Filed Pursuant to Rule 424(B)(3)
Registration No. 333-175078

 

 

 

To the shareholders of Alkermes, Inc.:

 

You are cordially invited to attend a special meeting of the shareholders of Alkermes, Inc., which is referred to as Alkermes, to be held on September 8, 2011 at 10 a.m. Eastern Daylight Time, at our principal executive offices, located at 852 Winter Street, Waltham, Massachusetts. Only shareholders who held shares of Alkermes common stock at the close of business on August 1, 2011 will be entitled to vote at the special meeting and at any adjournments and postponements thereof.

 

As previously announced, on May 9, 2011 Alkermes entered into a Business Combination Agreement and Plan of Merger, which is referred to as the merger agreement, with Elan Corporation, plc, which is referred to as Elan, Antler Science Two Limited (which has been re-registered as a public limited company, Antler Science Two plc), which is referred to as New Alkermes, and certain other parties, under which the business of Alkermes will be combined with the global drug delivery technologies business of Elan, which is referred to as EDT, in a cash and stock transaction that was valued at approximately $960 million at the time of announcement. The businesses will be combined under New Alkermes, a new holding company incorporated in Ireland that will be renamed Alkermes plc, at or prior to the completion of the business combination. To facilitate the business combination, EDT is being carved-out of Elan and will be held under New Alkermes. Following this reorganization and pursuant to the merger agreement, a wholly-owned indirect subsidiary of New Alkermes will merge with and into Alkermes, with Alkermes surviving as a wholly-owned indirect subsidiary of New Alkermes. A complete copy of the merger agreement is attached as Annex A to this proxy statement/prospectus.

 

As consideration for the business combination, Alkermes will pay Elan $500 million in cash, subject to certain adjustments, and a subsidiary of Elan that is organized in Ireland will receive and retain 31,900,000 New Alkermes ordinary shares, representing approximately 25% of the outstanding voting securities of New Alkermes immediately following the consummation of the merger. At the effective time, (i) each share of Alkermes common stock then issued and outstanding and all associated rights will be canceled and automatically converted into and become the right to receive one ordinary share of New Alkermes; (ii) all currently issued and outstanding options to purchase Alkermes common stock granted under any stock option plan will be converted into options to purchase, on substantially the same terms and conditions, the same number of New Alkermes ordinary shares at the same exercise price; and (iii) all currently issued and outstanding awards of Alkermes common stock will be converted into awards of the same number of New Alkermes ordinary shares on substantially the same terms and conditions. As a result, upon consummation of the merger and the issuance of the New Alkermes ordinary shares in exchange for the canceled shares of Alkermes common stock, the former shareholders of Alkermes will own approximately 75% of the outstanding voting securities of New Alkermes. The exchange of Alkermes shares for New Alkermes ordinary shares will be a taxable transaction for Alkermes shareholders. The New Alkermes ordinary shares are expected to be listed on the NASDAQ under the symbol “ALKS.”

 

Alkermes is holding a special meeting of its shareholders in order to obtain the shareholder approval necessary to consummate the business combination and the merger. At the special meeting, holders of Alkermes common stock who are entitled to vote will be asked to adopt the merger agreement and thereby approve the transactions contemplated by the merger agreement, including the business combination. The completion of the business combination is subject to the satisfaction or waiver of certain other conditions set forth in the merger agreement and described in the accompanying proxy statement/prospectus. You are also being asked to approve a proposal to create “distributable reserves” for New Alkermes, which are required under Irish law in order for New Alkermes to make distributions and pay dividends and to repurchase or redeem shares in the future. Approval of this proposal is not a condition to the completion of the business combination. More information about Alkermes, Elan, New Alkermes, EDT and the proposed business combination and merger is contained in this proxy statement/prospectus. The board urges all Alkermes shareholders to read this proxy statement/prospectus and the documents included with this proxy statement/prospectus, including the Annexes, or incorporated by reference in this proxy statement/prospectus carefully and in their entirety. In particular, the board urges you to read carefully “Risk Factors” beginning on page 14 of this proxy statement/prospectus.

 

After careful consideration, the Alkermes board of directors has approved and declared advisable the merger agreement and the business combination, and has determined that the merger agreement and the business combination are fair to and in the best interests of Alkermes and its shareholders. The board of directors of Alkermes recommends that you vote “FOR” the adoption of the merger agreement and “FOR” the other proposals described in this proxy statement/prospectus. Your vote is very important. The affirmative vote of a majority of the votes cast by the holders of shares of Alkermes common stock outstanding and entitled to vote is required for the adoption of the merger agreement. Approval of the separate proposal to create distributable reserves also requires the affirmative vote of a majority of the votes cast by the holders of shares of Alkermes common stock outstanding and entitled to vote; however, whether or not this proposal is approved will have no impact on the completion of the business combination. Abstentions, failures to vote and broker non-votes will have no effect on these proposals. Whether or not you plan to attend the special meeting, please vote as soon as possible by following the instructions in this proxy statement/prospectus to make sure that your shares are represented.

 

On behalf of the Alkermes board of directors, thank you for your consideration and continued support.

 

Very truly yours,

 

 

Richard F. Pops

Chairman, President and CEO

Alkermes, Inc.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

 

This proxy statement/prospectus is dated August 4, 2011, and is first being mailed to the Alkermes shareholders on or about August 8, 2011.

 

 

ALKERMES, INC.
852 Winter Street
Waltham, Massachusetts 02451

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 8, 2011

 

To the shareholders of Alkermes, Inc.:

 

A special meeting of the shareholders of Alkermes, Inc., a Pennsylvania corporation, will be held on September 8, 2011 at 10 a.m. Eastern Daylight Time, at our principal executive offices, located at 852 Winter Street, Waltham, Massachusetts for the following purposes:

 

1. To consider and vote upon a proposal to adopt the Business Combination Agreement and Plan of Merger, dated as of May 9, 2011, by and among Alkermes, Elan, New Alkermes and certain other parties;

 

2. To consider and vote upon a proposal to approve the creation of “distributable reserves” of New Alkermes which are required under Irish law in order to allow New Alkermes to make distributions and to pay dividends and repurchase or redeem shares following completion of the business combination; and

 

3. To vote upon a proposal to adjourn the special meeting of Alkermes shareholders if necessary or appropriate, including for the purpose of permitting further solicitation of proxies if there are not sufficient votes at the time of the Alkermes special meeting to adopt the merger agreement.

 

The above matters are more fully described in this proxy statement/prospectus, which also includes, as Annex A, the complete text of the merger agreement. Only shareholders of record at the close of business on August 1, 2011 are entitled to vote at the special meeting and at any adjournments and postponements thereof. Our stock transfer books will remain open between the record date and the date of the special meeting. A list of shareholders entitled to vote at the special meeting will be available for inspection at the special meeting. We urge you to read carefully this proxy statement/prospectus in its entirety including the Annexes and the documents incorporated by reference in this proxy statement/prospectus. In particular, we urge you to read carefully “Risk Factors” beginning on page 14 of this proxy statement/prospectus.

 

Your proxy is being solicited by the board of directors of Alkermes. After careful consideration, we have approved and declared advisable the merger agreement and the business combination, and have determined that the merger agreement and the transactions contemplated by the merger agreement, including the business combination, are fair to and in the best interests of Alkermes and its shareholders.

 

We recommend that you vote “FOR” the adoption of the merger agreement, “FOR” the distributable reserves proposal and “FOR” the adjournment proposal. Your vote is very important.

 

The affirmative vote of a majority of the votes cast by the holders of shares of Alkermes common stock outstanding and entitled to vote is required for the adoption of the merger agreement. Approval of the separate proposal to create distributable reserves also requires the affirmative vote of a majority of the votes cast by the holders of shares of Alkermes common stock outstanding and entitled to vote. The distributable reserves proposal is not a condition to the completion of the business combination and whether or not it is approved will have no impact on the completion of the business combination. Whether or not you attend the special meeting in person, to ensure your representation at the special meeting, please submit your proxy as described in this proxy statement/prospectus.

 

You may submit your proxy (1) over the Internet, (2) by telephone or (3) by signing, dating and returning the enclosed proxy card promptly in the accompanying envelope. Should you receive more than one proxy because your shares are registered in different names and addresses, each proxy should be submitted to ensure that all your shares will be voted. If you submit your proxy and then decide to attend the special meeting to vote your shares in person, you may still do so. Your proxy is revocable in accordance with the procedures set forth in this proxy statement/prospectus. If you hold your shares in the name of a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee when instructing them on how to vote your shares or when changing those instructions. If you do not instruct your bank, broker or other nominee, your bank, broker or other nominee will not have the discretion to vote your shares without your instructions.

 

The prompt return of your proxy card, or your prompt voting by telephone or over the Internet, will assist us in preparing for the special meeting.

 

By Order of the Board of Directors,

 

 

Richard F. Pops
Chairman, President and CEO
Alkermes, Inc.

 

August 4, 2011

 

TABLE OF CONTENTS

 

 

The following are answers to some of the questions you may have as an Alkermes shareholder. These questions and answers only highlight some of the information contained in this proxy statement/prospectus. They may not contain all the information that is important to you. You should read carefully this entire proxy statement/prospectus, including the Annexes and the documents incorporated by reference into this proxy statement/prospectus, to understand fully the proposed transactions and the voting procedures for the special meeting of Alkermes shareholders. All references in this proxy statement/prospectus to “Alkermes” refer to Alkermes, Inc., a Pennsylvania corporation; all references in this proxy statement/prospectus to “Elan” refer to Elan Corporation, plc, a public limited company incorporated in Ireland; all references in this proxy statement/prospectus to “New Alkermes” refer to Antler Science Two plc, a public limited company incorporated in Ireland that was converted from a private limited company formerly known as Antler Science Two Limited and which will be renamed Alkermes plc at or prior to the completion of the business combination as described in this proxy statement/prospectus; all references in this proxy statement/prospectus to “EDT” refer to the global drug delivery technologies business of Elan; all references to the “merger agreement” refer to the Business Combination Agreement and Plan of Merger, dated as of May 9, 2011, by and among Elan, New Alkermes, Elan Science Four Limited, EDT Pharma Holdings Limited, EDT US Holdco Inc., Antler Acquisition Corp. and Alkermes, a copy of which is included as Annex A to this proxy statement/prospectus; and all references to the “business combination” refer to the totality of transactions contemplated by the merger agreement, including the reorganization and the merger described in this proxy statement/prospectus. Unless otherwise indicated, all references to “dollars” or “$” in this proxy statement/prospectus are references to U.S. dollars.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUMMARY

 

The Companies (Page 72)

 

The Business Combination (Page 35)

 

Structure of the Transaction (Page 35)

 

Post-Merger Management (Page 138)

 

Alkermes’ Reasons for the Merger (Page 43)

	•	combining Alkermes and EDT will create a larger, faster-growing biopharmaceutical company that is immediately and sustainably profitable on a cash earnings basis with growing revenues in excess of $450 million and growing adjusted earnings before interest, tax, depreciation, amortization, share-based compensation expense and other non-recurring items, which are referred to in this proxy statement/prospectus as adjusted EBITDA margins;
	•	New Alkermes will have a diversified portfolio of products including five key products with long patent lives: Ampyra®, Vivitrol, Bydureon, Risperdal Consta and Invega® Sustenna®;
	•	New Alkermes will be a leader in the development of medicines for the treatment of central nervous system diseases with an established track record of successful innovation. It will have a powerful combination of commercial stage products and new pipeline candidates developed in collaboration with major pharmaceutical companies and for its own account;
	•	New Alkermes will have deep scientific, development and manufacturing capabilities which will provide competitive advantages in the creation of innovative biopharmaceutical products for itself and its partners;
	•	New Alkermes will have the scale, diversification and technical and manufacturing capabilities to accelerate the ongoing business transition from a provider of drug delivery technologies and services to a developer of proprietary innovative pharmaceutical products; and
	•	New Alkermes will have enhanced financial resources to invest in its proprietary drug candidates, pursue additional growth opportunities and reduce its cost of capital.

 

Alkermes’ Board Recommendation (Page 43)

 

Opinion of Alkermes’ Financial Adviser (Page 46)

 

The Special Meeting of Alkermes’ Shareholders (Page 31)

	•	adopt the merger agreement;
	•	create distributable reserves of New Alkermes; and
	•	adjourn the special meeting to a later date or dates if necessary or appropriate, including for the purpose of permitting the further solicitation of proxies.

 

Interests of Certain Persons in the Transactions (Page 55)

 

Certain Tax Consequences of the Merger (Page 61)

 

No Dissenters’ Rights (Page 71)

 

Regulatory Approvals Required (Page 60)

 

Listing of New Alkermes Ordinary Shares on NASDAQ (Page 71)

 

Conditions to the Completion of the Merger (Page 87)

	•	the adoption of the merger agreement by Alkermes shareholders;
	•	the absence of any law, order or injunction enacted, issued or promulgated by any court or governmental authority that is in effect and has the effect of making the merger illegal or otherwise prohibits consummation of the merger or the business combination;
	•	the expiration or termination of the waiting period applicable to the merger under the HSR Act and the filing or receipt of all other governmental authorizations required to be made or obtained by Alkermes, Elan or any of their subsidiaries to consummate the business combination, other than those the failure of which to make or obtain would not, individually or in the aggregate, be reasonably likely to have a Business Material Adverse Effect (as defined in the merger agreement);
	•	the authorization for listing on NASDAQ of the New Alkermes ordinary shares to be issued in the merger, subject to official notice of issuance;
	•	the effectiveness of the registration statement of which this proxy statement/prospectus is a part, the absence of a stop order issued by the SEC, suspending the effectiveness of that registration statement and the absence of any proceedings initiated for that purpose by the SEC;
	•	the validation and filing with the Irish Companies Registration Office of all Irish financial assistance issues arising in respect of the reorganization as contemplated by the merger agreement in accordance with Section 60 of the Irish Companies Act 1963;
	•	the re-registration of New Alkermes as a public limited company in accordance with the provisions of the Irish Companies (Amendment) Act 1983 and the delivery of a certificate of incorporation on re-registration from the Irish Companies Registration Office;
	•	the material accuracy of the representations and warranties made by Alkermes and Elan and material compliance by Alkermes and Elan with their respective obligations under the merger agreement;
	•	the completion of the reorganization;
	•	material compliance by Elan and certain of its subsidiaries with their respective obligations under the merger agreement;
	•	material compliance by Alkermes with its obligations under the merger agreement;
	•	the absence of indebtedness of New Alkermes and the New Alkermes Group Entities (as defined in the merger agreement) as of the closing date of the business combination (other than Elan reorganization indebtedness and indebtedness in respect of the transfer by Alkermes of certain intellectual property as described in this proxy statement/prospectus);

	•	the absence of any material difference between the audited financial statements delivered by Elan to Alkermes under the merger agreement from the historical financial statements of EDT specified in the merger agreement, other than in respect of the different accounting standards under which they were prepared and any applicable agreed adjustments;
	•	the delivery of all the certificates, instruments, agreements and other documents as specified in the merger agreement; and
	•	the absence of any change in law with respect to Section 7874 of Internal Revenue Code of 1986, as amended, which is referred to in this proxy statement/prospectus as the Code, or official interpretation thereof, that, in the opinion of Cleary Gottlieb Steen & Hamilton LLP, which is referred to in this proxy statement/prospectus as Cleary Gottlieb, (or other nationally recognized tax counsel), would materially increase the risk that New Alkermes would be treated as a United States domestic corporation for United States federal tax purposes.

 

Termination of the Merger Agreement (Page 91)

	•	by mutual written consent of Alkermes and Elan;
	•	by either Alkermes or Elan if:

	•	the business combination has not been consummated by November 5, 2011; provided, that this right to terminate the merger agreement is not available to any party that has breached its obligations under the merger agreement in a manner that has caused or resulted in the failure of the business combination to have been consummated by such date;

	•	any law, order or injunction that permanently restrains, enjoins or otherwise prohibits the merger or the other transactions contemplated by the merger agreement shall have become final and nonappealable; or
	•	the vote of the Alkermes shareholders on the adoption of the merger agreement has been held but the required vote was not obtained;

	•	by Alkermes if:

	•	Elan breaches its representations and warranties, covenants or other agreements contained in the merger agreement such that the relevant closing condition is not satisfied and the breach cannot be cured or, if curable, is not cured within 20 calendar days after Alkermes gives written notice to Elan of the breach or failure to perform;

	•	by Elan if:

	•	prior to the Alkermes shareholders meeting, the Alkermes board of directors withdraws or modifies in any manner adverse to Elan its recommendation that the shareholders of Alkermes approve the merger or has resolved to take any such action; or
	•	Alkermes breaches its representations and warranties, covenants or other agreements contained in the merger agreement such that the relevant closing condition is not satisfied and the breach cannot be cured or, if curable, is not cured within 20 calendar days after Elan gives written notice to Alkermes of the breach or failure to perform.

