SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN) Files An 8-K Entry into a Material Definitive Agreement


SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN) Files An 8-K Entry into a Material Definitive Agreement


Entry into a Material Definitive Agreement

Agreement and Plan of Merger

On June7, 2017, SciClone Pharmaceuticals, Inc., a Delaware
corporation (the Company) entered into an Agreement and
Plan of Merger (as it may be amended from time to time, the
Merger Agreement) with Silver Biotech Investment Limited,
a company organized under the laws of the Cayman Islands
(Holdco), and Silver Delaware Investment Limited, a
Delaware corporation and wholly owned subsidiary of Holdco
(Merger Sub), under which Merger Sub will be merged with
and into the Company (the Merger), with the Company
continuing after the Merger as the surviving corporation and
subsidiary of Holdco. The Merger Agreement has been unanimously
approved by the Companys Board of Directors.

At the effective time of the Merger (the Effective Time),
each share of the Companys common stock, par value $0.001 per
share (the Common Stock), issued and outstanding
immediately prior to the Effective Time (other than (i)shares of
the Common Stock that are held by the Company, Holdco or Merger
Sub or any direct or indirect wholly-owned subsidiary of either
the Company or Holdco, including the shares held by GL Capital
(as defined below), and (ii)certain shares of the Common Stock
with respect to which the holder thereof shall have properly
complied with the provisions of Section262 of the General
Corporation Law of the State of Delaware as to appraisal rights)
shall be converted into the right to receive $11.18 in cash,
without interest (the Merger Consideration).

At the Effective Time, each award of time-based restricted stock
units and performance-based restricted stock units (whether
vested or unvested) will be cancelled and extinguished without
payment, except as provided by the Merger Agreement with respect
to any required deferred payment. At the Effective Time, each
stock option that is vested and unexercised as of immediately
prior to the Effective Time will be cancelled and converted into
the right to receive from the Company a cash payment (without
interest) equal to the product of (i)the excess, if any, of
(x)the Merger Consideration over (y)the per share exercise price
of such stock option and (ii)the number of shares of Common Stock
subject to such stock option as of the Effective Time. Except as
otherwise provided in the preceding sentence, each outstanding
and unexercised stock option as of the Effective Time shall be
cancelled and extinguished without payment.

The Merger will be financed through a combination of equity
financing to be provided by the Holdco, and debt financing
expected to be arranged by Minsheng Bank, the proceeds of which,
in addition to the Companys available cash, will be sufficient
for Holdco and Merger Sub to pay the aggregate Merger
Consideration and all related fees and expenses. Holdco will
obtain the funds to provide the equity financing from an equity
ownership consortium including GL Capital Management GP Limited,
Bank of China Group Investment Limited, CDH Investments,
Ascendent Capital Partners II, L.P. and Boying (collectively, the
Buyer Consortium). Holdco has secured commitments for the
debt financing to be provided to it that are subject to certain
closing conditions. The Merger Agreement does not contain a
financing condition.

Consummation of the Merger is expected to occur in 2017 and is
subject to certain customary closing conditions including, among
others, the absence of certain legal impediments and approval by
the Companys stockholders.

The Company has made customary representations and warranties in
the Merger Agreement and has agreed to customary covenants
regarding the operation of its business between the execution of
the Merger Agreement and the Effective Time.

The Merger Agreement contains certain termination rights for the
Company and Holdco. Upon termination of the Merger Agreement, the
Company may be required to pay Holdco a termination fee, or
Holdco may be required to pay the Company a reverse termination
fee, depending on the circumstances under which the Merger
Agreement is terminated. Concurrently with the execution of the
Merger Agreement, Holdco has deposited shares of Common Stock
equal to approximately $7.2 million of the aggregate Merger
Consideration into an escrow account with Computershare Trust
Company, N.A., and has agreed to make a further deposit of
approximately $24.4million within 21 calendar days of the
execution of the Merger Agreement, in order to secure the reverse
termination fee that may become payable by Holdco to the Company.

