Item 1.01. Entry into a Material Definitive Agreement.

Merger Agreement

On August 10, 2020, Pfenex Inc. (the "Company" or "Pfenex"), a Delaware Corporation entered into an Agreement and Plan of Merger (the "Merger Agreement") with Ligand Pharmaceuticals Incorporated, a Delaware corporation ("Parent") and Pelican Acquisition Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent ("Acquisition Sub"). The board of directors of the Company has unanimously approved the Merger Agreement.

Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof, Acquisition Sub has agreed to commence, no later than August 31, 2020, a cash tender offer (the "Offer") to acquire all of the outstanding shares of common stock, par value $0.001 per share, of the Company (the "Company Common Stock") for a purchase price of (i) $12.00 per share, in cash, without interest (the "Cash Portion") and (ii) a non-transferrable contractual right (a "CVR"), pursuant to the Contingent Value Rights Agreement (as it may be amended from time to time, the "CVR Agreement"), to receive a contingent payment upon the achievement of a certain milestone as set forth in the CVR Agreement and described below, without interest (the "CVR Portion", and together with the Cash Portion, the "Offer Price"), subject to any required tax withholding and upon the other terms and subject to the conditions of the Merger Agreement. The Offer will expire at midnight (New York City time) at the end of the day on the date that is twenty (20) business days following the commencement of the Offer, unless extended in accordance with the terms of the Merger Agreement, including as required by the applicable rules and regulations of the U.S. Securities and Exchange Commission.

Following the completion of the Offer and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Acquisition Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the "Merger"). The Merger Agreement contemplates that, if the Offer is completed, the Merger will be effected pursuant to the procedure provided for under Section 251(h) of the Delaware General Corporation Law (the "DGCL"), which permits completion of the Merger without a vote of the Company stockholders upon the acquisition by Acquisition Sub of a majority of the aggregate voting power of Company Common Stock issued and outstanding. In the Merger, each outstanding share of Company Common Stock (other than (i) Company Common Stock owned by Parent, Acquisition Sub or the Company, or any of their respective wholly owned subsidiaries, or (ii) Company Common Stock held by stockholders who have validly exercised their appraisal rights under the DGCL) will be converted into the right to receive the Offer Price, without interest, less any applicable withholding taxes.

Upon the terms and subject to the conditions set forth in the Merger Agreement, each Company Option with an exercise price equal to or less than the Cash Portion that remains outstanding as of immediately prior to the Effective Time, whether vested or unvested, will be cancelled and converted into a right to receive, with respect to each share of Company Common stock subject to such Company Option, an amount in cash, without interest, equal to the excess, if any, of (i) the Cash Portion over the per share exercise price of such Company Option, plus (ii) the CVR Portion (the "Option Consideration"). All Option Consideration will be paid without interest and less any applicable tax withholdings.

Under the Merger Agreement, Acquisition Sub's obligation to accept and pay for share of Company Common Stock that are tendered in the offer is subject to customary conditions, including, among others, (i) the condition that, prior to the expiration of the Offer, there have been validly tendered and not validly withdrawn a number of shares of Company Common Stock, that, upon the completion of the Offer, together with the shares of Company Common Stock then owned by Parent, Acquisition Sub, and the Company would represent at least a majority of the aggregate voting power of the Company Common Stock outstanding immediately after the completion of the Offer; (ii) the expiration or termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iii) the absence of legal restraints on Acquisition Sub's ability to accept and pay for shares of Company Common Stock tendered into the Offer; and (iv) certain other customary conditions set forth in the Merger Agreement. The Offer is not subject to any financing condition.

The Merger Agreement contains certain termination rights for each of the Company and Parent if the Offer is not consummated on or prior to February 10, 2021. Upon termination of the Merger Agreement under specified circumstances, including Parent's termination due to a change in the recommendation of the Company's board of directors, the Company will be required to pay to Parent a termination fee of $17,500,000.

--------------------------------------------------------------------------------

The Merger Agreement contains representations, warranties and covenants of Parent, Acquisition Sub, and the Company that are customary for a transaction of this nature, including among others, covenants regarding the conduct of the Company's business during the pendency of the transactions, public disclosures, and the use of reasonable best efforts to cause the conditions to the transaction to be satisfied.