 

Shareholder’s Agreement (Page 93)

 

Financing Relating to the Business Combination (Page 54)

 

Accounting Treatment of the Merger (Page 61)

 

Comparison of the Rights of Holders of Alkermes Common Stock and New Alkermes Ordinary Shares (Page 157)

 

In deciding whether to vote for the adoption of the merger agreement, you should consider carefully the following risk factors in addition to the other information contained in or incorporated by reference into this proxy statement/prospectus, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements.” You should also read and consider the risks associated with the business of Alkermes and the risks associated with the business of EDT because these risks will also affect New Alkermes. The risks associated with the business of Alkermes can be found in the Alkermes Annual Report on Form 10-K for the fiscal year ended March 31, 2011, as amended, and in the Alkermes Quarterly Report on Form 10-Q for the period ended June 30, 2011, which are incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information.” The risks associated with the business of EDT are described under the caption “Risk Factors — Risks Related to EDT.”

 

The combination of the businesses currently conducted by Alkermes and EDT will create numerous risks and uncertainties which could adversely affect New Alkermes’ operating results.

 

Strategic transactions like the business combination of EDT with Alkermes create numerous uncertainties and risks. EDT will transition from being a part of Elan to being a part of New Alkermes, and Alkermes will migrate from being a standalone Pennsylvania company to being part of a combined company organized in Ireland. This combination will entail many changes, including the integration of EDT and its personnel with those of Alkermes and changes in systems and employee benefit plans. These transition activities are complex, and New Alkermes may encounter unexpected difficulties or incur unexpected costs, including:

 

 

If any of these factors limits New Alkermes’ ability to integrate the operations of Alkermes with those of EDT successfully or on a timely basis, the expectations of future results of operations, including certain cost savings and synergies expected to result from the business combination, might not be met. As a result, New Alkermes may not be able to realize the expected benefits that it seeks to achieve from the business combination. In addition, New Alkermes may be required to spend additional time or money on integration that otherwise would be spent on the development and expansion of its business.

 

In addition, the market price of New Alkermes ordinary shares may decline following the business combination if the integration of Alkermes and EDT is unsuccessful, takes longer than expected or fails to achieve financial benefits to the extent anticipated by financial analysts or investors, or the effect of the business combination on the financial results of the combined company is otherwise not consistent with the expectations of financial analysts or investors.

 

The price of New Alkermes ordinary shares is expected to be highly volatile, and the market price of the ordinary shares may drop following the closing.

 

The realization of any of the risks described in these risk factors or other unforeseen risks could have a dramatic and adverse effect on the market price of New Alkermes ordinary shares following the closing.

Additionally, market prices for securities of biotechnology and pharmaceutical companies, including Alkermes, have historically been very volatile. The market for these securities has from time to time experienced significant price and volume fluctuations for reasons that were unrelated to the operating performance of any one company. In particular, and in addition to circumstances described elsewhere under these risk factors, the following risk factors may adversely affect the market price of New Alkermes ordinary shares:

 

 

New Alkermes’ future results will suffer if it does not effectively manage its expanded operations.

 

The size of the combined company’s business will be significantly larger than the size of each of Alkermes’ and EDT’s businesses today. New Alkermes’ future success depends, in part, upon its ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity.

 

Adverse credit and financial market conditions may exacerbate certain risks affecting New Alkermes’ business.

 

The successful commercialization of New Alkermes’ products will be dependent, in large part, on reimbursement from government health administration authorities and private health insurers. As a result of adverse credit and financial market conditions, these organizations may be unable to satisfy their reimbursement obligations or may delay payment. In addition, federal, state and foreign health authorities may reduce reimbursements (including Medicare and Medicaid in the United States) or payments, and private insurers may increase their scrutiny of claims. A reduction in the availability or extent of reimbursement could

negatively affect New Alkermes’ product sales and revenue. Customers may also reduce spending during times of economic uncertainty.

 

In addition, New Alkermes will rely on third parties for several important aspects of its business. New Alkermes will depend upon collaborators for both manufacturing and royalty revenues and the clinical development of collaboration products. It may use third party contract research organizations for many of its clinical trials and it will rely upon several single source providers of raw materials and contract manufacturers for the manufacture of certain products and product candidates. Due to the recent tightening of global credit and the volatility in the financial markets, there may be a disruption or delay in the performance of New Alkermes’ third party contractors, suppliers or collaborators. If such third parties are unable to satisfy their commitments to New Alkermes, its business will be adversely affected.

 

If goodwill or other intangible assets that New Alkermes records in connection with the merger become impaired, the combined company could have to take significant charges against earnings.

 

In connection with the accounting for the merger, New Alkermes expects to record a significant amount of goodwill and other intangible assets. Under U.S. GAAP, the combined company must assess, at least annually and potentially more frequently, whether the value of goodwill and other indefinite-lived intangible assets has been impaired. Amortizing intangible assets will be assessed for impairment in the event of an impairment indicator. Any reduction or impairment of the value of goodwill or other intangible assets will result in a charge against earnings, which could materially adversely affect the combined company’s results of operations and shareholders’ equity in future periods.

 

New Alkermes’ actual financial position and results of operations may differ materially from the unaudited pro forma financial data included in this document.

 

The pro forma financial data contained in this proxy statement/prospectus are presented for illustrative purposes only and may not be an indication of what New Alkermes’ financial condition or results of operations would have been had the business combination been completed on the dates indicated. The pro forma financial data have been derived from the audited and unaudited historical financial statements of Alkermes and EDT and certain adjustments and assumptions have been made regarding the combined company after giving effect to the business combination. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with complete accuracy. For example, the pro forma financial data do not reflect all costs that are expected to be incurred by New Alkermes in connection with the business combination. In addition, the pro forma financial data are based on a preliminary purchase price allocation, and the actual allocation of the purchase price will be performed only after the completion of the business combination. Accordingly, the actual financial condition and results of operations of the combined company following the business combination may not be consistent with, or evident from, this pro forma financial data.

 

In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect New Alkermes’ financial condition or results of operations following the closing. Any potential decline in New Alkermes’ financial condition or results of operations may cause significant variations in the share price of New Alkermes. See “Unaudited Pro Forma Financial Data.”

 

Following the merger, New Alkermes will have significantly less cash on hand than Alkermes currently has.

 

In connection with the business combination, Alkermes will pay at least $50 million out of its existing cash reserves to Elan as part of the cash payment for the contribution of EDT to New Alkermes. In addition, Alkermes will pay substantial costs and expenses associated with the transactions. As a result, New Alkermes will, following the merger, have significantly less cash on hand than Alkermes currently has, which could adversely affect New Alkermes’ ability to grow and perform.

New Alkermes’ level of indebtedness following consummation of the business combination could adversely affect its business and limit its ability to plan for or respond to changes in its business.

 

Pursuant to the merger agreement, Alkermes will pay Elan $500 million in cash, subject to certain net cash and working capital adjustments, as partial payment for the contribution of the EDT business. Alkermes has obtained a commitment, subject to customary conditions, from MSSF and HSBC to provide up to $450 million in term loan financing, which is referred to in this proxy statement/prospectus as the “commitment letter,” a copy of which is filed as an exhibit to the registration statement of which this proxy statement/prospectus is a part. New Alkermes’ level of indebtedness following consummation of the business combination could adversely affect its business by, among other things:

 

 

In the event the financing contemplated by the commitment letter received by Alkermes is not available, other financing may be available only on less favorable terms or may not be available on acceptable terms, in a timely manner or at all.

 

If New Alkermes is unable to comply with restrictions in the proposed financing package, the indebtedness thereunder could be accelerated.

 

The credit facilities and loan agreement contemplated by the commitment letter received by Alkermes for the financing in connection with the business combination will impose restrictive covenants on New Alkermes and require certain payments of principal and interest over time. A failure to comply with these restrictions or to make these payments could lead to an event of default that could result in an acceleration of the indebtedness. New Alkermes cannot make any assurances that its future operating results will be sufficient to ensure compliance with the covenants in its agreements or to remedy any such default. In the event of an acceleration of this indebtedness, New Alkermes may not have or be able to obtain sufficient funds to make any accelerated payments. Please see the section of this proxy statement/prospectus entitled “The Business Combination — Financing Relating to the Business Combination” for more information about the financing package envisaged by the commitment letter and the restrictions contained therein and the payments required thereby.

 

New Alkermes’ effective tax rate may increase following the closing.

 

While the blended effective tax rate on any net income earned by New Alkermes that cannot be offset by its tax attributes, if any, is expected to be lower than the effective tax rate currently applicable to any net income earned by Alkermes that cannot be offset by its tax attributes, if any, there is uncertainty regarding the tax policies of the jurisdictions where New Alkermes will operate, and New Alkermes’ effective tax rate may increase and any such increase may be material. Additionally, the tax laws of any jurisdiction in which New Alkermes will operate could change in the future, and such changes could cause a material change in New Alkermes’ effective tax rate.

The merger may limit New Alkermes’ ability to use its tax attributes to offset taxable income, if any, generated from the merger and ancillary transactions.

 

For U.S. federal income tax purposes, a corporation is generally considered tax resident in the place of its incorporation. Because New Alkermes is incorporated in Ireland, it should be deemed an Irish corporation under these general rules. However, Section 7874 of the Code generally provides that a corporation organized outside the United States which acquires substantially all of the assets of a corporation organized in the United States will be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes if shareholders of the acquired U.S. corporation own at least 80 percent (of either the voting power or the value) of the stock of the acquiring foreign corporation after the acquisition by reason of holding stock in the domestic corporation, and the “expanded affiliated group” (as defined in Section 7874) that includes the acquiring corporation does not have substantial business activities in the country in which it is organized.

 

In addition, Section 7874 provides that if a corporation organized outside the United States acquires substantially all of the assets of a corporation organized in the United States, the taxable income of the U.S. corporation during the period beginning on the date the first assets are acquired as part of the acquisition, through the date which is ten years after the last date assets are acquired as part of the acquisition, shall be no less than the income or gain recognized by reason of the transfer during such period or by reason of a license of property by the expatriated entity after such acquisition to a foreign affiliate during such period, which is referred to as the inversion gain in this proxy statement/prospectus, if shareholders of the acquired U.S. corporation own at least 60 percent (of either the voting power or the value) of the stock of the acquiring foreign corporation after the acquisition by reason of holding stock in the domestic corporation, and the “expanded affiliated group” of the acquiring corporation does not have substantial business activities in the country in which it is organized. Alkermes intends to transfer certain intellectual property to an Irish subsidiary of New Alkermes in the IP Transfer, as discussed in “Questions and Answers About the Proposed Transactions,” and it is expected that Alkermes has sufficient net operating loss carryforwards available to offset any taxable income generated from this IP Transfer. If this rule was to apply to the merger, among other things, Alkermes would not be able to use any of the approximately $274 million of net operating loss carryforwards that it had as of March 31, 2011, to offset any taxable income generated as part of the merger or as a result of the IP Transfer described in detail under “Certain Tax Consequences of the Merger.” Alkermes does not believe that either of these limitations should apply as a result of the merger. However, the IRS could assert a contrary position, in which case, New Alkermes could become involved in tax controversy with the IRS regarding possible additional U.S. tax liability. If New Alkermes is unsuccessful in resolving any such tax controversy in its favor, New Alkermes could be liable for significantly greater U.S. federal income tax than New Alkermes anticipates being liable for through the merger and the reorganization, including as a result of the IP Transfer, which would place further demands on its cash needs. For further information on this matter see “Certain Tax Consequences of the Merger.”

 

New Alkermes may not have sufficient distributable reserves to pay dividends or repurchase or redeem shares following completion of the proposed transactions even if considered appropriate by the New Alkermes board. New Alkermes can provide no assurance that Irish High Court approval of the creation of distributable reserves will be forthcoming.

 

If New Alkermes determines to pay dividends in the future, it may be unable to do so under Irish law. Under Irish law, dividends may only be paid and share repurchases and redemptions must generally be funded only out of “distributable reserves,” which New Alkermes will not have immediately following the closing. The creation of distributable reserves requires the approval of the Irish High Court. New Alkermes is not aware of any reason why the Irish High Court would not approve the creation of distributable reserves, however, the issuance of the required order is a matter for the discretion of the Irish High Court and there is no guarantee that such approval will be obtained. Approval of the creation of distributable reserves by the Irish High Court may also take substantially longer than New Alkermes anticipates.

New Alkermes does not expect to pay dividends for the foreseeable future, and you must rely on increases in the trading prices of the New Alkermes ordinary shares for returns on your investment.

 

Alkermes has never paid cash dividends on its common stock. New Alkermes does not expect to pay dividends in the immediate future. New Alkermes anticipates that it will retain all earnings, if any, to support its operations and its proprietary drug development programs. Any future determination as to the payment of dividends will, subject to Irish legal requirements, be at the sole discretion of the New Alkermes board of directors and will depend on New Alkermes’ financial condition, results of operations, capital requirements and other factors the board of directors deems relevant. Holders of New Alkermes ordinary shares must rely on increases in the trading price of their shares for returns on their investment in the foreseeable future.

 

To the extent the board of directors does determine to declare a dividend, dividends paid in respect of New Alkermes ordinary shares will generally not be subject to Irish income tax where the beneficial owner of these dividends is exempt from dividend withholding tax, unless the beneficial owner of the dividend is resident or ordinarily resident in Ireland for Irish tax purposes or the shareholder holds shares in connection with a trade carried on by such shareholder in Ireland through a branch or agency.

 

As a result of different shareholder voting requirements in Ireland relative to Pennsylvania, New Alkermes will have less flexibility with respect to certain aspects of capital management than Alkermes currently has.

 

Under Pennsylvania law, Alkermes’ directors may issue, without shareholder approval, any common shares authorized by its articles of incorporation that are not already issued. In addition, under NASDAQ Rule 5635, a company listed on NASDAQ is required to obtain shareholder approval prior to the issuance of common stock, among other things, (a) in connection with the acquisition of the stock or assets of another company if 20% of more of the common stock of the issuer outstanding before such issuance would be issued in connection with such acquisition transaction; and (b) in connection with a transaction other than a public offering involving the sale or issuance by the issuer of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock.

 

Under Irish law, the authorized share capital of New Alkermes can be increased by an ordinary resolution of its shareholders and the directors may issue new ordinary or preferred shares up to a maximum amount equal to the authorized but unissued share capital, without shareholder approval, once authorized to do so by the articles of association of New Alkermes or by an ordinary resolution of the New Alkermes shareholders. Additionally, subject to specified exceptions, Irish law grants statutory preemption rights to existing shareholders to subscribe for new issuances of shares for cash, but allows shareholders to authorize the waiver of the statutory preemption rights by way of special resolution with respect to any particular allotment of shares. Accordingly, New Alkermes’ articles of association contain, as permitted by Irish company law, a provision authorizing the board to issue new shares for cash without offering preemption rights. The authorization of the directors to issue shares and the authorization of the waiver of the statutory preemption rights must both be renewed by the shareholders at least every five years, and Alkermes cannot provide any assurance that these authorizations will always be approved, which could limit New Alkermes’ ability to issue equity and thereby adversely affect the holders of New Alkermes securities. While Alkermes does not believe that the differences between Pennsylvania law and Irish law relating to New Alkermes’ capital management will have an adverse effect on New Alkermes, situations may arise where the flexibility Alkermes now has under Pennsylvania law would have provided benefits to New Alkermes shareholders that will not be available under Irish law. See “Comparison of the Rights of Holders of Alkermes Common Stock and New Alkermes Ordinary Shares.”

As a result of different shareholder voting requirements in Ireland relative to Pennsylvania, New Alkermes will have less flexibility with respect to its ability to amend its organizational documents than Alkermes currently has.

 

Under Pennsylvania law and Alkermes’ current bylaws and articles of incorporation, Alkermes’ bylaws may be altered, amended or repealed and new bylaws may be adopted (i) at any annual, regular or special meeting of the board of directors by a majority vote of all the directors in office, so long as the board action does not limit indemnification rights, increase the liability of directors or change the manner or vote required to make such alteration, or (ii) by a majority of the votes cast at any annual, regular or special meeting of shareholders. Irish law requires a special resolution of 75% of the shareholder votes cast at a general meeting for any amendment to the memorandum and articles of association of New Alkermes. As a result of this Irish law requirement, situations may arise where the flexibility Alkermes now has under Pennsylvania law would have provided benefits to New Alkermes shareholders that will not be available in Ireland. See “Comparison of the Rights of Holders of Alkermes Common Stock and New Alkermes Ordinary Shares.”

 

After the completion of the business combination, attempted takeovers of New Alkermes will be subject to the Irish Takeover Rules and subject to review by the Irish Takeover Panel.

 

Pennsylvania’s anti-takeover statutes and laws regarding directors’ fiduciary duties give the board of directors broad latitude to defend against unwanted takeover proposals. Following the closing, New Alkermes will become subject to the Irish Takeover Rules, under which the board of directors of New Alkermes will not be permitted to take any action which might frustrate an offer for New Alkermes ordinary shares once the board of directors has received an approach which may lead to an offer or has reason to believe an offer is imminent. Further, it could be more difficult for New Alkermes to obtain shareholder approval for a merger or negotiated transaction after the closing of the business combination because the shareholder approval requirements for certain types of transactions differ, and in some cases are greater, under Irish law than under Pennsylvania law.