The Company will be required to pay a termination fee of
approximately $15.8 million to Holdco if the Merger Agreement is
terminated because, among other things, (i)the Company enters
into an alternative definitive agreement in respect of a superior
proposal, (ii)the Companys Board of Directors fails to recommend
the Merger or changes its recommendation to stockholders with
respect to the Merger, or (iii)the Companys is in receipt of a
competing bid, Holdco terminates the Agreement due to (x)Companys
failure to obtain stockholder consent, (y)material breach of the
Agreement by the Company or (z)material breach by Company of
no-shop, and the Company accepts the competing bid within 12

In addition, the Agreement includes a 60 day go-shop period and
the provides that the Company may continue negotiating with
certain excluded parties until the Company stockholder vote. Any
termination resulting from superior proposal received during
go-shop period or from excluded party is subject to a reduced
Company termination fee of approximately $7.9 million. Following
the go-shop period and subject to the rights of excluded parties,
the Company is also subject to customary restrictions on its
ability to solicit proposals from, and hold discussions and
negotiations with, third parties regarding alternative
acquisition proposals, subject to certain exceptions to allow the
Companys Board of Directors to fulfill its fiduciary duties.

Holdco will be required to pay the Company a reverse termination
fee of approximately $31.6 million if the Merger Agreement is
terminated because of any reason other than failure to obtain
regulatory approvals, provided that Holdco will have a one month
extension of the termination date if required to secure debt
financing and all other conditions are met. Holdco will be
obligated to pay the Company the termination fee approximately
$21.0 million, if the Merger Agreement is terminated based upon,
among other things, (i)a final and non-appealable injunction or
law preventing consummation of Merger (as long as injunction not
caused by Companys material breach of agreement or new law after
date of the agreement), (ii)if all conditions are met by Company
and transaction has not closed by the termination date or
(iii)agreement is terminated due to Holdcos failure to obtain any
regulatory approvals provided that Company has met conditions and
committed in writing it is ready to close. In addition, Holdco
will be required to pay the Company a reverse termination fee of
approximately $7.2 million (in the form of 646,942shares of
Company common stock deposited into an escrow account at the date
of signing of the Agreement) if the Merger Agreement is
terminated by the Company based upon Holdco failing to cause a
supplemental amount of approximately $24.3million in cash to be
deposited into the escrow account within 21 calendar days of the
date of the Agreement, in order to secure the reverse termination
fee that may become payable by Holdco to the Company.

Holdco and Merger Sub are affiliates of GL Trade Investments
Limited (GL Capital), a holder of approximately 9.2% of
the Companys Common Stock. Currently with the execution of the
Merger Agreement, GL Capital is entering into a rollover
agreement with Holdco and Silver Biotech Holding Limited, a
company organized under the laws of the Cayman Islands and sole
shareholder of Holdco (Topco), to which GL Capital is
agreeing, among other things, to contribute all of the shares of
Common Stock beneficially owned by it to Holdco immediately prior
to the Effective Time in exchange for newly issued shares of

The Merger Agreement has been provided solely to inform investors
of its terms. It is not intended to provide any other factual
information about the Company. In particular, the
representations, warranties and covenants contained in the Merger
Agreement were made only for the purposes of the Merger Agreement
as of specific dates, and solely for the benefit of the parties
to the Merger Agreement. The representations, warranties and
covenants contained in the Merger Agreement may be subject to
limitations agreed upon by the parties to the Merger Agreement
and may be qualified by certain confidential disclosures not
reflected in the text of the Merger Agreement. Moreover, certain
representations, warranties and covenants in the Merger Agreement
may apply standards of materiality in a way that is different
from what may be viewed as material by the Companys stockholders
or other investors, and may have been used for the purpose of
allocating risk among the parties rather than establishing
matters of fact. The Companys stockholders and other investors
are not third-party beneficiaries under the Merger Agreement and
should not rely on the representations, warranties and covenants
or any descriptions thereof as characterizations of the actual
state of facts or condition of the Company or any of its
subsidiaries or affiliates. Moreover, information concerning the
subject matter of the representations and warranties may change
after the date of the Merger Agreement, which subsequent
information may or may not be fully reflected in the Companys
public disclosures.

