, including certain corporate administrative and shared costs incurred on its behalf, such allocations are not necessarily indicative of the actual costs that the oncology business would have incurred had it been a standalone entity.

 

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Table of Contents

The Oncology Business

(A Portion of Certain Operations of Agios Pharmaceuticals, Inc.)

Combined Balance Sheets

(Unaudited)

 

(in thousands)    September 30,
2020
    December 31,
2019
    December 31,
2018
 

Assets

      

Current assets:

      

Accounts receivable, net

   $ 18,989     $ 8,952     $ 5,076  

Collaboration receivable—related party

     2,334       1,539       2,462  

Collaboration receivable—other

     1,992       1,928       670  

Royalty receivable—related party

     —         2,900       2,234  

Inventory

     11,371       7,331       869  

Prepaid expenses and other current assets

     11,743       8,290       4,060  
  

 

 

   

 

 

   

 

 

 

Total current assets

     46,429       30,940       15,371  
  

 

 

   

 

 

   

 

 

 

Property and equipment, net

     171       —         —    

Other non-current assets

     1,350       —         238  
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 47,950     $ 30,940     $ 15,609  
  

 

 

   

 

 

   

 

 

 

Liabilities and equity

      

Current liabilities:

      

Accounts payable

     6,077       10,661       11,107  

Accrued expenses

     26,823       25,344       17,286  

Deferred revenue—related party

     —         10,933       32,710  
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     32,900       46,938       61,103  

Deferred revenue, net of current portion—related party

     —         50,580       59,809  

Liability related to the sale of future revenue, net of debt issuance costs

     258,121       —         —    

Total liabilities

     291,021       97,518       120,912  

Commitments and contingent liabilities (Note 5)

      

Parent equity:

      

Net parent investment

     (243,071     (66,578     (105,303
  

 

 

   

 

 

   

 

 

 

Total parent equity

     (243,071     (66,578     (105,303
  

 

 

   

 

 

   

 

 

 

Total liabilities and parent equity

   $ 47,950     $ 30,940     $ 15,609  
  

 

 

   

 

 

   

 

 

 

See accompanying Notes to Combined Financial Statements.

 

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Table of Contents

The Oncology Business

(A Portion of Certain Operations of Agios Pharmaceuticals, Inc.)

Combined Statements of Operations

(Unaudited)

 

     For the Nine Months Ended
September 30,
    For the Year Ended
December 31,
 
(In thousands)    2020     2019     2019     2018  

Revenues:

        

Product revenue, net

   $ 81,971   $ 40,287   $ 59,851   $ 13,841  

Collaboration revenue—related party

     67,038     32,414     39,257     60,661  

Collaboration revenue—other

     2,786     2,202     8,262     12,670  

Royalty revenue—related party

     7,356     7,569     10,542     7,215  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     159,151     82,472     117,912     94,387  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost and expenses:

        

Cost of sales

     1,846     1,030     1,317     1,397  

Research and development

     167,315     211,092       282,028     224,978  

Selling, general and administrative

     77,097     73,993       99,847     89,423  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost and expenses

     246,258     286,115       383,192     315,798  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (87,107     (203,643     (265,280     (221,411

Non-cash interest expense for the sale of future revenue

     (11,818     —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (98,925   $ (203,643   $ (265,280   $ (221,411
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying Notes to Combined Financial Statements.

 

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Table of Contents

The Oncology Business

(A Portion of Certain Operations of Agios Pharmaceuticals, Inc.)

Combined Statements of Cash Flows

(Unaudited)

 

     For the Nine Months
Ended September 30,
    For the Year Ended
December 31,
 
(in thousands)    2020     2019     2019     2018  

Operating activities

        

Net loss

   $ (98,925   $ (203,643   $ (265,280   $ (221,411

Adjustments to reconcile net loss to net cash used in operating activities:

        

Depreciation and amortization

     4,378       4,138       5,424       4,441  

Stock-based compensation expense

     38,071       38,770       50,803       47,623  

Non-cash interest expense associated with the sale of future revenue

     11,818       —         —         —    

Non-cash royalty revenue

     (4,341     —         —         —    

Changes in operating assets and liabilities:

        

Accounts receivable, net

     (10,037     (2,030     (3,876     (5,076

Collaboration receivable—related party

     (795     624       923       (15

Collaboration receivable—other

     (64     (199     (1,258     (670

Royalty receivable—related party

     2,900       (366     (666     (1,012

Inventory

     (4,040     (4,980     (6,462     (869

Prepaid expenses and other current and non-current assets

     (4,803     (3,640     (3,992     4,985  

Accounts payable

     (4,584     578       (446     (1,581

Accrued expenses

     1,479       7,292       8,058       3,068  

Deferred revenue—related party

     (61,513     (25,849     (31,006     (31,665
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in operating activities

     (130,456     (189,305     (247,778     (202,182
  

 

 

   

 

 

   

 

 

   

 

 

 

Investing activities

        

Purchase of property and equipment

     (171     —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (171     —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Financing activities

        

Proceeds from the sale of future revenue to RPI

     255,000       —         —         —    

Payment of issuance costs for the sale of future revenue

     (4,463     —         —         —    

Net transfers (to)/from Parent

     (119,910     189,305       247,778       202,182  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities

     130,627       189,305       247,778       202,182  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net change in cash and cash equivalents

     —         —         —         —    

See accompanying Notes to Combined Financial Statements.