 

Following the completion of the business combination, a future transfer of New Alkermes ordinary shares may be subject to Irish stamp duty.

 

In certain circumstances, the transfer of shares in an Irish incorporated company will be subject to Irish stamp duty which is a legal obligation of the buyer. This duty is currently charged at the rate of 1.0% of the higher of the price paid and the market value of the shares acquired. However, transfers of book-entry interests in a Depositary Trust Company, which is referred to in this proxy statement/prospectus as DTC, representing New Alkermes ordinary shares should not be subject to Irish stamp duty. Accordingly, transfers by shareholders who hold their New Alkermes ordinary shares beneficially through brokers which in turn hold those shares through DTC, should not be subject to Irish stamp duty on transfers to holders who also hold through DTC. This exemption is available because New Alkermes ordinary shares will be traded on a recognized stock exchange in the United States.

 

In relation to any transfer of New Alkermes ordinary shares that is subject to Irish stamp duty, New Alkermes’ articles of association allow New Alkermes, in its absolute discretion, to create an instrument of transfer and pay (or procure the payment of) any stamp duty payable by a buyer or otherwise require an instrument of transfer to be executed to effect a transfer. In the event of any such payment, New Alkermes is (on behalf of itself or its affiliates) entitled to (i) seek reimbursement from the buyer or seller (at its discretion), (ii) set-off the amount of the stamp duty against future dividends payable to the buyer or seller (at its discretion), and (iii) claim a first and permanent lien against the New Alkermes ordinary shares on which it has paid stamp duty. New Alkermes’ lien shall extend to all dividends paid on those shares.

 

Dividends paid by New Alkermes may be subject to Irish dividend withholding tax.

 

In certain circumstances, as an Irish tax resident company, New Alkermes will be required to deduct Irish dividend withholding tax (currently at the rate of 20%) from dividends paid to its shareholders. Shareholders that are resident in the United States, European Union member states (other than Ireland) or other countries

with which Ireland has signed a tax treaty (whether the treaty has been ratified or not) generally should not be subject to Irish withholding tax so long as the shareholder has provided its broker, for onward transmission to New Alkermes’ qualifying intermediary (or other designated agent) (in the case of shares held beneficially), or New Alkermes or its transfer agent (in the case of shares held directly), with all the necessary documentation prior to payment of the dividend. However, some shareholders may be subject to withholding tax, which could adversely affect the price of New Alkermes ordinary shares.

 

As a result of the business combination, New Alkermes will incur additional direct and indirect costs.

 

New Alkermes will incur additional costs and expenses in connection with and as a result of the business combination. These costs and expenses include professional fees to comply with Irish corporate and tax laws and financial reporting requirements, costs and expenses incurred in connection with holding a majority of the meetings of the New Alkermes board of directors and certain executive management meetings in Ireland, as well as any additional costs New Alkermes may incur going forward as a result of its new corporate structure. There can be no assurance that these costs will not exceed the costs historically borne by Alkermes and those allocated to EDT in the carve out financials.

 

EDT is exposed to the risk of intensifying competition.

 

EDT is aware of other pharmaceutical companies that are developing competing technologies, which could significantly damage its current portfolio of technologies. For example, there is a range of technology approaches to address poorly water soluble drugs including nanoparticles, cyclodextrins, lipid based self emulsifying drug delivery systems, dendrimers, micelles, among others, which could limit the potential success of EDT’s NanoCrystal technology, and its growth prospects could be materially impaired. In addition, there are many competing technologies to EDT’s OCR technology, some of which are owned by large pharmaceutical companies with drug delivery divisions and other smaller drug delivery specific companies. EDT’s business, financial condition, results of operations and prospects may be materially adversely affected by its failure to maintain its competitive position with respect to its proprietary technologies.

 

Pharmaceutical technologies and products are subject to rapid and significant technological change. EDT expects its competitors to develop new technologies, products and processes that may be more effective than those EDT develops. As a result, EDT products and product candidates may become uncompetitive or obsolete before it recovers expenses incurred in connection with their development or realizes revenues from any commercialized product.

 

The pharmaceutical industry is characterized by intensive research, development and commercialization efforts and rapid technological change. The success of EDT’s business strategy depends to a significant extent on its ability to reformulate existing drugs, and to develop these drugs into new product candidates on a cost-effective basis. Research and discoveries by EDT’s competitors may render some or all of EDT’s product candidates uncompetitive or obsolete. Furthermore, unforeseen problems may develop with technologies or applications EDT uses in its development programs, and EDT may be unable to address these challenges successfully. This could result in its inability to develop commercially feasible products, which could have a material adverse effect on EDT’s business, financial condition, results of operations and prospects. See “The Business of EDT — Competition.”

 

Strategic decisions of collaborators, wholesalers and distributors may adversely affect EDT’s revenues.

 

EDT’s product revenue may be adversely affected, in part, by the strategic decisions of its collaborators, wholesalers and distributors. In the event that EDT’s collaborators, wholesalers or distributors decide to decrease sales of a product by, for example, shifting their sales emphasis to a different form of the product (not employing EDT’s technology) or to a new product for the same or a similar indication, EDT’s revenues in respect of the relevant product would decline.

 

For example, TriCor^® 145 tablets are manufactured by Fournier Laboratories using EDT’s NanoCrystal technology. Royalties on sales of TriCor 145 equaled approximately $54.5 million for the year ended December 31, 2010, being 59.6% of EDT’s royalty revenues and 19.9% of EDT’s total revenues in that year. TriCor 145, a cholesterol lowering product containing the compound fenofibrate, is currently marketed by Abbott Laboratories in the United States and Solvay S.A. in territories outside of the United States. Abbott launched a new generation fenofibrate product, which does not incorporate any of EDT’s technologies. Abbott’s new product has had and will continue to have a material adverse effect on EDT’s TriCor 145 revenues.

 

In addition, a significant part of EDT’s current business involves granting licenses for the use of drug delivery technologies EDT has developed to large pharmaceutical companies in return for the payment of an ongoing royalty. There is a risk that large pharmaceutical companies will determine that in-house development and production of drug delivery technologies would be more cost efficient and would provide a greater scope for the development of their own new products. In this event, such companies may not enter into new licenses with EDT or seek to terminate their existing license agreements with EDT, which would have a material adverse effect on EDT’s revenues.

 

EDT’s inability to compete with such companies in terms of scale and resources may have a material adverse effect on its business, financial condition, results of operations and prospects.

 

EDT depends on the success of its existing arrangements with its collaborators.

 

There are a number of risks associated with EDT’s business strategy, which depends on third parties for marketing and sale of products. In many cases, EDT has relatively limited control or ability to influence the marketing efforts and commercial diligence of the collaborator on whom EDT relies to sell the product. As a consequence, EDT is largely dependent on the actions of these third parties to generate its revenues and if they are not effective in their efforts, EDT’s revenue streams could be materially adversely affected. EDT has had in the past challenging relationships with client companies where, for a variety of reasons that were not related to EDT, little or no product was sold on the market and EDT had very limited remedies to address this situation.

 

Some of EDT’s collaborators are small companies that depend on venture capital funding to progress their product candidates to later stage development and commercialization. There is a risk that these companies may not be in a position to attract sufficient investment to sustain their development efforts and/or that they may be taken over by other entities with different priorities and motivations. In many cases, EDT has little or no control or input in these circumstances.

 

Furthermore, EDT’s collaborators may fail to fulfill their responsibilities or may seek to renegotiate or terminate their relationships with EDT, for example, as a result of unsatisfactory clinical results. A collaborator may experience financial or other difficulties unrelated to its arrangement with EDT, or may merge with or be acquired by another company, each of which could adversely affect its ability to perform its obligations under the license agreement with EDT. Similarly, a collaborator may fail to manage its inventory levels successfully, which could increase the volatility of its operating results. Alternatively, EDT’s relationship with a collaborator may be adversely affected, for example, if EDT develops a proprietary product that competes directly with products that EDT currently supplies to such collaborator. Moreover, in most instances, EDT’s collaborators may terminate their relationships with EDT on limited notice and without penalty or if they reasonably determine that the product does not justify continued development or commercialization.

 

If events such as these materialize, there is a risk that EDT’s collaborators or marketing collaborators could discontinue sales of EDT’s products, fail to satisfy their obligations under their agreements with EDT or seek alternative or additional suppliers for the same or similar products. If any of the above factors were to arise, this could have a material adverse effect on EDT’s business, financial condition, results of operation and prospects.

If EDT is not successful in establishing and maintaining additional license arrangements, its growth prospects will be materially harmed.

 

An element of EDT’s business strategy is to establish license arrangements with third parties to develop particular products or to accelerate the development of some of its early-stage product candidates. The process of establishing new relationships is difficult, time-consuming and involves significant uncertainty. EDT faces, and will continue to face, significant competition in seeking appropriate collaborators. If EDT is unable to establish and maintain license arrangements on acceptable terms, EDT may have to delay or discontinue further development of one or more of its product candidates, seek regulatory approval or undertake commercialization activities at its own expense or find alternative sources of funding. This could have a material adverse effect on EDT’s business, financial condition, results of operations and prospects.

 

Any difficulties with, or interruptions to, manufacturing could delay the output of products and harm EDT’s relationships with its collaborators.

 

EDT conducts its scale-up and commercial manufacturing activities at its facilities in Gainesville, Georgia, in the United States, and Athlone, Ireland. Due to regulatory and technical requirements, EDT has limited ability to shift production among its facilities or to outsource any part of EDT’s manufacturing to third parties. Damage to any of EDT’s manufacturing facilities caused by human error, physical or electronic security breaches, power loss or other failures or circumstances beyond its control, including acts of God, fire, explosion, flood, war, insurrection or civil disorder, acts of, or authorized by, any government, terrorism, accident, labor trouble or shortage, or inability to obtain material, equipment or transportation, could interrupt or delay EDT’s manufacturing or other operations.

 

Any interruption in manufacturing or challenges relating to the scale-up of the manufacturing process to commercial quantities, whether due to EDT’s failure to comply with regulatory requirements, limitations in manufacturing capacity, EDT’s own limitations or arising from factors outside EDT’s control, could result in delays in meeting contractual obligations and could damage EDT’s relationships with EDT’s collaborators including the loss of manufacturing and supply rights.

 

EDT is reliant in certain cases on third parties to manufacture products.

 

Where the manufacturing rights to the products in which EDT’s technologies are applied are granted to or retained by its third party licensee or approved sub-licensee, EDT has no control over the manufacturing, supply or distribution of the product, and, accordingly, EDT is dependent upon these third parties to carry out those functions. Any failure on the part of such third parties to perform such functions, or to do so using commercially reasonable efforts, may have a material adverse effect on EDT’s business, financial condition, results of operations and prospects.

 

EDT is dependent on third parties for the supply of key raw materials.

 

EDT is reliant on third parties to manufacture key raw materials to enable it to develop, manufacture and supply products, including currently marketed products and products currently in development.

 

There is a risk that if any key third parties were to cease manufacturing or supplying key raw materials, or fail to produce these on commercially reasonable terms, this could have a material adverse effect on EDT’s business, financial condition, result of operations and prospects.

 

EDT is exposed to credit risk on accounts receivable from EDT’s collaborators.

 

EDT sells its pharmaceutical products to EDT’s collaborators through contracts that are not secured by collateral or other security and therefore bears the risk that its collaborators are unable to pay amounts due to EDT thereunder. EDT may not be able to limit its potential loss of revenues if a significant number of collaborators are unable to pay amounts owed to EDT.

EDT may be unable to obtain, register, maintain or protect its intellectual property rights.

 

EDT’s ability to compete effectively with other companies will depend in part on its ability to obtain and maintain patent and/or trademark protection for certain of EDT’s products, product candidates, technologies and developing technologies, to preserve EDT’s trade secrets, defend and enforce EDT’s rights against infringement and operate without infringing the proprietary or intellectual property rights of third parties.

 

The primary U.S. patent covering the NanoCrystal technology expired in 2011. The related primary patent in Europe has been declared invalid. Primary patents covering NanoCrystal technology in the rest of the world, which is referred to as the ROW in this proxy statement/prospectus, expire in some countries in 2012. EDT has additional patents and patent applications relating to other aspects of EDT’s NanoCrystal technology in the United States and the ROW that are independent of the primary patent and which will continue for several years beyond the expiration of this base patent. EDT may nonetheless face competition from other pharmaceutical companies and/or generic manufacturers as various patents in the NanoCrystal portfolio expire. This could adversely affect EDT’s ability to exploit the NanoCrystal technology and/or the sales of currently marketed products employing the NanoCrystal technology, which could have a material adverse effect on EDT’s business, financial condition, results of operations and prospects.

 

No assurance can be given that any patents based on pending patent applications or any future patent applications will be issued, that the scope of any patent protection will exclude competitors or provide EDT with competitive advantages, that any of the patents that have been or may be issued to EDT will be held valid if subsequently challenged or that others will not claim rights in the patents and other proprietary rights held by EDT.

 

In addition, the development of new technologies or pharmaceutical products incorporating EDT’s technologies may take a number of years, and there can be no assurance that any patents which may be granted in respect of such technologies or products will not have expired or be due to expire by the time such products are commercialized. Furthermore, there can be no assurance that EDT’s competitors have not developed or will not develop similar technologies or products, duplicate any EDT’s technologies or products or design around any of EDT’s existing or future patents.

 

If EDT is unable to protect its intellectual property rights, or EDT infringes on the rights of other parties, then its revenues and potential revenues may be materially reduced.

 

Although EDT believes that it makes reasonable efforts to protect EDT’s intellectual property rights and to ensure that its proprietary technology does not infringe the rights of other parties, EDT cannot ascertain the existence of all potentially conflicting claims. Therefore, there is a risk that third parties may make claims of infringement against EDT’s product or technologies. In addition, third parties may be able to obtain patents that prevent the sale of EDT’s products or require EDT to obtain a license and pay significant fees or royalties in order to continue selling EDT’s products.

 

There has been, and EDT expects there will continue to be, significant litigation in the pharmaceutical industry regarding patents and other intellectual property rights. Litigation and other proceedings concerning patents and other intellectual property rights in which EDT is involved have been and will continue to be protracted and expensive and could be distracting to EDT’s management. EDT’s competitors may sue it or its collaborators as a means of delaying the introduction of products. Any litigation, including any interference proceedings to determine priority of inventions, oppositions to patents or litigation against EDT’s licensors, may be costly and time consuming and could adversely affect EDT. In addition, litigation has been and may be instituted to determine the validity, scope or non-infringement of patent rights claimed by third parties to be pertinent to the manufacturing, use or sale of EDT’s or their products. The outcome of any such litigation could adversely affect the validity and scope of EDT’s patents or other intellectual property rights, hinder, delay or prevent the marketing and sale of EDT’s products and cost EDT substantial sums of money.

EDT may have to enforce its intellectual property rights against third parties who infringe those rights.

 

EDT may have to enforce its intellectual property rights against third parties who infringe its patents and other intellectual property or challenge patent or trademark applications that might have an impact on its intellectual property. Such proceedings are typically protracted with no certainty of success and are likely to involve significant costs and management time. EDT is involved in a number of Paragraph IV litigations (see below), all of which are costly and time consuming.

 

If EDT’s technologies or products and product candidates are claimed under other existing patents or are otherwise claimed to be protected by third party proprietary rights, EDT may be subject to infringement actions. Since patent applications are generally not published until 18 months after filing, EDT also cannot be certain that others did not first file applications for inventions covered by its pending patent applications, nor can EDT be certain that it will not infringe any patents that may be issued to others on such unpublished applications.

 

If EDT is required to defend charges of patent infringement or to protect its own proprietary rights against third parties, substantial costs and significant management time and effort could be incurred regardless of whether EDT is successful. Such proceedings are typically protracted with no certainty of success. An adverse outcome could subject EDT to significant liabilities and potential indemnification obligations to third parties, and force EDT to curtail or cease the use of certain intellectual property, the development of certain technologies or product candidates and the sale of certain products. In addition, the loss of certain intellectual property rights by EDT’s collaborators could have a consequential effect on its revenues. This could have a material adverse effect on EDT’s business, financial condition, results of operations and prospects.

 

EDT and its product collaborators are pursuing a number of “Paragraph IV” lawsuits with generic manufacturers that, if unsuccessful, could result in generic competitors to EDT’s or its collaborators’ marketed products and a potential reduction in product revenue.

 

EDT and/or its product collaborators are involved in various sets of patent infringement litigations (also known as “Paragraph IV” litigations in the United States) in Canada, France and the United States. These actions and litigation could be costly and time consuming to defend and may not be successful.