Voting Agreement

On June7, 2017, GL Capital entered into a Voting and Support
Agreement with the Company (the Voting Agreement), to
which, subject to the terms and condition set forth in the Voting
Agreement, GL Capital has agreed to, among other things, vote all
shares of Common Stock held by it in favor of the adoption of the
Merger Agreement and approval of the transactions contemplated
thereby, including the Merger and to vote against, among other
things, any other acquisition proposal or other proposal, action
or agreement that would impede, frustrate, interfere with, delay,
postpone or adversely affect the Merger and the transactions
contemplated by the Merger Agreement. The Voting Agreement also
restricts GL Capital, among other things, from transferring or
agreeing to transfer any of the common stock owned by GL Capital
during its term, except in connection with the rollover or
escrow. GL Capital currently holds an aggregate of 4,750,116
shares of Common Stock, comprising approximately 9.2% of the
outstanding shares of the Common Stock, which are subject to the
Voting Agreement.

The Voting Agreement terminates upon the earlier to occur of the
completion of the Merger, the termination of the Merger Agreement
in accordance with its terms, an adverse recommendation change by
the Companys Board or the mutual agreement of the Company and GL

The foregoing description of the Merger Agreement, the Voting
Agreement and the transactions contemplated thereby does not
purport to be complete and is subject to, and qualified in its
entirety by, the full text of the Merger Agreement and the Voting
Agreement, attached asExhibit 2.1and Exhibit 10.1,
respectively, to this Current Report on Form 8-K, which are
incorporated herein by reference.

Additional Information and Where to Find It

This communication does not constitute an offer to sell or the
solicitation of an offer to buy the securities of the Company or
the solicitation of any vote or approval. This communication is
being made in respect of the proposed merger transaction
involving the Company and the Buyer Consortium. The proposed
merger of the Company will be submitted to the stockholders of
the Company for their consideration. In connection therewith, the
Company intends to file relevant materials with the Securities
and Exchange Commission (the SEC), including a definitive proxy
statement. However, such documents are not currently available.
The definitive proxy statement will be mailed to the stockholders
PROPOSED TRANSACTION. Investors and security holders may obtain
free copies of the definitive proxy statement, any amendments or
supplements thereto and other documents containing important
information about the Company, once such documents are filed with
the SEC, through the website maintained by the SEC at Copies of the documents filed with the SEC by
the Company will be available free of charge on the Companys
website at under the heading SEC Filings
in the Investors and Media portion of the Companys website.
Stockholders of the Company may also obtain a free copy of the
definitive proxy statement and any filings with the SEC that are
incorporated by reference in the definitive proxy statement by
contacting the Companys Investor Relations Department at

Participants in the Solicitation

The Company and its directors and executive officers may be
deemed participants under SEC rulesin the solicitation of proxies
from the Companys stockholders in favor of the proposed
transaction. Information about the Companys directors and
executive officers and their interests in the solicitation, which
may, in some cases, differ from those of the Companys
stockholders generally, will be included in the proxy statement
to be filed with the SEC in connection with the proposed
transaction. Additional information about these directors and
executive officers is available in the Companys proxy statement
for its 2017 Annual Meeting of Stockholders, which was filed with
the SEC on April28, 2017, and in the Companys Annual Report on
Form 10-K for the fiscal year ended December31, 2016, which was
filed with the SEC on March9, 2017. To the extent that holdings
of the Companys securities by the Companys directors and
executive officers have changed since the amounts printed in the
latest proxy statement or Form 10-K, such changes have been or
will be reflected on Statements of Change in Ownership on Form4
filed with the SEC.

Item8.01. Other Events

On June8, 2017, Holdco and the Company issued a press release
announcing execution of the Merger Agreement. A copy of the press
release is attached hereto as Exhibit 99.1.