 

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Table of Contents

The Oncology Business

(A Portion of Certain Operations of Agios Pharmaceuticals, Inc.)

Combined Statements of Changes in Parent Equity

(Unaudited)

 

(in thousands)    Parent Equity  

Balance at January 1, 2018

   $  (138,138

Net loss

     (221,411

Investment from Parent

     254,246  
  

 

 

 

Balance at December 31, 2018

   $ (105,303
  

 

 

 

Net loss

     (265,280

Investment from Parent

     304,005  
  

 

 

 

Balance at December 31, 2019

   $ (66,578
  

 

 

 

Net loss

     (98,925

Transfer to Parent

     (77,568
  

 

 

 

Balance at September 30, 2020

   $ (243,071
  

 

 

 

See accompanying Notes to Combined Financial Statements.

 

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Table of Contents

The Oncology Business

Notes to Combined Financial Statements

(Unaudited)

Note 1. Nature of Business

Agios is focused on discovering and developing novel investigational medicines to treat malignant hematology, solid tumors and genetically defined diseases through scientific leadership in the field of cellular metabolism. In addition to an active research and discovery pipeline across these three therapeutic areas, Agios has two approved oncology precision medicines and multiple first-in-class investigational therapies in clinical and/or preclinical development. Agios is a corporation organized under the laws of the State of Delaware. Shares of Agios common stock are listed on the NASDAQ Select Global Market under the symbol “AGIO.” Our principal executive offices are located at 88 Sidney Street, Cambridge, Massachusetts 02139.

Description of Transaction

On December 20, 2020, Agios entered into the purchase agreement to sell its commercial, clinical and research-stage oncology portfolio (the “oncology business”) to Servier. As consideration for the sale of the oncology business, Servier has agreed to pay Agios (i) $1,800,000,000 in cash payable upon completion of the transaction, subject to adjustments based on closing levels of working capital of the oncology business and amounts payable in respect of a representation and warranty insurance policy, (ii) $200,000,000 in cash if a regulatory milestone for vorasidenib is achieved, (iii) a royalty of 5% of U.S. net sales of TIBSOVO® from the completion of the transaction through its loss of exclusivity and (iv) a royalty of 15% of U.S. net sales of vorasidenib from the first commercial sale of vorasidenib through its loss of exclusivity.

Overview

The oncology business is engaged in the operations, activities and programs with respect to the discovery, research, development, manufacture, registration, commercialization, importation, distribution, sale and marketing of chemical or biological entities, pharmaceutical products, medicines, therapies, compounds, programs, or in vitro diagnostic or other devices, in each case, for patients in the areas of hematologic malignancies, solid tumors and other malignant diseases, including all activities related to the products ivosidenib (TIBSOVO®), enasidenib (IDHIFA®), vorasidenib, AG-270 and AG-636 and any and all applications of such products in any field.

Our wholly-owned product, TIBSOVO® (ivosidenib) is an oral targeted inhibitor of the mutated isocitrate dehydrogenase 1, or IDH1 enzyme. TIBSOVO® is the first and only FDA-approved therapy for the treatment of adult patients with (i) relapsed or refractory acute myeloid leukemia, or R/R AML, with a susceptible IDH1 mutation as detected by an FDA-approved test (approved by the FDA in July 2018) and (ii) newly diagnosed AML with a susceptible IDH1 mutation as detected by an FDA-approved test who are at least 75 years old or who have comorbidities that preclude use of intensive induction chemotherapy (approved by the FDA in May 2019). In December 2018, the Company submitted a Marketing Authorization Application, or MAA, to the European Medicines Agency, or EMA, for TIBSOVO® for the treatment of adult patients with R/R AML with an IDH1 mutation, which we subsequently withdrew in October 2020. We plan to submit an sNDA for TIBSOVO® for previously treated IDH1 mutant-positive cholangiocarcinoma to the FDA in the first quarter of 2021.

Our other marketed product is IDHIFA® (enasidenib), an oral targeted inhibitor of the mutated isocitrate dehydrogenase 2, or IDH2 enzyme and the first and only FDA-approved therapy for patients with R/R AML and an IDH2 mutation. In August 2017, the FDA granted our collaboration partner, Celgene, approval of IDHIFA® for the treatment of adult patients with R/R AML and an IDH2, mutation as detected by an