 

In the United States, putative generics of innovator drug products (including products in which the innovation comprises a new drug delivery method for an existing product, such as the drug delivery market occupied by EDT) may file Abbreviated New Drug Applications, which are referred to in this proxy statement/prospectus as ANDAs, and, in doing so, they are not required to include preclinical and clinical data to establish the safety and effectiveness of their drug. Instead, they would rely on such data provided in the innovator drug New Drug Application, which is referred to in this proxy statement/prospectus as an NDA. However, to benefit from this less costly abbreviated procedure, the ANDA applicant must demonstrate that its drug is “generic” or “bioequivalent” to the innovator drug, and, to the extent that patents protecting the innovator drug are listed in the “Orange Book”, the ANDA applicant must write to the innovator NDA holder and the patent holder (to the extent that the Orange Book-listed patents are not owned by the innovator NDA holder) certifying that its product either does not infringe the innovator’s and, if applicable, the patent holder’s patents and/or that the relevant patents are invalid. The innovator and the patent holder may sue the ANDA applicant within 45 days of receiving the certification and, if they do so, the Food and Drug Administration, which is referred to in this proxy statement/prospectus as the FDA, may not approve the ANDA for 30 months from the date of certification unless, at some point before the expiry of those 30 months, a court makes a final decision in the ANDA applicant’s favor.

 

EDT is involved in a number of Paragraph IV litigations and similar suits outside of the United States in respect of six different products (TriCor (registered trademark of Fournier Industrie et Sante (S.A.S.)), Focalin XR^®, Avinza^®, Zanaflex^® (registered trademark of Acorda Therapeutics, Inc.), Rapamune^® (registered trademark of Wyeth LLC) and Luvox CR^® (registered trademark of Abbott Products, Inc.) either as plaintiff or as an interested party (where the suit is being brought in the name of one of EDT’s collaborators). EDT has recently received a Paragraph IV certification with respect to Megace^® ES.

 

If EDT is unsuccessful in these and other similar suits, EDT or its collaborators’ products may be subject to generic competition, its manufacturing revenue and royalties could be materially and adversely affected and generic manufacturers may be entitled to market generic products that compete with EDT’s or its collaborators’ marketed products which may result in a loss of product revenue and could have a material adverse effect on EDT’s business, financial condition, results of operations and prospects.

 

Alkermes and Elan must obtain required approvals and governmental and regulatory consents to consummate the business combination, which, if delayed, not granted or granted with unacceptable conditions, may jeopardize or delay the consummation of these transactions, result in additional expenditures of money and resources and/or reduce the anticipated benefits of the business combination.

 

The business combination is subject to customary closing conditions. These closing conditions include, among others, the receipt of required approvals of Alkermes shareholders, the effectiveness of the registration statement and the expiration or termination of the waiting period under the HSR Act.

 

The governmental agencies from which the parties will seek certain of these approvals have broad discretion in administering the governing regulations. As a condition to their approval of the business combination, agencies may impose requirements, limitations or costs or require divestitures or place restrictions on the conduct of New Alkermes’ business after the closing. These requirements, limitations, costs, divestitures or restrictions could jeopardize or delay the consummation of the business combination or may reduce the anticipated benefits of the business combination. Further, no assurance can be given that the required shareholder approval will be obtained or that the required closing conditions will be satisfied, and, if all required consents and approvals are obtained and the closing conditions are satisfied, no assurance can be given as to the terms, conditions and timing of the approvals. If Alkermes and Elan agree to any material requirements, limitations, costs, divestitures or restrictions in order to obtain any approvals required to consummate the business combination, these requirements, limitations, costs, divestitures or restrictions could adversely affect New Alkermes’ ability to integrate Alkermes’ operations with EDT operations or reduce the anticipated benefits of the business combination. This could result in a failure to consummate these transactions or have a material adverse effect on New Alkermes’ business and results of operations.

 

Failure to consummate the business combination could negatively impact the stock price and the future business and financial results of Alkermes and/or Elan.

 

If the business combination is not consummated, the ongoing businesses of Alkermes and/or Elan may be adversely affected and, without realizing any of the benefits of having consummated the merger, Alkermes and/or Elan will be subject to a number of risks, including the following:

 

 

 

Alkermes and/or Elan also could be subject to litigation related to any failure to consummate the business combination or merger or related to any enforcement proceeding commenced against Alkermes and/or Elan to perform their respective obligations under the merger agreement. If the business combination is not

consummated, these risks may materialize and may adversely affect Alkermes and/or Elan’s business, financial results and stock price.

 

New Alkermes may fail to realize benefits estimated as a result of the business combination.

 

The success of the combination of the businesses of Alkermes and EDT will depend, in part, on New Alkermes’ ability to realize the anticipated synergies, business opportunities and growth prospects from combining the businesses. New Alkermes may never realize these anticipated synergies, business opportunities and growth prospects. Integrating operations will be complex and will require significant efforts and expenditures. Employees might leave or be terminated because of the merger. New Alkermes’ management might have its attention diverted while trying to integrate operations and corporate and administrative infrastructures. Assumptions underlying estimates of expected cost savings may be inaccurate and general industry and business conditions might deteriorate. If any of these factors limit New Alkermes’ ability to integrate the operations of Alkermes with those of EDT successfully or on a timely basis, the expectations of future results of operations, including certain cost savings and synergies expected to result from the business combination, might not be met.

 

Alkermes’ and EDT’s business relationships, including customer relationships, may be subject to disruption due to uncertainty associated with the business combination.

 

Parties with which Alkermes and EDT currently do business or may do business in the future, including customers and suppliers, may experience uncertainty associated with the business combination, including with respect to current or future business relationships with Alkermes, EDT or New Alkermes. As a result, Alkermes’ and EDT’s business relationships may be subject to disruptions if customers, suppliers and others attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than Alkermes or EDT. For example, many of EDT’s customers and collaborators have contractual consent rights or termination rights that may be triggered by a change of control of EDT. In addition, the contract manufacturing business of New Alkermes could be impaired if existing or potential customers of Alkermes or EDT determine not to continue or initiate contract manufacturing relationships with New Alkermes. These disruptions could have an adverse effect on the businesses, financial condition, results of operations or prospects of New Alkermes following the closing. The adverse effect of such disruptions could be exacerbated by a delay in the consummation of the business combination and merger or termination of the merger agreement.

 

Loss of key personnel could lead to loss of customers and a decline in revenues, adversely affect the progress of pipeline products or otherwise adversely affect the operations of Alkermes, EDT and New Alkermes.

 

Current and prospective employees of Alkermes and EDT might experience uncertainty about their future roles with New Alkermes following completion of the business combination, which might adversely affect Alkermes’, EDT’s and New Alkermes’ ability to retain key managers and other employees. In particular, the closure of EDT’s King of Prussia facility, which has been a principal center for EDT’s Nanocrystal technology platform, could adversely affect the development of pipeline products using such technology. Although EDT believes it has put in place sufficient plans, including transitioning the roles of employees at this location, to mitigate this risk, there is no assurance that the closure will not adversely affect the development of products using this technology. In addition, competition for qualified personnel in the biotechnology industry may be very intense. The success of New Alkermes after the completion of the business combination will depend, in part, upon its ability to retain key employees. See “The Business Combination — Interests of Certain Persons in the Transactions.” If Alkermes or EDT loses key personnel or New Alkermes is unable to attract, retain and motivate qualified individuals or the associated costs to New Alkermes increase significantly, Alkermes’ business and New Alkermes’ business could be adversely affected.

Alkermes may waive one or more of the conditions to the merger without resoliciting shareholder approval.

 

Alkermes may determine to waive, in whole or in part, one or more of the conditions to its obligations to complete the merger, to the extent permitted by applicable laws. Alkermes’ board of directors will evaluate the materiality of any such waiver and its effect on Alkermes shareholders in light of the facts and circumstances at the time to determine whether amendment of this proxy statement/prospectus and resolicitation of proxies is required or warranted. In some cases, if Alkermes’ board of directors determines that such a waiver is warranted but that such waiver or its effect on Alkermes shareholders is not sufficiently material to warrant resolicitation of proxies, Alkermes has the discretion to complete the merger without seeking further shareholder approval. Any determination whether to waive any condition to the merger or as to resoliciting shareholder approval or amending this proxy statement/prospectus as a result of a waiver will be made by the Alkermes board of directors at the time of such waiver based on the facts and circumstances as they exist at that time.

 

Alkermes’ directors and executive officers have interests in the business combination in addition to those of shareholders.

 

In considering the recommendations of the Alkermes board of directors with respect to the merger agreement, you should be aware that some Alkermes’ directors and executive officers have financial and other interests in the proposed transactions in addition to interests they might have as shareholders. See “The Business Combination — Interests of Certain Persons in the Transactions.” In particular, members of Alkermes’ board of directors and executive officers will become directors and executive officers of New Alkermes. You should consider these interests in connection with your vote on the related proposal.

 

The presence of a significant shareholder may affect the ability of a third party to acquire control of New Alkermes.

 

Elan will beneficially own approximately 25% of the outstanding New Alkermes ordinary shares immediately following the closing. These shares will be subject to the terms of the shareholder’s agreement. See “Other Related Agreements — Shareholder’s Agreement.” The shareholder’s agreement will generally entitle the Elan Shareholder to appoint one independent director to the New Alkermes board of directors so long as Elan continues to hold at least 10% of the outstanding voting securities of New Alkermes. Although this director will not constitute a majority of the board of directors, he or she may exercise influence over the decisions of the board.

 

Having the Elan Shareholder as a significant shareholder of New Alkermes may have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from seeking to acquire, a majority of the outstanding New Alkermes ordinary shares in a public takeover offer (whether by means of a voluntary bid or scheme of arrangement), or control of the New Alkermes board of directors through a proxy solicitation. In that regard, Elan and its affiliates will be obligated pursuant to the shareholder’s agreement not to tender any New Alkermes ordinary shares in any tender or exchange offer that the board of directors recommends that the New Alkermes shareholders reject.

 

For at least one year following the closing, the shareholder’s agreement will obligate the Elan Shareholder to vote on all matters in accordance with the recommendation of the New Alkermes board of directors. Thereafter, the Elan Shareholder will remain obligated to vote in accordance with the board’s recommendation for so long as Elan beneficially owns more than 15% of the outstanding voting securities of New Alkermes or the 30-day volume weighted average trading price of New Alkermes ordinary shares is at least $7.595.

 

Existing Alkermes shareholders will own a smaller share of New Alkermes following completion of the merger.

 

Following completion of the merger, Alkermes shareholders will own the same number of shares of New Alkermes that they owned in Alkermes immediately before the closing. Each New Alkermes ordinary share,

however, will represent a smaller ownership percentage of a significantly larger company. Alkermes shareholders, who currently own 100% of the outstanding Alkermes common stock, will, immediately following the merger, own approximately 75% of the total outstanding New Alkermes ordinary shares, with the Elan Shareholder owning the remaining approximately 25%.

 

The New Alkermes ordinary shares to be received by Alkermes shareholders in connection with the merger will have different rights from the shares of Alkermes common stock.

 

Upon consummation of the merger, Alkermes shareholders will become New Alkermes shareholders and their rights as shareholders will be governed by New Alkermes’ memorandum and articles of association. The rights associated with Alkermes common stock are different from the rights associated with New Alkermes ordinary shares. See “Comparison of the Rights of Holders of Alkermes Common Stock and New Alkermes Ordinary Shares.”

 

Until the completion of the business combination or the termination of the merger agreement in accordance with its terms, Alkermes and/or Elan are prohibited from entering into certain transactions that might otherwise be beneficial to Alkermes and/or Elan or their respective shareholders.

 

During the period that the merger agreement is in effect, other than with Elan’s written consent, Alkermes is prohibited from, and other than with Alkermes’ written consent, Elan is prohibited from making any acquisition that would be reasonably likely to prevent the merger from occurring prior to November 5, 2011. During the period the merger agreement is in effect, except as permitted by certain limited exceptions in the merger agreement or required by their fiduciary duties and subject to the other requirements of the merger agreement, (i) Alkermes may not, among other things, solicit, participate in any discussion or negotiations, provide information to any third party or enter into any agreement providing for the acquisition of Alkermes, (ii) Elan may not, among other things, solicit, participate in any discussion or negotiations, provide information to any third party or enter into any agreement providing for the acquisition of EDT, and (iii) the Alkermes board of directors may not withdraw or adversely modify its recommendation of approval by the Alkermes shareholders of adoption of the merger agreement. The foregoing prohibitions could have the effect of delaying other strategic transactions and may, in some cases, make it impossible to pursue other strategic transactions that are available only for a limited time.

 

This proxy statement/prospectus and the documents incorporated into it by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, which is referred to in this proxy statement/prospectus as the Securities Act, and Section 21E of the Exchange Act that involve risks and uncertainties. All statements, trend analyses and other information contained herein about the markets for the services and products of New Alkermes, Alkermes and EDT and trends in revenue, as well as other statements identified by the use of forward-looking terminology, including “anticipate”, “believe”, “plan”, “estimate”, “expect”, “goal” and “intend”, or the negative of these terms or other similar expressions, constitute forward-looking statements. These forward-looking statements are based on estimates reflecting the best judgment of the senior management of Alkermes and EDT. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should therefore be considered in light of various important factors, including those set forth in this proxy statement/prospectus. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include the following:

 

 

 

 

 

 

 

 

Actual results might differ materially from those expressed or implied by these forward-looking statements because these forward-looking statements are subject to assumptions and uncertainties. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this proxy statement/prospectus or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements concerning the business combination, the merger or the other matters addressed in this proxy statement/prospectus and attributable to New Alkermes, Alkermes or EDT or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except as required by applicable law or regulation, none of New Alkermes, Alkermes or EDT undertakes any obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this proxy statement/prospectus or any document incorporated by reference might not occur. For more information regarding the risks and uncertainties of the pharmaceutical business as well as risks relating to the combination of EDT and Alkermes, see “Risk Factors.”

 

This proxy statement/prospectus is being provided to Alkermes shareholders as part of a solicitation of proxies by the Alkermes board of directors for use at the special meeting of Alkermes shareholders and at any adjournments or postponements of such meeting. This proxy statement/prospectus is being furnished to Alkermes shareholders on or about August 8, 2011. In addition, this proxy statement/prospectus constitutes a prospectus for New Alkermes in connection with the issuance by New Alkermes of ordinary shares in connection with the merger. This proxy statement/prospectus provides Alkermes shareholders with information they need to be able to vote or instruct their vote to be cast at the special meeting.

 

Alkermes will hold a special meeting of shareholders on September 8, 2011 at 10 a.m. Eastern Daylight Time, at its principal executive offices located at 852 Winter Street, Waltham, Massachusetts.

 

At the special meeting, Alkermes shareholders will vote upon proposals to:

 

 

Only holders of Alkermes common stock at the close of business on August 1, 2011, the record date for the Alkermes special meeting, will be entitled to notice of, and to vote at, the Alkermes special meeting or any adjournments or postponements thereof. On the record date, there were 97,618,711 shares of Alkermes common stock outstanding. Each outstanding Alkermes share is entitled to one vote on each proposal and any other matter properly coming before the Alkermes special meeting.

 

A quorum of shareholders is necessary to hold a valid special meeting of Alkermes. The required quorum for the transaction of business at the Alkermes special meeting consists of the presence, whether in person or by proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders of Alkermes are entitled to cast. Abstentions will be counted for purposes of determining whether a quorum is present. Broker non-votes will not be counted for purposes of determining whether a quorum is present unless the shares covered by the broker non-votes are voted on a matter other than a procedural matter.

 

Proposal to Adopt the Merger Agreement

 

Alkermes shareholders are considering and voting on a proposal to adopt the merger agreement. You should carefully read this proxy statement/prospectus in its entirety for more detailed information concerning the business combination. In particular, you are directed to the merger agreement, which is attached as Annex A to this proxy statement/prospectus.

 

The adoption of the merger agreement requires the affirmative vote of a majority of the votes cast by the holders of shares of Alkermes common stock outstanding and entitled to vote on the merger agreement proposal, assuming a quorum is present. As a result, abstentions, failures to vote and broker non-votes will have no effect on the merger agreement proposal.

 

The board of directors of Alkermes recommends that you vote “FOR” the adoption of the merger agreement.

 

Proposal to Create Distributable Reserves of New Alkermes

 

Alkermes shareholders are considering and voting on a proposal to create distributable reserves of New Alkermes. You should carefully read this proxy statement/prospectus in its entirety for more detailed information concerning the creation of distributable reserves. See “Creation of Distributable Reserves of New Alkermes.”

 

Approval of the proposal to create distributable reserves requires the affirmative vote of a majority of the votes cast by the holders of shares of Alkermes common stock outstanding and entitled to vote, assuming a quorum is present. As a result, abstentions, failures to vote and broker non-votes will have no effect on the distributable reserves proposal. Approval of this proposal is not a condition to the completion of the business combination and whether or not this proposal is approved will have no impact on the completion of the business combination.

 

The board of directors of Alkermes recommends that you vote “FOR” the creation of distributable reserves of New Alkermes.

 

Proposal to Adjourn the Special Meeting

 

Alkermes shareholders may be asked to vote on a proposal to adjourn the special meeting if necessary or appropriate, including for the purpose of permitting further solicitation of proxies if there are not sufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement.

 

The approval of the proposal to permit the proxies to adjourn the special meeting, including for the purpose of soliciting additional proxies, requires the affirmative vote of a majority of the votes cast by the holders of shares of Alkermes common stock present in person or represented by proxy at the meeting and entitled to vote on the adjournment proposal, regardless of whether a quorum is present. As a result, abstentions, failures to vote and broker non-votes will have no effect on the adjournment proposal.