In addition, under the terms of the Merger Agreement, during the pendency of the transaction, the Company is not permitted to solicit or otherwise facilitate any alternative transaction proposals. Notwithstanding this limitation, prior to the expiration of the Offer, subject to customary limitations and conditions, the Company may provide information and participate in discussions or negotiations with a third party that has made a bona fide, written and unsolicited acquisition proposal that the Company's board of directors has determined in good faith, after consultation with its financial advisor and outside legal counsel, either constitutes or would reasonably be expected to lead to a "Superior Proposal" (as defined in Merger Agreement). Additionally, the Company is permitted, in certain specified circumstances and subject to customary limitations and conditions, to terminate the Merger Agreement prior to the expiration of the Offer, which may result in the payment of a $17.5 million fee by the Company by Company to Parent.

The Merger Agreement has been unanimously approved by the board of directors of each of the Company, Parent and Acquisition Sub. The board of directors of the Company unanimously recommends that stockholders of the Company tender their shares of Common Stock in the Offer.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by the full text of the Merger Agreement, which is attached as Exhibit 2.1 to this Current Report on Form 8-K, and is incorporated herein by reference. The Merger Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company, Parent or Acquisition Sub. In particular, the assertions embodied in the representations and warranties contained in the Merger Agreement are qualified by information in a confidential disclosure letter provided by the Company to Parent in connection with the signing of the Merger Agreement. This confidential disclosure letter contains information that modifies, qualifies, and creates exceptions to the representations and warranties and certain covenants set forth in the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were used for the purposes of allocating risk between Parent and the Company rather than establishing matters of fact. Accordingly, the Merger Agreement should not be relied on as characterizations of the actual state of facts about Parent, Acquisition Sub or the Company.

Support Agreements

Concurrently with the execution of the Merger Agreement, all directors and executive officers of the Company, in their respective capacities as stockholders of the Company, entered into a Support Agreement with Parent and Acquisition Sub (the "Support Agreement"), pursuant to which the signatories have agreed, among other things, and subject to the terms and conditions of the Support Agreements, to tender all of their respective shares of Company Common Stock (including those owned through the exercise of Company Options) (the "Subject Securities") into the Offer, which, as of August 9, 2020, in the aggregate represent approximately 6% of the outstanding shares of Company Common Stock. The Support Agreements terminate upon the occurrence of certain events, including the termination of the Merger Agreement in accordance with its terms.

The foregoing description of the Support Agreement does not purport to be complete and is qualified in its entirety by the full text of the Support Agreement, the form of which is attached as Exhibit 99.2, and is incorporated herein by reference.

Contingent Value Rights Agreement

At or prior to the time that Acquisition Sub accepts for payment all shares of Company Common Stock validly tendered and not properly withdrawn pursuant to the Offer, Parent and a duly qualified rights agent (the "Rights Agent") will enter into the CVR Agreement, pursuant to which each share of Company Common Stock held by the stockholders immediately prior to the Closing shall be entitled to . . .




Item 8.01. Other Events.

On August 10, 2020, the Company issued a press release announcing the entry into the Merger Agreement, a copy of which is attached as Exhibit 99.3 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.




(d) Exhibits.



Exhibit
  No.                                    Description

 2.1          Agreement and Plan of Merger, dated as of August 10, 2020, by and
            among Pfenex, Inc., Ligand Pharmaceuticals Incorporated and
            Acquisition Sub.*

99.1          Support Agreement, dated August 10, 2020, by and among Ligand
            Pharmaceuticals Incorporated, Acquisition Sub and the directors and
            executive directors of Pfenex, Inc.

99.2          Form of Contingent Value Rights Agreement.

99.3          Press Release issued by Pfenex, Inc., dated August 10, 2020.

104         Cover page Interactive Data File (formatted as inline XBRL contained
            in Exhibit 101)




*   Certain schedules and annexes have been omitted in accordance with Item
    601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or annex will
    be furnished as a supplement to the U.S. Securities and Exchange Commission
    upon request.

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses