Clarient and Avid Radiopharmaceuticals Complete Acquisitions

Posted by | December 21, 2010

Earlier this quarter, we announced that partner companies Clarient (Nasdaq: CLRT) and Avid Radiopharmaceuticals had signed definitive agreements to be acquired by GE Healthcare and Eli Lilly, respectively. I’m happy to report that both transactions have closed.

On December 17, Safeguard realized $144 million in net proceeds from the successful completion of GE Healthcare’s public tender offer for all outstanding shares of partner company Clarient. The net proceeds represent a 3x cash-on-cash return on Safeguard’s remaining cost basis in its holdings in Clarient. Proceeds from the Clarient transaction substantially increase Safeguard’s cash balance from $55.2 million at September 30, 2010. Upon completion of the final merger stage of the transaction, Safeguard will receive additional proceeds of $2.6 million related to Clarient warrants it holds.

When GE Healthcare announced its definitive agreement to acquire Clarient on October 22, the company agreed to acquire all outstanding common and preferred shares of Clarient, at $5.00 per common share and $20.00 per preferred share, which valued Clarient at $587 million. The transaction represented a 35.9% premium to Clarient’s stock price of $3.68 per share at close of business on October 19 and a 5.8x multiple of the last twelve months sales as of June 30, 2010. Safeguard owned approximately 26% of Clarient outstanding shares on a fully-diluted, as-converted basis.

And just yesterday, Eli Lilly’s completed acquisition of Avid realized $36 million in net sale proceeds for Safeguard, which is another 3x cash-on-cash return for Safeguard with the potential to generate an 8x cash-on-cash return based on future regulatory and commercial milestones.

This is a major transaction for an incubator graduate out of the University of Pennsylvania. As our friend Steve Dickman over at Boston Biotech noted, this was an interesting deal. Eli Lilly—a major pharmaceutical company—acquired a diagnostics, pre-revenue start-up at premium prices. Clearly, Lilly sees great potential for Avid’s Florbetapir in the earlier detection and diagnosis of Alzheimer’s disease.

These exits are the result of years of dedication and hard work of the teams at Clarient and Avid, and we look forward to seeing great things from both companies in the future. These exits also give us the opportunity to redeploy this capital into new, high-growth, high-value opportunities, our current partner companies, and ultimately expand our Safeguard platform.

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