 

The board of directors of Alkermes recommends that you vote “FOR” any adjournment of the special meeting to a later date or dates if necessary or appropriate, including for the purpose of permitting further solicitation of proxies.

 

As of the record date, the Alkermes directors and executive officers had the right to vote approximately 1,882,108 shares of Alkermes common stock, representing approximately 1.93% of the Alkermes common stock then outstanding and entitled to vote at the meeting. It is expected that the Alkermes directors and executive officers who are shareholders of Alkermes will vote “FOR” the proposal to adopt the merger agreement, “FOR” the proposal to create distributable reserves of New Alkermes, and “FOR” the proposal to adjourn the special meeting if necessary or appropriate, including for the purpose of permitting further solicitation of proxies, although none of them has entered into any agreement requiring them to do so.

 

Alkermes shareholders may vote in person at the special meeting or by proxy. Alkermes recommends that you submit your proxy even if you plan to attend the special meeting. If you vote by proxy, you may change your vote, among other ways, if you attend and vote at the special meeting.

 

If you own stock in your own name, you are considered, with respect to those shares, the “shareholder of record.” If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name.”

 

If you are a shareholder of record you may use the enclosed proxy card(s) to tell the persons named as proxies how to vote your shares. If you properly complete, sign and date your proxy card(s), your shares will be voted in accordance with your instructions. The named proxies will vote all shares at the meeting for which proxies have been properly submitted and not revoked. If you sign and return your proxy card(s) but do not mark your card(s) to tell the proxies how to vote, your shares will be voted “FOR” the proposals to adopt the merger agreement, to create distributable reserves of New Alkermes and to adjourn the special meeting.

 

Alkermes shareholders may also vote over the Internet at www.envisionreports.com/alks or by telephone at 1-800-652-8683. Voting instructions are printed on the proxy card or voting information form you received. Either method of submitting a proxy will enable your shares to be represented and voted at the special meeting.

 

If your shares are held in an account through a broker, bank or other nominee, you must instruct the broker, bank or other nominee how to vote you shares by following the instructions that the broker, bank or other nominee provides you along with this proxy statement/prospectus. If you do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote. This is referred to in this proxy statement/prospectus and in general as a broker non-vote. In these cases, the broker, bank or other nominee will not be able to vote your shares on those matters for which specific authorization is required; if the broker, bank or other nominee votes on a matter other than a procedural matter, your shares will be treated as present at the special meeting for purposes of determining the presence of a quorum. Brokers do not have discretionary authority to vote on the proposal to adopt the merger agreement.

 

If you are a shareholder of record, you may revoke your proxy at any time before it is voted at the special meeting by:

 

 

 

 

Attendance at the special meeting will not, in and of itself, revoke a proxy.

 

If your shares are held in “street name” by a bank, broker or other nominee, you should follow the instructions of your bank, broker or other nominee regarding the revocation of proxies.

 

Alkermes will bear the cost of soliciting proxies from its shareholders, except that Alkermes and Elan will share the cost of printing and mailing this proxy statement/prospectus.

 

Alkermes will solicit proxies by mail. In addition, the directors, officers and employees of Alkermes may solicit proxies from its shareholders by telephone, electronic communication, or in person, but will not receive any additional compensation for their services. Alkermes will make arrangements with brokerage houses and other custodians, nominees, and fiduciaries for forwarding proxy solicitation material to the beneficial owners of Alkermes common stock held of record by those persons and will reimburse them for their reasonable out-of-pocket expenses incurred in forwarding such proxy solicitation materials.

 

Alkermes has engaged a professional proxy solicitation firm, MacKenzie Partners, Inc., to assist in soliciting proxies for a fee of $12,500. In addition, Alkermes will reimburse MacKenzie Partners, Inc. for its reasonable out-of-pocket expenses.

 

Alkermes shareholders should not send in their stock certificates with their proxy cards.

 

As described on page 76 of this proxy statement/prospectus, Alkermes shareholders will be sent materials for exchanging shares of Alkermes common stock shortly after the completion of the merger.

 

Alkermes is not aware of any other business to be acted upon at the special meeting. If, however, other matters are properly brought before the special meeting, your proxies will have discretion to vote or act on those matters according to their best judgment and they intend to vote the shares as the Alkermes board of directors may recommend.

 

If you need assistance in completing your proxy card or have questions regarding Alkermes’ special meeting, please contact MacKenzie Partners, Inc. Banks and brokers call collect: (212) 929-5500; all others call toll free: (800) 322-2885.

 

EDT operates as a business unit of Elan with its principal assets held by various Elan legal entities predominantly located in Ireland.

 

Prior to the effective time of the merger, and in accordance with the merger agreement, Elan, certain of its subsidiaries and New Alkermes will carry out a reorganization that carves out the assets and legal entities that comprise the EDT business and repositions them under New Alkermes. The reorganization will consist of a series of asset transfers, share transfers and other inter-company transfers following which the EDT business will be contained in its own corporate structure under New Alkermes, which, prior to the effective time of the merger, will be an indirect subsidiary of Elan. As of the date of this proxy statement/prospectus certain steps in respect of the reorganization have already been completed.

 

The reorganization will result in (i) the Elan Shareholder beneficially owning 31,900,007 New Alkermes ordinary shares and the Euro Share Capital, which will constitute all of the then-issued share capital of New Alkermes and (ii) New Alkermes owning, indirectly, the equity interests in the companies that carry out the EDT business, and (with certain identified exceptions and additions), owning all of the right, title and interest to the EDT business.

 

Following the reorganization, Merger Sub, which will be an indirect wholly-owned subsidiary of New Alkermes, will merge with and into Alkermes, with Alkermes as the surviving corporation and a wholly-owned indirect subsidiary of New Alkermes. At the effective time, (i) each share of Alkermes common stock then issued and outstanding and all associated rights will be canceled and automatically converted into and become the right to receive one ordinary share of New Alkermes; (ii) all currently issued and outstanding options to purchase Alkermes common stock granted under any stock option plan will be converted into options to purchase, on substantially the same terms and conditions, the same number of New Alkermes ordinary shares at the same exercise price; and (iii) all currently issued and outstanding awards of Alkermes common stock will be converted into awards of the same number of New Alkermes ordinary shares on substantially the same terms and conditions. As a result, upon consummation of the merger and the issuance of the New Alkermes ordinary shares in exchange for the canceled shares of Alkermes common stock, the former shareholders of Alkermes will own approximately 75% of New Alkermes and the Elan Shareholder will beneficially own the remaining approximately 25% of New Alkermes, subject to the terms of the shareholder’s agreement.

 

On November 23, 2010, Michael Baldock, a partner of Ondra Partners, which is referred to in this proxy statement/prospectus as Ondra, an independent financial adviser engaged by Elan, met with Richard Pops, Chief Executive Officer of Alkermes, and Michael Landine, Senior Vice President of Corporate Development at Alkermes, to discuss a possible combination of Alkermes and EDT.

 

In a telephone call on November 24, 2010, Mr. Pops discussed with Kelly Martin, Chief Executive Officer of Elan, the possibility of a combination of Alkermes and EDT.

 

On November 29, 2010, Mr. Martin sent an email to Mr. Pops outlining immediate next steps, including the execution of a confidentiality agreement between Elan and Alkermes and the need to discuss a possible combination of Alkermes and EDT with the chairman of Elan’s board of directors.

 

On December 3, 2010, Mr. Martin sent an email to Mr. Pops noting that Elan’s board of directors approved Elan’s entry into discussions with Alkermes regarding a possible business combination.

 

Following approval by Elan’s board of directors, Alkermes and Elan entered into a confidentiality agreement relating to discussions of a possible business combination on December 6, 2010.

From December 6, 2010, through the execution of the merger agreement, Alkermes, Elan and their respective representatives, including their financial, tax and legal advisers, conducted due diligence investigations of each other’s business. Such due diligence activities included in-person meetings, telephone conference calls, and review of materials made available in hard copy or electronic copy, and focused on various aspects of the businesses, including, but not limited to, intellectual property, pipeline and commercial products, delivery technologies, finance and tax.

 

On December 13, 2010, Mr. Martin and Mr. Baldock met with Mr. Pops, James Frates, Chief Financial Officer of Alkermes, Mr. Landine, Blair Jackson, Vice President of Business Development at Alkermes, and Kathryn Biberstein, Senior Vice President and General Counsel of Alkermes, to discuss a possible business combination of Alkermes and EDT.

 

On December 23, 2010, Mr. Frates, Mr. Jackson, Mr. Landine, Iain Brown, Vice President of Finance at Alkermes, and Claire Vasios, Vice President of Intellectual Property at Alkermes, participated in a conference call with members of EDT’s management and advisers, during which Alkermes and EDT each delivered a presentation detailing its business, including a discussion of clinical programs and commercial products, and intellectual property matters related to such programs and products.

 

On January 4, 2011, Mr. Baldock and Mr. Pops met to discuss further a possible combination of Alkermes and EDT.

 

On January 5, 2011, Mr. Landine, Mr. Jackson, Mr. Frates, Ms. Vasios, Ms. Biberstein, Mr. Brown, Gordon Pugh, Chief Operating Officer of Alkermes, and Cathy Gebhard, Chief Licensing and Intellectual Property Counsel at Alkermes, met with Shane Cooke, then the CFO of Elan and head of EDT, Peter Thornton, Senior Vice President of Corporate Development and Business Operations at EDT, Karen Kim, a consultant to Elan, Harm Hemsing, Director of Finance and Investor Relations at EDT, Sharon Hamm, Senior Vice President of Technical Operations at EDT, Gary Liversidge, Chief Technical Officer at EDT, James Botkin, Senior Vice President of Operations at EDT, Tom Riordan, Vice President and Legal Counsel at EDT, and Mr. Baldock. During this meeting, representatives of Alkermes and EDT each delivered a presentation providing an overview of its business.

 

From January through May 2011, Alkermes worked with its financial and tax advisers and, on occasion, met with EDT and its financial and tax advisers, to perform various financial planning activities related to a possible business combination, including financial modeling activities, tax planning, valuation work and financing matters.

 

On January 8, 2011, Mr. Cooke sent an email to Mr. Pops outlining the rationale for, and potential advantages of, a possible combination of Alkermes and EDT.

 

On January 20 and 21, 2011, Mr. Frates, Mr. Landine, Mr. Jackson, Mr. Pugh, and Mr. Brown met with members of EDT’s management and accounting and tax advisers and Mr. Baldock in Dublin, Ireland to discuss the businesses of Alkermes and EDT, including their respective financial projections and legal structures related to a possible business combination. Ms. Biberstein and Ms. Gebhard participated by telephone.

 

On January 24, 2011, Mr. Martin sent an email to Mr. Pops noting the inclusion of the possible business combination as an agenda item at the upcoming meeting of Elan’s board of directors and requesting that there occur a discussion and agreement on the price to be paid by Alkermes to Elan for a possible combination of Alkermes and EDT.

 

In a telephone call on January 25, 2011, Mr. Pops and Mr. Cooke discussed the potential benefits posed by a possible combination of Alkermes and EDT.

 

In a telephone call with Mr. Pops on January 26, 2011 and an email to Mr. Pops on February 2, 2011, Mr. Martin communicated that, at the previous meeting of the Elan board of directors, he had received the full support of Elan’s board of directors to lay out the framework under which Elan would be prepared to move forward with the negotiation of a possible combination of EDT and Alkermes.

Mr. Pops held a dinner with Mr. Martin and Mr. Baldock on February 9, 2011, during which they discussed in detail aspects of a possible combination and Mr. Martin proposed to Mr. Pops a potential price and pricing structure.

 

On February 10, 2011, Mr. Martin sent an email to Mr. Pops reiterating their discussion on February 9, 2011.

 

On February 14, 2011, Mr. Pops sent an email to Mr. Martin noting that there was continued discussion among the Alkermes board of directors as to the rationale for and potential risks and benefits of a possible combination. In his email, Mr. Pops also noted that Alkermes was still moving ahead with transaction-related and due diligence activities that Mr. Pops wished to complete before engaging in any pricing-related discussions.

 

Mr. Pops and Mr. Martin met for breakfast on February 16, 2011, during which Mr. Martin and Mr. Pops discussed a possible business combination. Mr. Pops did not engage in pricing negotiations.

 

From February 16 to 23, 2011, Alkermes entered into discussions with three valuation firms to provide valuation services with respect to Alkermes’ clinical and commercial programs and EDT in connection with the possible business combination.

 

During this period, Mr. Pops sent an email to the Alkermes board of directors on February 17, 2011, discussing a possible business combination. As part of this communication, Mr. Pops provided the Alkermes board of directors with written materials describing EDT and an explanation of the rationale for, and risks of, such a business combination. On February 17 and 18, 2011, representatives of Morgan Stanley and another global financial services company met with Mr. Pops, Mr. Landine, Mr. Frates, Mr. Jackson, Ms. Biberstein, Mr. Pugh and Mr. Brown to discuss a possible business combination and the financial services each could provide in connection therewith. On February 19, 2011, Alkermes retained Morgan Stanley to provide certain financial services to Alkermes in connection with a possible business combination.

 

On February 24 and 25, 2011, members of Alkermes senior management, representatives of Morgan Stanley and PricewaterhouseCoopers, which is referred to in this proxy statement/prospectus as PwC, Alkermes’ accounting and tax adviser, met with members of EDT management, Mr. Baldock and EDT accounting and tax advisers, to discuss the terms and structure of a possible business combination.

 

On February 28, 2011, the Alkermes board of directors held a telephonic meeting to discuss a possible business combination with EDT. Representatives of Alkermes’ senior management attended. Mr. Pops, referencing the information sent to the Alkermes board of directors on February 17, 2011, indicated that Alkermes had been evaluating a potential transaction with EDT. Mr. Pops summarized in detail the business of EDT, including its intellectual property estate, physical assets, commercial and clinical products, and current and projected financial performance. Mr. Pops outlined the cash and equity consideration that Alkermes would utilize to finance a possible business combination, including the use of bank debt. Substantial discussion regarding a possible business combination followed, including discussion regarding the pro forma financials of the combined entities, the financing of a possible business combination, the diligence process for a possible business combination, the impact of acquiring certain royalty streams and the relocation of Alkermes headquarters to Ireland. The Alkermes board of directors then authorized the formation of, and established, an ad hoc committee of the Alkermes board of directors, which is referred to in this proxy statement/prospectus as the Transaction Committee, to assist Alkermes senior management and the Alkermes board of directors in considering a possible business combination with EDT, which committee consisted of Robert Breyer, Paul Mitchell and David Anstice.

 

Following the Alkermes board of directors’ meeting, Mr. Pops emailed Mr. Martin on March 1, 2011 to communicate that Alkermes would continue to proceed with transaction-related activities, working through the deal structure and legal and tax issues and preparing for price negotiations. Mr. Pops noted further that, after it received a valuation analysis from Morgan Stanley, Alkermes would advance a proposed transaction structure to Elan for consideration.

 

On March 2, 2011, Mr. Frates, Mr. Landine, Mr. Brown and Mr. Jackson participated in a conference call with members of EDT and Elan management, and Mr. Baldock, to discuss the credit financial model of a possible combined business following a possible transaction.

 

On March 4, 2011, Mr. Pops, Mr. Landine, Mr. Frates, Mr. Brown and Mr. Jackson participated in a conference call with Morgan Stanley to discuss the valuation models and other financial aspects of a possible business combination.

 

Also on March 4, 2011, Mr. Pops communicated to Mr. Martin via email that Alkermes would be prepared to speak with Elan about pricing and pricing structure within the week. Mr. Martin asked that such information be communicated to Elan’s financial advisers, Ondra and Citibank Global Markets Inc., which is referred to in this proxy statement/prospectus as Citi, Elan’s financial advisers.

 

On March 7, 2011, Mr. Pops held a call with the Transaction Committee to update them as to the progress of the negotiations on a possible business combination and discuss the open issues. Also participating in the call were members of Alkermes senior management.

 

Following the call with the Transaction Committee, Mr. Pops spoke with Mr. Martin on March 8, 2011 by telephone and communicated an offer for EDT in the amount of $500 million in cash and 30 million New Alkermes ordinary shares. Mr. Martin noted that he would convey the offer to Elan’s board of directors.

 

In an email to Mr. Pops on March 9, 2011, Mr. Martin communicated that he had spoken with the chairman of the Elan board of directors about Alkermes’ proposed pricing and price structure and that Mr. Martin should be able to provide clarity about the process over the next few days.

 

In a telephone call on March 11, 2011, Mr. Pops requested that Alkermes be provided with exclusivity in its negotiations with Elan regarding a possible business combination with EDT.

 

In an email exchange on March 12, 2011, Mr. Martin communicated that he had a meeting with the chairman of Elan’s board of directors and reviewed with him the discussion of exclusivity. Mr. Martin next planned to review such discussion with members of the ad hoc sub-committee of Elan’s board of directors. Mr. Pops intimated that, unless and until exclusivity was provided, Alkermes would not proceed with further activities related to a possible business combination.

 

On March 15, 2011, Mr. Pops and Mr. Martin spoke by telephone. They discussed some of the key open issues related to a possible combination, including total consideration, board governance, executive management, rights and restrictions of Elan as a shareholder of the combined business, and a timeline for a possible business combination.

 

Also on March 15, 2011, as a follow-up to their telephone conversation, Mr. Martin sent Mr. Pops an email outlining five transaction components to be satisfied before the sub-committee of Elan’s board of directors would recommend approval of the Alkermes’ exclusivity proposal to the full board of directors. These components related to the total consideration to be paid by Alkermes, including the receipt by Elan of equity consideration equal to 31,900,000 ordinary shares of New Alkermes (approximately 25% of New Alkermes), the number of board seats Elan would have in a combined business, the possible role, if any, of Mr. Cooke in a combined business, the ability of Elan to monetize its equity stake in the combined business, and the timeline of a possible business combination.

 

In advance of Alkermes’ next scheduled board of directors meeting, Mr. Pops sent an email to the Alkermes board of directors on March 15, 2011, describing Alkermes’ analysis of a possible business combination to date, including the financial and operational synergies such a combination could produce and the risks posed by a possible business combination.

 

On March 18, 2011, Alkermes engaged Duff & Phelps, LLC, which is referred to in this proxy statement/prospectus as Duff & Phelps, to provide valuation services with respect to certain Alkermes’ clinical and commercial programs and EDT in connection with a possible business combination.

 

From March 18, 2011 through the signing of the definitive merger agreement, representatives of Alkermes, EDT, and their respective financial, tax and legal advisers provided Duff & Phelps information, by

telephone, email, and in person, to enable it to generate a valuation of EDT and certain Alkermes’ clinical and commercial programs. The valuation work with respect to EDT will continue through the completion of the business combination.

 

On March 21, 2011, Mr. Pops, Mr. Frates, Mr. Jackson, Mr. Landine and Ms. Biberstein met with members of the Transaction Committee. During this meeting, Mr. Pops provided an update as to the status of the business combination negotiations and discussed the open issues.

 

Also on March 21, 2011, during a meeting with the full Alkermes board of directors, members of Alkermes senior management delivered presentations describing in detail the business of EDT, financial matters relating to a possible business combination (including potential financing structures, individual and combined business valuation models and other considerations), and potential benefits and risks of a possible business combination, with substantial discussion among those present occurring thereafter.

 

On March 22, 2011, as part of Alkermes’ regularly scheduled board of directors meeting at Alkermes’ headquarters in Waltham, Massachusetts, representatives of Morgan Stanley presented to the Alkermes board of directors a preliminary valuation analysis of EDT, Alkermes and the pro forma combined business, potential financing structures, and other financial deal terms and the open issues related to a possible business combination. Members of Alkermes management were in attendance during such presentation and participated in the discussion that followed. A representative of Cleary Gottlieb, legal counsel to Alkermes in connection with the possible business combination, then presented an overview of the Alkermes board of directors’ obligations in making a determination regarding the review and approval of a possible business combination and discussed various legal issues related to a possible business combination. The Alkermes board of directors, along with members of Alkermes senior management, discussed in further detail a possible business combination. In the executive session that followed, board members further discussed certain aspects of a possible business combination, including financial terms, the potential role of Mr. Cooke, the addition of new board members, rights related to the sale of Elan’s equity stake in a combined business, and timing of a possible business combination.

 

Following the Alkermes board of directors meeting, Mr. Pops and Mr. Martin spoke by telephone on March 23, 2011, during which they discussed the five transaction components set forth during their telephone discussion and email communication on March 15, 2011.

 

Also on March 23, 2011, as a follow-up to their telephone conversation, Mr. Pops sent Mr. Martin an email summarizing Alkermes’ position with regard to total consideration, number of board seats for Elan in a combined business, the potential role of Mr. Cooke in a combined business, and timing of a possible business combination. In addition, Mr. Pops outlined terms that would allow Elan to monetize its equity stake in a combined business based on certain holding periods and the share price of the combined business.

 

On March 24, 2011, Mr. Pops and Mr. Cooke met to discuss EDT and the organization and strategic direction of the combined business, as well as to explore a potential role for Mr. Cooke in the combined business.

 

In email communication between Mr. Pops and Mr. Martin on March 24 and 25, 2011, Mr. Martin discussed agreement on the five transaction components as a pre-condition to raising the issue of exclusivity with Elan’s board of directors. Mr. Pops requested that Elan confirm that it was willing to agree to exclusivity in its negotiations with Alkermes related to a possible business combination notwithstanding agreement on the five transaction components.

 

From March 23 to 25, 2011, Alkermes commenced discussions with each of MSSF, HSBC, and Citi, about different financing structures for a possible business combination.

 

On March 25, 2011, Mr. Pops sent an email to the Transaction Committee discussing progress made in discussions with Mr. Martin and Elan about those open issues discussed during the previous meeting of the Alkermes board of directors, including total consideration, governance of the combined business, and the rights and restrictions of Elan as a shareholder in a combined business.

 

On March 27, 2011, Mr. Pops sent an email to Mr. Martin outlining Alkermes’ position related to the main outstanding issues — total consideration, including certain conditions to be met by Elan related to the status of EDT’s balance sheet and the costs of an EDT facility as a precondition to Alkermes’ agreement to provide Elan with equity consideration equal to 31,900,000 ordinary shares of New Alkermes, board governance, and the ability of Elan to monetize its equity stake in a combined business — and requesting that Elan confirm its willingness to negotiate exclusively with Alkermes as a precondition to Alkermes’ continuing to engage its internal and external legal counsels and financial and tax advisers in working towards finalization of a transaction.

 

During the first week in April 2011, each of MSSF, HSBC and Citi conducted its respective due diligence investigation on Alkermes in connection with potential financing related to a possible business combination.

 

On April 1, 2011, in a series of emails from Mr. Martin to Mr. Pops, Mr. Martin noted the occurrence of an Elan board subcommittee call and the desire of Elan to formulate a new monetization framework for its equity ownership in a combined business. Mr. Martin also stated that Alkermes’ agreement on this issue would influence the Elan board of directors’ receptivity to agreeing to negotiate exclusively with Alkermes.

 

On April 2, 2011, Mr. Pops and Mr. Martin had a discussion, by email and telephone, and agreed upon general terms that would govern Elan’s ability to monetize its equity stake in a combined business, including lock-up periods and registration rights.

 

On April 5, 2011, Mr. Landine and Mr. Frates conducted a conference call with Nigel Clerkin, Senior Vice President, Finance and Group Controller at Elan, and Ms. Kim to discuss and resolve the open issues related to a possible business combination.

 

On April 6, 2011, Mr. Pops held a call with the Transaction Committee to update them as to the progress of negotiations relating to a possible business combination and discuss the open issues. Also participating in the call were members of Alkermes senior management.

 

Also on April 6, 2011, Mr. Pops and Mr. Cooke spoke by telephone about EDT, and the organizational structure of, and potential role of Mr. Cooke in, the combined business following a possible transaction.

 

From April 6, 2011 through April 24, 2011, MSSF, HSBC and Citi presented their respective financing offerings and options to Alkermes. After numerous discussions with each of MSSF, HSBC and Citi during this time and into the first week of May, Alkermes agreed to terms with, and secured financing commitments from, MSSF and HSBC for up to $450 million in term loan financing. In April 2011 and prior to Alkermes selecting MSSF and HSBC to provide the financing, Citi withdrew from being considered as a potential source for, or participant in, the financing.

 

On April 12, 2011, Alkermes and Elan contractually agreed to exclusivity for a specified period of time in the negotiation of a possible business combination.

 

On April 13, 2011, the initial draft of the shareholder’s agreement was distributed by Cleary Gottlieb to Elan.

 

Mr. Landine and Mr. Frates conducted a conference call with Mr. Clerkin and Ms. Kim on April 13, 2011 to discuss and resolve the open issues related to a possible business combination.

 

Mr. Pops held a lunch with Mr. Cooke on April 13, 2011, during which they discussed the organization and strategic direction of a combined business as well as the potential role of Mr. Cooke in a combined business.

 

On April 19, 2011, Mr. Landine and Mr. Frates conducted a conference call with Mr. Clerkin and Ms. Kim to discuss and resolve the open issues related to a possible business combination.

 

Also on April 19, 2011, Mr. Pops sent an email to the Transaction Committee updating them on the status of the merger agreement and shareholder’s agreement, and outlining an expected timeline of the related negotiations.

From April 19 through April 21, 2011, members of Alkermes’ finance, information technology and business development functions traveled to EDT headquarters in Ireland to conduct on-site due diligence investigation and meet with EDT management.

 

On April 20, 2011, Mr. Pops and Mr. Landine traveled to Ireland to meet with EDT and Elan management and visit the EDT facilities. On April 20, 2011, Mr. Pops, Mr. Landine, and Mr. Frates met for dinner with Mr. Martin, Mr. Thornton, Ms. Kim, Mr. Cooke, Mr. Clerkin and John B. Moriarty, Jr., General Counsel of Elan.

 

On April 21, 2011, Mr. Landine and Mr. Frates met with Mr. Clerkin and Ms. Kim in Ireland to discuss the open issues related to a possible business combination.

 

Also on April 21, 2011, the initial draft of the merger agreement was distributed by Cleary Gottlieb to Elan.

 

From the end of April through the execution of the definitive merger agreement on May 9, 2011, there were regular interactions and negotiations among internal and external counsels of Elan and Alkermes, and their respective financial and tax advisers, relating to the terms and conditions of a possible business combination.

 

On April 22, 2011, Mr. Pops held a call with the Transaction Committee to update them as to the progress of the negotiations relating to a proposed business combination and discuss the open issues. Also participating in the call were members of Alkermes senior management.

 

Also on April 22, 2011, Ms. Biberstein, Mr. Landine and Mr. Frates conducted a conference call with Mr. Clerkin and Ms. Kim to discuss and resolve the open issues related to a possible business combination.

 

On April 23, 2011, Cleary Gottlieb conducted a telephone call with Cahill Gordon & Reindel LLP, which is referred to in this proxy statement/prospectus as Cahill, U.S. external legal counsel to Elan, A&L Goodbody, Irish external legal counsel to Elan and referred to in this proxy statement/prospectus as A&L Goodbody, and internal Elan counsel to discuss and resolve the open issues related to the drafts of the merger agreement and shareholder’s agreement.

 

On April 26, 2011, Mr. Landine, Mr. Frates, Ms. Biberstein, and Ms. Gebhard met with representatives of Morgan Stanley to discuss the status of a possible business combination.

 

Also on April 26, 2011, Mr. Landine, Ms. Biberstein, Ms. Gebhard and Mr. Frates met with Mr. Clerkin and Ms. Kim, Mr. Moriarty and John Donahue, Senior Vice President, Legal-Corporate at Elan, to discuss and resolve the open issues related to a possible business combination.

 

On April 27, 2011, Ms. Biberstein, Mr. Frates, Mr. Landine, Mr. Jackson, Ms. Gebhard and representatives of Cleary Gottlieb and Arthur Cox, Irish external legal counsel to Alkermes, which is referred to in this proxy statement/prospectus as Arthur Cox, met with members of EDT and Elan management and representatives of Cahill and A&L Goodbody, to negotiate the terms of the merger agreement and the shareholder’s agreement.

 

Also on April 27, 2011, Mr. Pops met with Mr. Cooke to discuss the organizational structure of, and potential role of Mr. Cooke in, the combined business following a possible transaction.

 

On May 2, 2011, Mr. Pops held a call with the Transaction Committee to update them as to the progress of the negotiations on a possible business combination, to discuss the open issues, and, along with Mr. Frates, to walk through a presentation prepared by Morgan Stanley and provided to the Transaction Committee in advance, which summarized the various financing options and their implications to Alkermes. Also participating in the call were members of Alkermes senior management.

 

On May 3, 2011, Mr. Martin sent an email to Mr. Pops in which he emphasized the importance of Elan’s ability to monetize its equity ownership in the combined business following a possible transaction and noted that Alkermes’ then current proposal was inadequate in this regard.

On May 5, 2011, representatives of Alkermes management, Cleary Gottlieb and Arthur Cox conducted a conference call with representatives of Elan and EDT management, Cahill and A&L Goodbody to address and resolve the open issues related to the draft merger agreement.

 

On May 6, 2011, Mr. Pops and Mr. Martin spoke by telephone to resolve the open issues relating to the draft shareholder’s agreement.

 

On May 6, 2011, as a follow-up to their telephone conversation, Mr. Pops and Mr. Martin sent a series of emails in which they outlined, and eventually resolved, the remaining open issues related to the draft shareholder’s agreement, including voting rights and monetization provisions.

 

Also on May 6, 2011, representatives of Alkermes management, Cleary Gottlieb and Arthur Cox conducted a conference call with representatives of Elan and EDT management, Cahill and A&L Goodbody to resolve the remaining open issues related to the drafts of merger agreement and shareholder’s agreement.

 

On May 7, 2011, the Alkermes board of directors convened a special meeting at Alkermes’ headquarters in Waltham, Massachusetts, to consider the proposed business combination. Present at the meeting were representatives of Alkermes’ senior management, representatives of Morgan Stanley and a representative of Cleary Gottlieb. Prior to the meeting, the members of the Alkermes board of directors had been provided with a summary of the merger agreement and shareholder’s agreement and copies of the most recent drafts thereof, preliminary tax memoranda from Alkermes’ legal and tax advisers, and a memoranda detailing the duties of directors in considering the business combination, as prepared by Cleary Gottlieb. Mr. Pops provided an overview of the status of the proposed business combination and the remaining open negotiation points. A representative of Cleary Gottlieb then provided a summary of the salient points of the merger agreement and the shareholder’s agreement, discussed the directors’ fiduciary duties in considering the proposed business combination under applicable law, and presented generally the form of resolutions the board of directors of Alkermes would be required to adopt to approve the proposed business combination. Following substantial discussion of these and other matters, Morgan Stanley presented to the Alkermes board of directors their preliminary analysis of the fairness of the price to be paid by Alkermes for EDT. The Morgan Stanley representatives provided an overview of the key transaction terms, a review, based on management forecasts and assumptions, of key operating assumptions for EDT, financial forecasts for EDT, and potential transaction synergies, a valuation of EDT using various methodologies, the pro forma business and financial profile of the combined business, and an intrinsic value analysis of the combined business. Substantial discussion followed and copies of the Morgan Stanley materials were provided electronically to those members of the Alkermes board of directors participating by conference telephone. Morgan Stanley and Mr. Frates then summarized the financing terms related to the debt Alkermes would incur in order to finance the proposed business combination. Morgan Stanley distributed materials summarizing the financing terms to the members of the Alkermes board of directors. Discussion followed regarding the cost of the debt and potential debt covenants. Copies of the Morgan Stanley materials related to the debt financing were provided electronically to those members of the Alkermes board of directors participating by conference telephone. Mr. Pops and the members of Alkermes board of directors then discussed the potential timing for the execution of the merger agreement and the announcement of the proposed business combination.

 

On May 8, 2011, the Alkermes board of directors convened another special meeting by conference telephone to review and consider the proposed business combination. Present at the meeting were representatives of senior management, representatives of Morgan Stanley and a representative of Cleary Gottlieb. At the meeting Mr. Pops indicated that the proposed business combination was ready to be brought before the Alkermes board of directors for approval, on substantially the same terms presented to the Alkermes board of directors during the prior day’s board meeting. Cleary Gottlieb discussed the resolutions required to be adopted by the Alkermes board of directors to approve the proposed business combination and also indicated that the merger agreement and commitment letter would be executed after midnight but before market open and would therefore be dated May 9, 2011. Morgan Stanley then reviewed the materials provided to the Alkermes board of directors at the prior day’s meeting, discussed with the Alkermes board of directors its financial analysis of the proposed business combination, and delivered its oral opinion to the Alkermes board of directors, which opinion was confirmed in writing to the effect that on May 8, 2011 and based upon

and subject to the various assumptions, considerations, qualifications and limitations set forth in the written opinion (see “The Business Combination — Opinion of Alkermes’ Financial Adviser”) the consideration to be paid by Alkermes pursuant to the merger agreement was fair from a financial point of view to Alkermes (Morgan Stanley’s opinion is attached as Annex B to this proxy statement/prospectus). The Alkermes board of directors generally discussed the materials provided to them regarding the proposed business combination by Alkermes management and Alkermes’ advisers and indicated that those materials were thorough, complete and allowed them to undertake a sound decision-making process regarding the proposed business combination. The members of the Alkermes board of directors present at the meeting then approved the merger agreement, the form of the shareholder’s agreement and the business combination, and the commitment letter and related documents. The Alkermes board members present at the meeting determined that the merger agreement, the form of shareholder’s agreement and the business combination are advisable and in the best interests of Alkermes and its shareholders and authorized the appropriate officers of Alkermes to finalize, execute and deliver the merger agreement, the commitment letter, the fee letter and the ancillary agreements.

 

On May 9, 2011, the Elan board of directors convened a special meeting and determined that the business combination and the transactions contemplated by the merger agreement are in the best interests of Elan and approved the merger agreement and its execution for and on behalf of Elan.

 

In the morning of May 9, 2011, all agreements were finalized and the merger agreement was executed by and among Elan, New Alkermes, Elan Science Four Limited, EDT Pharma Holdings Limited, EDT US Holdco Inc., Antler Acquisition Corp., and Alkermes, the commitment letter and fee letter were executed by and among Alkermes, MSS and HSBC and other relevant documents were executed between Alkermes and Elan. Prior to the opening of trading on NASDAQ, Alkermes and Elan issued a joint press release announcing the business combination.

 

The Alkermes board of directors has determined that the terms of the merger agreement are in the best interests of Alkermes and its shareholders. The Alkermes board of directors consulted with its management as well as its legal counsel and financial advisers in reaching its decision to approve, adopt and declare advisable the merger agreement and the business combination (including the merger and the reorganization) and recommends to the Alkermes shareholders that they vote “FOR” adoption of the merger agreement.

 

In reaching its conclusion to approve the merger agreement and the business combination, the Alkermes board of directors reviewed a significant amount of information and considered a number of factors in its deliberations and concluded that the business combination is likely to result in significant strategic and financial benefits to New Alkermes, which would accrue to Alkermes shareholders, as shareholders of New Alkermes, and in particular believes that:

 

 

 

These beliefs are based in part on the following factors that the Alkermes board of directors considered:

 

 

 

The Alkermes board of directors weighed these factors against a number of uncertainties, risks and potentially negative factors relevant to the business combination, including the following:

 

 

 

 

 

The Alkermes board of directors concluded that the uncertainties, risks and potentially negative factors relevant to the business combination were outweighed by the potential benefits that it expected Alkermes and the Alkermes shareholders would achieve as a result of the business combination.

 

This discussion of the information and factors considered by the Alkermes board of directors includes the principal positive and negative factors considered by the Alkermes board of directors, but is not intended to be exhaustive and may not include all of the factors considered by the Alkermes board of directors. In view of the wide variety of factors considered in connection with its evaluation of the merger and the business combination, and the complexity of these matters, the Alkermes board of directors did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the business combination and to make its recommendations to the Alkermes shareholders. Rather, the Alkermes board of directors viewed its decisions as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the Alkermes board of directors may have given differing weights to different factors.

 

On February 18, 2011, Alkermes engaged Morgan Stanley to provide it with financial advisory services and a financial opinion in connection with a possible combination with EDT. Alkermes selected Morgan Stanley to act as its financial adviser based on Morgan Stanley’s qualifications, expertise and reputation and its knowledge of the business and affairs of Alkermes. At the meeting of the Alkermes board of directors on May 8, 2011, Morgan Stanley rendered its oral opinion, subsequently confirmed in writing, that as of May 8, 2011, and based upon and subject to the various assumptions, considerations, qualifications and limitations set forth in the written opinion, the consideration to be paid by Alkermes pursuant to the merger agreement was fair from a financial point of view to Alkermes.

 

The full text of the written opinion of Morgan Stanley, dated as of May 8, 2011, and referred to in this proxy statement/prospectus as the opinion, is attached to this proxy statement/prospectus as Annex B. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion. Alkermes encourages you to read the entire opinion carefully and in its entirety.

 

Morgan Stanley’s opinion is directed to the Alkermes board of directors and addresses only the fairness from a financial point of view to Alkermes of the consideration to be paid by Alkermes pursuant to the merger agreement, as of the date of the opinion. It does not address any other aspects of the transactions, or in any manner address the prices at which the New Alkermes ordinary shares will trade at any time, including following consummation of the business combination, and does not constitute a recommendation to any holder of Alkermes common stock as to how to vote at any shareholders’ meeting held in connection with the business combination or whether to take any other

action with respect to the business combination. The summary of the opinion 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:

 

 

 

 

 

 

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 Alkermes and Elan, and formed a substantial basis for its opinion. With respect to the financial projections, including information relating to certain strategic, financial and operational benefits anticipated from the business combination, Morgan Stanley assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the respective managements of Alkermes and Elan of the future financial performance of EDT and of the management of Alkermes of the future financial performance of Alkermes. In addition, Morgan Stanley assumed that the business combination, including the merger, will be consummated in accordance with the terms set forth in the merger agreement without any waiver, amendment or delay of any terms or conditions, including, without limitation, that Alkermes will obtain financing in accordance with the terms set forth in the commitment letter. Morgan Stanley relied upon, without independent verification, the assessment by the management of Alkermes of: (i) the strategic, financial, tax and other benefits expected to result from the business combination; (ii) the timing and risks associated with the integration of EDT with Alkermes; (iii) the ability to retain key employees of EDT and Alkermes, respectively and (iv) the validity of, and risks associated with, EDT’s and Alkermes’ existing and future technologies, intellectual property, products, services and business models.

Morgan Stanley assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the proposed transactions, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived from the business combination. Morgan Stanley noted that it is not a legal, tax or regulatory adviser. Morgan Stanley is a financial adviser only and relied upon, without independent verification, the assessment of Alkermes and its legal, tax or regulatory advisers with respect to legal, tax or regulatory matters. Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities of EDT or Alkermes, 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, May 8, 2011. Events occurring after May 8, 2011 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.

 

The following is a brief summary of the material analyses performed by Morgan Stanley in connection with its oral opinion and the preparation of its written opinion letter dated May 8, 2011. 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. Various analyses presented below were based on the closing price of Alkermes common stock of $14.47 per share as of May 6, 2011, the last full trading day prior to the meeting of the Alkermes board of directors to consider and approve, adopt and authorize the merger agreement.

 

Equity Research Analysts’ Estimates of Value.  Morgan Stanley reviewed and analyzed values of EDT prepared and published by equity research analysts from April 12, 2011 and prior to April 21, 2011. These values reflected each analyst’s estimate of value of EDT. The range of analysts’ estimates for EDT was $700 million to $1,150 million.

 

Morgan Stanley noted that the value of the consideration to be paid by Alkermes pursuant to the merger agreement as of May 8, 2011 was approximately $960 million, based on the closing price of Alkermes common stock of $14.47 per share as of May 6, 2011.

 

The value estimates published by equity research analysts are subject to uncertainties, including the future financial performance of EDT and future financial market conditions.

 

Public Trading Comparables Analysis.  Morgan Stanley performed a public trading comparables analysis, which attempts to provide an implied standalone trading value of a company by comparing it to similar companies that are publicly traded. Morgan Stanley compared certain financial information of EDT with comparable publicly available consensus equity research estimates for companies that share similar business characteristics, such as those that operate in the pharmaceutical or drug delivery businesses or those that have similar scale and operating characteristics, which are referred to in this proxy statement/prospectus as the Comparable Companies. The Comparable Companies included the following:

 

Novo Nordisk A/S
Shire plc
UCB S.A.
Ipsen S.A.
Alkermes
Nektar Therapeutics
Acino Holding AG
Patheon Inc.
LifeCycle Pharma A/S
Alexion Pharmaceuticals, Inc.
Actelion Pharmaceuticals Ltd
United Therapeutics Corporation
Cubist Pharmaceuticals, Inc.
Acorda Therapeutics, Inc.

 

For purposes of this comparative analysis, Morgan Stanley analyzed for each of these Comparable Companies the multiple of aggregate value to estimated earnings before interest, taxes, depreciation and amortization, which is referred to in this proxy statement/prospectus as EBITDA, for calendar year 2011 (in each case, based on publicly available consensus estimates).

 

Based on the analysis of the relevant metrics for each of the Comparable Companies, Morgan Stanley selected representative ranges of financial multiples and applied these ranges of multiples to the relevant financial statistic for EDT. For the estimated EBITDA for calendar year 2011, Morgan Stanley utilized a set of estimates for EDT developed by the management of Alkermes, which is referred to in this proxy statement/prospectus as the Alkermes Management Case, and a set of estimates for EDT prepared by Elan’s management, which is referred to in this proxy statement/prospectus as the Elan Management Case.

 

Morgan Stanley calculated the estimated implied value of EDT as of May 7, 2011 as follows:

 

 

Morgan Stanley also selected representative ranges of financial multiples and applied these ranges to the relevant financial statistics set forth in the Alkermes Management Case or the Elan Management Case, as applicable, adjusted to reflect the estimate of the value of the possible synergies achievable as a result of the business combination using synergy estimates prepared by Alkermes management. For the estimated EBITDA for calendar year 2011, Morgan Stanley utilized a set of estimates based on the Alkermes Management Case and a set of estimates based on the Elan Management Case, and added the net present value of synergies as estimated by Alkermes management to each of these.

 

Morgan Stanley calculated the estimated implied value of EDT plus synergies as of May 7, 2011 as follows:

 

 

Morgan Stanley noted that the value of the consideration to be paid by Alkermes pursuant to the merger agreement as of May 8, 2011 was approximately $960 million, based on the closing price of Alkermes common stock of $14.47 per share as of May 6, 2011.

 

No company utilized in the public trading comparables analysis is identical to EDT. In evaluating comparable companies, Morgan Stanley made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of EDT, such as the impact of competition on EDT and the industry generally, industry growth and the absence of any adverse material change in the financial condition and prospects of EDT or the industry or in the financial markets in general. Mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using peer group data.

 

Discounted Cash Flow Analysis.  Morgan Stanley calculated a range of values for EDT based on a discounted cash flow analysis to value EDT as a standalone entity as well as an entity incorporating synergies. Morgan Stanley utilized projections from the Alkermes Management Case, an Alkermes Management Case

incorporating certain upside projections for the EDT product Ampyra, which is referred to in this proxy statement/prospectus as Ampyra Upside, and described under “Certain Unaudited Financial Projections” below, and the Elan Management Case. Morgan Stanley calculated the net present value of free cash flows for EDT for calendar years 2011 through 2027. These values were discounted to present values as of March 31, 2011 at discount rates ranging from 8.75% to 10.25% to reflect a range of the estimated cost of capital for EDT. In addition, Morgan Stanley used these projections as adjusted to reflect estimated synergies as described above. The cost of capital was estimated using the Capital Asset Pricing Model.

 

The following table summarizes Morgan Stanley’s analysis:

 

 

Morgan Stanley noted that the value of the consideration to be paid by Alkermes pursuant to the merger agreement as of May 8, 2011 was approximately $960 million, based on the closing price of Alkermes common stock of $14.47 per share as of May 6, 2011.

 

Leveraged Buyout Analysis.  Morgan Stanley performed an illustrative leveraged buyout analysis to estimate the theoretical prices at which a financial sponsor might effect a leveraged buyout of EDT. For purposes of this analysis, Morgan Stanley assumed a transaction date of March 31, 2011. Morgan Stanley utilized projections from the Alkermes Management Case in performing its analysis and analyzed two different scenarios. The Exit Scenario assumed the removal of certain unallocated research and development costs, as well as an exit by the financial sponsor on March 31, 2016 with the valuation of EDT realized by the financial sponsor in such subsequent exit transaction based on a 5.0x to 7.0x aggregate value to next-twelve months EBITDA multiple and estimated total debt and cash for EDT as of March 31, 2016. The Harvest Scenario assumed the removal of all unallocated research and development costs and assumed that the financial sponsor collected excess cash flows through March 31, 2021. In both the Exit Scenario and the Harvest Scenario, maximum debt was assumed to be $400 million. The implied acquisition price paid by the financial sponsor was based on a hypothetical target range of internal rates of return for the financial sponsor between March 31, 2011 and March 31, 2016 of 17.0% to 22.0%.

 

The following table summarizes Morgan Stanley’s analysis:

 

 

Morgan Stanley noted that the value of the consideration to be paid by Alkermes pursuant to the merger agreement as of May 8, 2011 was approximately $960 million, based on the closing price of Alkermes common stock of $14.47 per share as of May 6, 2011.

 

Illustrative New Alkermes Intrinsic Value Analysis.  Morgan Stanley performed an illustrative intrinsic value analysis of New Alkermes to assess the potential impact on value to Alkermes shareholders. For this analysis, Morgan Stanley used the Alkermes Management Case for the projections for EDT. Morgan Stanley noted that the market value of Alkermes on May 6, 2011 was approximately $1,456 million. Morgan Stanley also noted that calculation of the intrinsic value based on relative ownership of New Alkermes ordinary shares

following the business combination ($1,456 million less 24% of standalone Alkermes, plus 76% of standalone EDT prior to synergies, plus 76% of net operating synergies less 76% of the cash consideration to be paid to Elan) resulted in a value for New Alkermes of $1,584 million, a 9% increase from the standalone value of Alkermes. Additionally, Morgan Stanley also noted that assuming the Ampyra Upside resulted in a value of $1,680 million, a 15% increase from the standalone value of Alkermes.

 

In connection with the review of the business combination by the Alkermes board of directors, 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 EDT. In performing its analyses, Morgan Stanley made numerous assumptions with respect to industry performance, general business and economic conditions and other matters. Many of these assumptions are beyond the control of Alkermes or New Alkermes. 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 consideration to be paid by Alkermes pursuant to the merger agreement and in connection with the delivery of its opinion, dated May 8, 2011, to the Alkermes board of directors. These analyses do not purport to be appraisals.

 

The consideration was determined through arm’s-length negotiations between Alkermes and Elan and was approved by the Alkermes board of directors. Morgan Stanley provided advice to Alkermes during these negotiations. Morgan Stanley did not, however, recommend any specific consideration to Alkermes or that any specific consideration constituted the only appropriate consideration for the business combination.

 

Morgan Stanley’s opinion and its presentation to the Alkermes board of directors was one of many factors taken into consideration by the Alkermes board of directors in deciding to approve, adopt and authorize the merger agreement. Consequently, the Morgan Stanley analyses as described above should not be viewed as determinative of the opinion of the Alkermes board of directors with respect to the consideration, or of whether the Alkermes board of directors would have been willing to agree to different consideration.

 

Alkermes retained Morgan Stanley based upon Morgan Stanley’s qualifications, experience and expertise and its knowledge of the business affairs of Alkermes. Morgan Stanley is an internationally recognized investment banking and advisory firm. Morgan Stanley, as part of its investment banking and financial advisory business, is continuously engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate, estate and other purposes. Morgan Stanley also is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives trading, 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 its customers, in debt or equity securities or loans of Alkermes, New Alkermes, Elan, or any other company, or any currency or commodity, that may be involved in the business combination, or any related derivative instrument.

 

Under the terms of its engagement letter, Morgan Stanley provided Alkermes financial advisory services and a financial opinion in connection with the business combination, and Alkermes has agreed to pay Morgan Stanley a fee for its services of between $8.5 million and $11 million, $250,000 of which was payable upon engagement of Morgan Stanley, $2 million of which became payable upon execution of the merger agreement

and the remainder of which is contingent upon the closing of the business combination. In addition, MSSF, an affiliate of Morgan Stanley, is providing to Alkermes a portion of the financing required in connection with the business combination, for which such affiliate will receive fees from Alkermes of approximately $8.0 million in the aggregate. Morgan Stanley or one or more of its affiliates may also provide financing services to Elan for purposes that are unrelated to the business combination, including restructuring or refinancing Elan’s existing debt, in one or more transactions to be executed separately from, and without receipt of internal strategic information from Elan regarding, the business combination. Alkermes has also agreed to reimburse Morgan Stanley for its expenses, including fees of outside counsel and other professional advisers, incurred in connection with its services. In addition, Alkermes has agreed to indemnify Morgan Stanley and its affiliates, their respective directors, officers, agents and employees and each person, if any, controlling Morgan Stanley or any of its affiliates against certain liabilities and expenses, including certain liabilities under the federal securities laws, relating to or arising out of Morgan Stanley’s engagement.

 

In the two years prior to the date of its opinion, Morgan Stanley has provided financial advisory and financing services to Alkermes and Elan and has received fees in connection with certain of such services. Morgan Stanley may also seek to provide such services to New Alkermes, Alkermes and Elan in the future and expects to receive fees for the rendering of these services. Morgan Stanley’s opinion was approved by a committee of Morgan Stanley’s investment banking and other professionals in accordance with Morgan Stanley’s customary practice.

 

Alkermes and Elan do not, as a matter of course, publicly disclose extended projections of future revenues, earnings or other financial performance, particularly of EDT. New Alkermes has included in this proxy statement/prospectus certain financial projections for EDT that the managements of Alkermes and Elan prepared in connection with the business combination. The projections are included in this proxy statement/prospectus only because such projections were provided to Morgan Stanley, the financial adviser to Alkermes.

 

These financial projections were not prepared with a view toward public disclosure or compliance with published guidelines of the SEC or the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, the International Financial Reporting Standards promulgated by the International Accounting Standards Board, which are referred to as IFRS in this proxy statement/prospectus, or U.S. GAAP. Neither PwC, Alkermes’ independent registered public accounting firm nor KPMG, Elan and EDT’s independent registered public accounting firm, have examined or compiled nor performed any procedures on any of the financial projections, expressed any conclusion or provided any form of assurance with respect to the financial projections and, accordingly, assume no responsibility for them. The reports of the independent registered public accounting firms of Alkermes and EDT, included elsewhere in this proxy statement/prospectus, relate to the historical financial information of Alkermes and EDT, respectively. They do not extend to the financial projections and should not be read to do so. The inclusion of this information in this proxy statement/prospectus should not be regarded as an indication that any of New Alkermes, Alkermes, Elan or any other recipient of this information considered, or now considers, it to be necessarily predictive of future results of EDT. New Alkermes, Alkermes and Elan do not intend to update or otherwise revise the financial projections to correct any errors existing in such projections when made, to reflect circumstances existing after the date when made or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the financial projections are shown to be in error.