Forward-Looking Statements

This Current Report on Form 8-K, and the documents to which the
Company refers you in this communication, contain forward-looking
statements made to the safe-harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements represent the Companys current expectations or beliefs
concerning future events, plans, strategies, or objectives that
are subject to change, and actual results may differ materially
from the forward-looking statements.Without limiting the
foregoing, the words expect, plan, believe, seek, estimate, aim,
intend, anticipate, believe, and similar expressions are intended
to identify forward-looking statements. Forward-looking
statements may involve known and unknown risks over which the
Company has no control. Those risks include, without limitation
(i)the risk that the proposed transaction may not be completed in
a timely manner, or at all, which may adversely affect the
Companys business and the price of its common stock, (ii)the risk
that the Buyer Consortium may fail to obtain financing, and
notwithstanding that receipt of financing is not a closing
condition, that the closing may not occur if Buyer Consortium is
unable to secure adequate financing, (iii)the failure to satisfy
all of the closing conditions of the proposed transaction,
including the adoption of the definitive agreement by the
Companys stockholders, (iv)the occurrence of any event, change or
other circumstance that could give rise to the termination of the
definitive agreement, (v)the effect of the announcement or
pendency of the proposed transaction on the Companys business,
operating results, and relationships with customers, suppliers
and others, (vi)risks that the proposed transaction may disrupt
the Companys current plans and business operations,
(vii)potential difficulties retaining employees as a result of
the proposed transaction, (viii)risks related to the diverting of
managements attention from the Companys ongoing business
operations, and (ix)the outcome of any

legal proceedings that may be instituted against the Company
related to the definitive agreement or the proposed transaction.
In addition, the Companys actual performance and results may
differ materially from those currently anticipated due to a
number of risks including, without limitation: the Companys
substantial dependence on sales of ZADAXIN in China; the
dependence of the Companys revenues on obtaining or maintaining
regulatory licenses and compliance with other country-specific
regulations, including renewing the Companys drug import license
for ZADAXIN; risks and uncertainties relating to Chinese
governmentactionsintended to reduce pharmaceutical prices such as
the reduction insome provinces ofthe governmentally permitted
maximum listed price for the Companys products and increased
oversight of the health care market and pharmaceutical industry;
risks related to existing and future pricing pressures on our
products, particularly in China; SciClones ability to implement
and maintain controls over its financial reporting; actual or
anticipated fluctuations in the Companys operating results, some
of which may result from undertaking new clinical development
projects, or from licensing or acquisition-related expenses
including up-front fees, milestone payments, and other items; the
Companys ability to successfully develop or commercialize its
products; risks related to the impact of the Companys efforts to
in-license or acquire other pharmaceutical products for marketing
in China and other markets; the Companys dependence of its
current and future revenue and prospects on third-party license,
promotion or distribution agreements, including the need to renew
such agreements, enter into similar agreements, or end
arrangements that SciClone does not believe are beneficial; risks
relating to operating in China, including risk due to changes in
regulatory environment, slow payment cycles and changes to
economic conditions including currency exchange fluctuations;
uncertainty in the prospects for unapproved products, including
uncertainties as to pricing and competition and risks relating to
the clinical trial process and related regulatory approval
process and the process of initiating trials at, and enrolling
patients at, clinical sites. Please also refer to other risks and
uncertainties described in SciClones filings with the SEC,
including but not limited to the risks described in SciClones
Annual Report on Form 10-K for the fiscal year ended December31,
2016 and the Quarterly Report on Form 10-Q for the fiscal quarter
ended March31, 2017. All forward-looking statements are based on
information currently available to SciClone and SciClone assumes
no obligation to update any such forward-looking statements.

Item9.01 Financial Statements and Exhibits
(d) Exhibits.


Description of Exhibit

2.1 Agreement and Plan of Merger by and among Company, Holdco and
Merger Sub dated June 7, 2017
10.1 Voting Agreement by and between GL Capital and Company dated
June 7, 2017
99.1 Press Release dated June 8, 2017

About SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN)

SciClone Pharmaceuticals, Inc. is a pharmaceutical company. The Company’s product portfolio of therapies includes oncology, infectious diseases and cardiovascular disorders. The Company operates in two segments: China and the Rest of the World, including its operations in the United States and Hong Kong. The Company’s lead product ZADAXIN (thymalfasin) is approved in approximately 30 countries, which is used for the treatment of hepatitis B virus (HBV), hepatitis C virus (HCV), and certain cancers according to the local regulatory approvals, and for use as an immune system enhancer. In addition to ZADAXIN, the Company markets approximately seven partnered and in-licensed products in China. The Company’s development portfolio includes Angiomax, Neucardin, Loramyc, Cleviprex, RapidFilm, VIBATIV and SGX942. The Company sells ZADAXIN in various international markets through its subsidiary, SciClone Pharmaceuticals International Ltd. (SPIL).