Notable Mergers and Acquisitions 11/23: (AGN) (MIME) (ESEA) (LLL)

November 23, 2016 9:48 AM EST

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*** Allergan plc (NYSE: AGN) announced that it has completed the acquisition of Chase Pharmaceuticals Corporation, a clinical-stage biopharmaceutical company focused on the development of improved treatments for neurodegenerative disorders including Alzheimer's disease (AD), Allergan acquired Chase for an upfront payment of $125 million (subject to certain adjustments) and additional potential regulatory and sales milestone payments related to Chase's lead compound, CPC-201, and certain backup compounds.

"Alzheimer's disease is a neurodegenerative disease that represents a major and growing global public health problem, for which very few approved treatment options are available, and the societal cost is measured in hundreds of billions of dollars, so the need for improved treatment choices is paramount," said David Nicholson, Chief Research & Development Officer, Allergan. "This acquisition adds a new Phase 3 ready program for Alzheimer's disease to our CNS portfolio and builds on our commitment to develop innovative approaches to improve the lives of millions of patients suffering from this devastating illness."

Chase's lead compound, CPC-­201, is a patent-protected combination of the most commonly prescribed acetylcholinesterase inhibitor (AChEI), donepezil, and the peripherally acting cholinergic blocker, solifenacin. AChEIs have been shown to improve cognition in Alzheimer's disease patients. Currently approved AChEIs are only modestly effective due to dose-limiting side effects, including diarrhea, nausea and vomiting.

In Phase 2 clinical trials, 29 out of 33 patients (88%) reached 40 mg/day of donepezil (maximum dose allowed), without experiencing dose-limiting adverse events. This median donepezil dose did not change significantly during three months of maintenance treatment. Chase's next-generation formulations offer the possibility of greater and more tolerable dosing, and may provide the potential for significantly improved cognition and function in Alzheimer's disease patients.

Chase Pharmaceuticals recently completed an End of Phase 2 meeting with the Food and Drug Administration (FDA). Based on feedback from the FDA, Allergan intends to advance CPC-201 into a single Phase 3 registration study in 2017.

"We at Chase Pharmaceuticals are passionate about developing and bringing to physicians and their patients profoundly improved Alzheimer's disease treatments. I am very excited that Allergan has recognized the strong clinical value of our development programs and look forward to seeing Allergan apply its leading clinical development and regulatory expertise to bring these potential treatments forward for patients," said Douglas Ingram, Chief Executive Officer and President, Chase Pharmaceuticals Corporation.

"We believe our lead candidate, CPC-201, will offer a significant improvement over existing therapy in the symptomatic treatment of Alzheimer's disease, and will benefit all those suffering from this disease," said Thomas Chase, co-founder and Chief Scientific Officer of Chase Pharmaceuticals.

"When determining appropriate treatment for my patients with Alzheimer's, I am looking for treatments that provide a beneficial effect with the lowest possible side effect profile," said Jeffrey L. Cummings, MD, ScD, Director of the Cleveland Clinic's Lou Ruvo Center for Brain Health and the Camille and Larry Ruvo Chair of the Neurological Institute at Cleveland Clinic and a former consultant for Chase Pharmaceuticals. "The potential to provide improved cognition without the dose-limiting side effects of currently available AChEIs would be a welcome advance for medical professionals, their patients and caregivers who seek better approaches to manage the symptoms of Alzheimer's disease."

*** Mimecast Limited (Nasdaq: MIME) announced it was purchasing substantially all of the assets of iSheriff, a leading cloud-based security provider. This acquisition will provide Mimecast customers additional real-time email threat intelligence and detection expertise and complements Mimecast’s existing portfolio of email security, continuity and archiving solutions.

Email continues to be mission-critical for organizations and the number one attack vector for cybercriminals. These new technologies will further enhance Mimecast’s market leading detection capabilities, safeguarding customers against threats.

“Organizations that have legacy security capabilities focused on just prevention are likely to fail,” said Peter Bauer, CEO and founder of Mimecast. “Just years ago organizations argued not to move to the cloud because of security issues. Now organizations are moving to the cloud to get advanced threat detection and intelligence. This added expertise in threat detection and intelligence strengthens Mimecast’s cloud services to help customers bolster their cyber resilience efforts.”

With this acquisition, there is no change to Mimecast’s Q3 and FY 2017 guidance provided on November 9, 2016.

*** Euroseas Ltd. (Nasdaq: ESEA) announced that it signed a memorandum of agreement to purchase the M/V Capetan Tassos, a Panamax size drybulk carrier of 75,100 dwt built in 2000 in Japan for approximately $4.4 million. The vessel is expected to be delivered to the Company in January 2017.

The Company also announced that it reached an agreement with a company affiliated with its CEO to draw a $2 million loan to finance working capital needs. Interest on the loan is payable quarterly, and there are no principal repayments until January 2018 when the loan matures. The Company may elect to add the interest to the outstanding principal amount. Under certain limited circumstances, the Company can pay principal and interest in equity, and the loan is convertible in common stock of the Company at the option of the lender at certain times. The agreement was negotiated on an arms-length basis with market terms and is subject to customary legal documentation.

Aristides Pittas, Chairman and CEO of Euroseas commented: "We are very pleased to announce the acquisition of M/V Capetan Tassos as we believe the sector is approaching a turning point after a long period of depressed rates. Furthermore, to facilitate the acquisition and provide additional working capital, we arranged for a short term loan with an affiliated party; the loan was negotiated by an independent committee of our Board of Directors and carries what we believe to be better-than market terms."

After the acquisition of M/V Capetan Tassos, the Company's fleet will consist of 13 vessels, including four Panamax drybulk carriers, one Handymax drybulk carrier, one Kamsarmax drybulk carrier, and seven Feeder containerships.

*** L-3 Communications (NYSE: LLL) announced today the acquisition of MacDonald Humfrey (Automation) Ltd (“MacDonald Humfrey”) located in Luton, U.K. The acquisition was completed today for a purchase price of approximately £224 million (approximately $280 million). The purchase price is subject to an upward adjustment of up to £30 million (approximately $37.5 million), based on MacDonald Humfrey’s post-acquisition performance for years ending December 31, 2017 to 2019, which would be payable in 2020. The acquisition was funded initially from revolving credit borrowings expected to be repaid before the end of December 2016 from free cash flow. MacDonald Humfrey will report to the L-3 Security & Detection Systems (L-3 SDS) division of the company’s Electronic Systems business segment and will operate under the L-3 MacDonald Humfrey name. L-3 MacDonald Humfrey is projected to generate sales of approximately $135 million (£108 million) for the year ending December 31, 2017, and be accretive to earnings. The purchase price represents a multiple of approximately 10 times the business's estimated 2017 earnings before interest, taxes and depreciation and amortization (EBITDA).

MacDonald Humfrey is a globally recognized leader in the deployment of operationally effective and efficient aviation checkpoint security solutions, as well as in the development of state-of-the-art process automation and collaborative robotic capabilities supporting aviation and other adjacent markets. With a global business base, MacDonald Humfrey has deployed its advanced solutions at airports in Europe, the Middle East and Canada. The company has recently engaged with airlines and airports in the United States to help reduce lengthy checkpoint delays and is also developing passenger and baggage tracking systems to facilitate efficient security throughputs at airports. As an adjacent business area, MacDonald Humfrey has engaged in programs to automate the assembly of aircraft engines and is a key supplier to other high-end process automation markets. The company has 350 employees.

“L-3 has been very focused on developing total aviation checkpoint solutions built around our innovative ClearScan™ carry-on baggage screening system and our ProVision® personnel screener. The acquisition of MacDonald Humfrey, with its market-leading checkpoint management systems and security efficiency software, will enhance our ability to deliver scalable, operationally based networked security systems,” said Michael T. Strianese, L-3’s Chairman and Chief Executive Officer. “L-3 MacDonald Humfrey enhances our position in the global aviation security market while at the same time creating new opportunities for that business as it leverages existing worldwide distribution channels.”

“MacDonald Humfrey is a strong cultural fit with L-3 SDS and expands our capabilities, which will enhance traveler satisfaction while reducing the cost of security operations and airport infrastructure requirements,” added Tom Ripp, President of L-3 Security & Detection Systems. “We will be able to more effectively address continually evolving security requirements and the growing end-user demand for centralized screening supported by common data networks.”​

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