 

The inclusion of the financial projections in this proxy statement/prospectus shall not be deemed an admission or representation by New Alkermes, Alkermes or Elan that such information is material. As discussed below, the projections were prepared, using many assumptions, for the purpose of facilitating an evaluation of the financial performance of EDT, and due to the inherent uncertainty in these assumptions, the financial projections should not be considered necessarily to have significance outside of this limited and specific context.

 

The financial projections, a condensed subset of which are set forth below, are based on, among other things, certain assumptions. See “Risk Factors — Risks Related to EDT.” In order to facilitate the use of the

financial projections for purposes of evaluating EDT, Alkermes and Elan used independent assumptions to prepare the financial projections, which have not been updated to take into account any circumstances or events occurring after the date the financial projections were prepared and do not necessarily reflect the current expectation of management of Alkermes or Elan and should not be read as such. The inclusion of the projections should not be regarded as an indication that New Alkermes, Alkermes or Elan considered or now consider them to be a reliable prediction of future results of EDT and you should not rely on them as such.

 

Although presented with numerical specificity, financial projections of this type are based on numerous estimates and assumptions that are subject to factors, such as technological progress, operating efficiencies, industry performance, general business, economic, regulatory, market and financial conditions, and the other factors listed in this proxy statement/prospectus under the section entitled “Risk Factors,” which are difficult to predict and most of which are beyond the control of New Alkermes, Alkermes and Elan. These or other factors may cause the financial projections or the underlying assumptions and estimates to be inaccurate. Since the financial projections cover multiple years, such information by its nature becomes less reliable with each successive year. The financial projections also do not take into account any circumstances or events occurring after the date they were prepared, and do not give effect to the business combination, including the merger. Accordingly, there can be no assurance that the financial projections will be realized, and actual results may vary materially from those reflected in the projections. You should read the section entitled “Cautionary Statement Regarding Forward-Looking Statements” for additional information regarding the risks inherent in forward-looking information such as the financial projections.

 

Certain of the financial projections set forth herein, including EBITDA, may be considered non-U.S. GAAP financial measures. Morgan Stanley understands that Alkermes and Elan believe this information could be useful in evaluating, on a prospective basis, EDT’s potential operating performance and cash flow. Non-U.S. GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP, and non-U.S. GAAP financial measures as used by Alkermes and Elan may not be comparable to similarly titled amounts used by other companies.

 

Elan Management Case for EDT

 

In the course of discussions relating to the proposed business combination, Elan developed the Elan Management Case, financial projections for EDT for the years ending December 31, 2011, 2012, 2013, 2014, 2015 and 2016. In developing these financial projections, Elan used consensus analyst estimates of product-by-product revenues. The Elan Management Case was prepared by Elan and was furnished to and used by Alkermes and the Alkermes board of directors in connection with its evaluation of the strategic rationale for the business combination. The Elan Management Case was also furnished to Morgan Stanley in connection with the preparation of its opinion as described in the section entitled “The Business Combination — Opinion of Alkermes’ Financial Adviser.”

 

 

Alkermes Management Case for EDT

 

In the course of its due diligence, Alkermes developed the Alkermes Management Case, with financial projections for EDT for the years ending December 31, 2011, 2012, 2013, 2014, 2015 and 2016, 2017, 2018, 2019, 2020 and 2021. In developing these financial projections, Alkermes management used a combination of consensus analyst estimates, Elan management estimates and the good faith judgment of Alkermes management

to estimate, on a product-by-product basis, future revenues for the EDT products which were then totaled to derive a projected aggregate revenue for EDT. In its base case, Alkermes management assumed no revenues outside the United States for Ampyra. Alkermes management then separately added as estimate of future non-U.S. revenues for Ampyra, which served as the “Ampyra Upside Case.” The Alkermes Management Case was prepared to assist the Alkermes board of directors in its evaluation of the strategic rationale for the business combination and was furnished to and used by Morgan Stanley in connection with the preparation of its opinion as described in the section entitled “The Business Combination — Opinion of Alkermes’ Financial Adviser.”

 

 

Alkermes has entered into a debt commitment letter with MSSF and HSBC, pursuant to which MSSF and HSBC have committed, subject to customary conditions as further described below, to provide the First-Lien Term Loan Facility and the Second-Lien Term Loan Facility. The term of the First-Lien Term Loan Facility is six years and the term of the Second-Lien Term Loan Facility is seven years. The newly committed financing, in addition to existing cash balances, will be used to fund the cash portion of the consideration payable in the business combination, to repay and redeem existing indebtedness of Alkermes and New Alkermes and their respective subsidiaries, if any, and to pay transaction fees and expenses. The debt financing commitments are available until November 5, 2011 and are subject to:

 

 

In the merger agreement, Alkermes has agreed to use its reasonable best efforts to obtain debt financing on the terms and conditions described in the debt commitment letter. (See “The Business Combination Agreement and Plan of Merger — Covenants — Additional Agreements.”)

 

Alkermes’ obligations under the Term Loan Facilities will be guaranteed by New Alkermes, certain of its direct and indirect wholly-owned subsidiaries, including certain direct and indirect wholly-owned U.S. subsidiaries of Alkermes, and will be secured by substantially all the assets of Alkermes and the guarantors.

 

Management

 

Immediately prior to the effective time, the following current Alkermes senior executive officers are expected to be appointed officers of New Alkermes: Kathryn L. Biberstein, Senior Vice President, Government Relations and Public Policy, General Counsel and Secretary, and Chief Compliance Officer; Elliot W. Ehrich, M.D., Senior Vice President, Research and Development, and Chief Medical Officer; James M. Frates, Senior Vice President, Chief Financial Officer and Treasurer; Michael J. Landine, Senior Vice President, Corporate Development; Richard F. Pops, Chairman, President and Chief Executive Officer and Gordon G. Pugh, Senior Vice President, Chief Operating Officer and Chief Risk Officer. Other current Alkermes officers may be employed by New Alkermes. Their positions at New Alkermes will entitle these individuals to compensation and equity awards from New Alkermes. Following the completion of the business combination, options to purchase Alkermes common stock currently owned by Alkermes’ executive officers will be assumed by New Alkermes and converted into options to purchase ordinary shares of New Alkermes. Stock awards in the form of Alkermes common stock currently owned by Alkermes’ executive officers will be converted into a right to receive New Alkermes ordinary shares.

 

In addition, the compensation committee of the Alkermes board of directors may consider the role Alkermes’ executive officers played in securing and executing the business combination in connection with its performance pay determinations. In that regard, in determining performance pay for Mr. Pops for fiscal year 2011 under Alkermes’ fiscal year 2011 performance pay plan, the compensation committee took into account its assessment of Mr. Pops’ performance against corporate objectives and, in this context, focused on, among other factors, the role he played in securing the business combination. In addition, in determining performance pay for Mr. Pops, Mr. Frates, Mr. Landine, Ms. Biberstein, Dr. Ehrich and Mr. Pugh for performance during fiscal year 2012, the compensation committee will consider individual and company performance against company objectives, one of which includes completing the acquisition of EDT and developing and beginning to implement an integration plan.

 

Directors

 

The following eight current directors of Alkermes will become directors of New Alkermes in connection with the business combination: David W. Anstice, Floyd E. Bloom, Robert A. Breyer, Wendy L. Dixon, Geraldine A. Henwood, Paul J. Mitchell, Richard F. Pops and Mark B. Skaletsky. As directors of New Alkermes, these individuals will be entitled to compensation and equity awards from New Alkermes.

 

Indemnification

 

Alkermes has entered into indemnification agreements with its directors and executive officers. Under the terms of the indemnification agreement, Alkermes will indemnify each director or executive officer to the fullest extent permitted by law for expenses actually and reasonably incurred by the director or executive officer in relation to claims, brought against such director or executive officer, that arise from actions taken while acting as a director or executive officer of Alkermes, except to the extent that such indemnification is prohibited by applicable law or would be duplicative of amounts otherwise actually provided to such director or executive officer in relation to such claims. Alkermes will advance the expenses of such director or executive officer in connection with his or her defense. Each director or executive officer undertakes to the fullest extent required by law to repay all amounts advanced if it is ultimately determined that he or she is not entitled to be indemnified by Alkermes.

 

The following tables set forth information known to Alkermes regarding the beneficial ownership of its common stock as of the record date by (i) all persons who own beneficially more than 5% or more of its outstanding common stock, (ii) each Alkermes director, (iii) each of the named executive officers of Alkermes

and (iv) all directors and executive officers as a group. Unless otherwise indicated, the principal address of each of the shareholders listed below is c/o Alkermes, 852 Winter Street, Waltham, MA 02451.

 

 

 

 

 

 

 

 

In addition, due to their ownership, directly or through trusts, of shares representing 49% of the voting power of FMR LLC, the members of the family of Edward C. Johnson 3d, Chairman of FMR LLC, may be deemed to beneficially own the shares reported as beneficially owned by FMR LLC. Neither FMR LLC nor Edward C. Johnson 3d has the sole power to vote or direct the voting of the shares owned

directly by the Fidelity funds, which power resides in the funds’ board of trustees. Fidelity carries out the voting of the shares under written guidelines established by the funds’ board of trustees.

 

 

 

 

 

 

 

 

 

 

 

 

The following tables set forth information, as of the date of this proxy statement/prospectus, regarding the expected beneficial ownership of New Alkermes ordinary shares, after giving effect to the proposed transactions, of:

 

 

Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power over securities. Except in cases where community property laws apply or as indicated in the footnotes to this table, it is believed that each shareholder identified in the table possesses sole voting and investment power over all shares of New Alkermes ordinary shares shown as beneficially owned by that shareholder. Percentage of beneficial ownership is based on the approximately 129,518,711 shares of New

Alkermes ordinary shares that will be outstanding immediately following the merger and, in the case of directors and executive officers, on the ownership of Alkermes common stock as of August 1, 2011 and is calculated in accordance with applicable SEC rules.

 

 

 

 

 

 

In addition, due to their ownership, directly or through trusts, of shares representing 49% of the voting power of FMR LLC, the members of the family of Edward C. Johnson 3d, Chairman of FMR LLC, may be deemed to beneficially own the shares reported as beneficially owned by FMR LLC. Neither FMR LLC nor Edward C. Johnson 3d, has the sole power to vote or direct the voting of the shares owned directly by the Fidelity funds, which power resides in the funds’ Board of Trustees. Fidelity carries out the voting of the shares under written guidelines established by the funds’ Board of Trustees.

 

 

 

 

 

 

 

 

United States Antitrust

 

Under the HSR Act, and the rules and regulations promulgated thereunder by the FTC, the business combination cannot be consummated until notifications have been given and certain information has been furnished to the FTC and the Antitrust Division, and specified waiting period requirements have been satisfied. On May 20, 2011, each of Alkermes and EDT filed a Pre-Merger Notification and Report Form pursuant to the HSR Act with the Antitrust Division and the FTC. The waiting period under the HSR Act expired at 11:59 p.m. Eastern Daylight Time on June 20, 2011. Although the waiting period has expired, at any time before the effective time of the merger, the FTC, the Antitrust Division or others could take action under the antitrust laws with respect to the business combination, including seeking to enjoin the proposed transactions or to require the divestiture of certain assets of Alkermes or EDT. There can be no assurance that a challenge to the business combination on antitrust grounds will not be made or, if such a challenge is made, that it would not be successful.

 

There are no relationships or related person transactions that would be required to be disclosed in this proxy statement/prospectus in accordance with SEC rules.

 

 

The business combination of EDT and Alkermes will be accounted for using the acquisition method of accounting for business combinations with Alkermes being treated as the accounting acquirer under U.S. GAAP. Under this method of accounting, Alkermes will record the acquisition based on the fair value of the consideration given, which includes the market value of its shares issued in connection with the merger (based on the closing price of shares of Alkermes common stock on the closing date of the merger) and the cash consideration paid in the business combination. Alkermes will allocate the purchase price to the identifiable assets acquired and liabilities assumed based on their respective fair values at the date of the completion of the business combination. Any excess of the value of consideration paid over the aggregate fair value of those net assets will be recorded as goodwill.

 

This section contains a general discussion of the material tax consequences of (i) the merger, (ii) post-merger ownership and disposition of New Alkermes ordinary shares and (iii) post-merger operations of New Alkermes.

 

The discussion under the caption “Certain Tax Consequences of the Merger — U.S. Federal Income Tax Considerations” addresses (i) application of the U.S. anti-inversion rules to New Alkermes, (ii) the material U.S. federal income tax consequences of the merger to Alkermes and New Alkermes, and (iii) the material U.S. federal income tax consequences to U.S. holders (as defined below) of (a) exchanging Alkermes common stock for New Alkermes ordinary shares in the merger and (b) owning and disposing of New Alkermes ordinary shares received in the merger.

 

The discussion of the merger and of ownership and disposition of shares received in the merger under “Certain Tax Consequences of the Merger — Irish Tax Considerations” addresses certain Irish tax considerations of the merger and subsequent operations for Alkermes and New Alkermes.

 

The discussion below is not a substitute for an individual analysis of the tax consequences of the merger, post-merger ownership and disposition of shares or post-merger operations of New Alkermes. You should consult your own tax adviser regarding the particular U.S. (federal, state and local), Irish and other non-U.S. tax consequences of these matters in light of your particular situation.

 

Scope of Discussion

 

The following is a summary of the material U.S. federal income tax consequences of the merger generally expected to be applicable to the U.S. holders (as defined below) of Alkermes common stock and their receipt of New Alkermes ordinary shares. The summary is based upon the existing provisions of the Code, applicable Treasury Regulations, judicial authority, administrative rulings effective as of the date of hereof, and the income tax treaty between Ireland and the United States, which is referred to in this proxy statement/prospectus as the Tax Treaty. These laws and authorities are subject to change, possibly with retroactive effect. Any such change, which may or may not be retroactive, could alter the tax consequences to the holders of Alkermes and New Alkermes ordinary shares as described herein. The discussion below does not address any state, local or foreign or any U.S. federal tax consequences other than U.S. federal income tax consequences such as estate and gift tax or U.S. Medicare contribution tax consequences that are applicable to the U.S. holder. The tax treatment of the merger to the holders will vary depending upon their particular situations.

 

The summary below is limited to U.S. holders who hold shares of Alkermes common stock or New Alkermes ordinary shares as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment). The following discussion is intended only as a summary of the material U.S. federal income tax consequences of the merger and does not purport to be a complete analysis or listing of all of the potential tax effects relevant to a decision on whether to approve the merger. In particular, this

discussion does not deal with all U.S. federal income tax considerations that may be relevant to particular holders in light of their particular circumstances, such as holders who are dealers in securities, who are subject to the alternative minimum tax provisions of the Code, who are non-U.S. persons or entities, that are banks, financial institutions or insurance companies, tax-exempt entities, holders who do not hold their Alkermes common stock as a capital asset at the time of the merger, or their New Alkermes ordinary shares as a capital asset after the merger, holders who acquired their Alkermes common stock in connection with stock option or stock purchase plans or in other compensatory transactions, who hold Alkermes common stock or New Alkermes ordinary shares as part of an integrated investment (including a “straddle”) comprised of Alkermes common stock or New Alkermes ordinary shares, as the case may be, and one or more other positions, or who may hold Alkermes common stock or New Alkermes ordinary shares subject to the constructive sale provisions of Section 1259 of the Code. If a partnership holds shares of Alkermes common stock or New Alkermes ordinary shares, the tax treatment of a partner generally will depend on the status of the partner and on the activities of the partnership. Partners of partnerships holding Alkermes common stock or New Alkermes ordinary shares should consult their tax advisers. In addition, except as expressly provided below, the following discussion does not address the tax consequences of transactions effectuated prior to, concurrently with or after the merger (whether or not such transactions are in connection with the merger).

 

For purposes of this discussion, a ‘‘U.S. holder’’ is a beneficial owner of Alkermes common stock or New Alkermes ordinary shares that is, for U.S. federal income tax purposes, (i) a citizen or resident of the United States, (ii) a U.S. domestic corporation or an entity taxable as a U.S. domestic corporation, (iii) an estate whose income is subject to U.S. federal income tax regardless of its source, (iv) a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust.

 

Alkermes has not requested and does not intend to request a ruling from the IRS and it is possible that the IRS may take different positions concerning the tax consequences of the merger than those stated below and such positions could be sustained.

 

Neither Alkermes nor New Alkermes should be subject to U.S. federal income tax as a result of the merger.

 

The U.S. Anti-Inversion Rules

 

As described above under “Risk Factors — Risks Related to New Alkermes,” the IRS may assert as a result of the merger that (1) although New Alkermes is incorporated in Ireland, New Alkermes should be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes, or (2) that Alkermes or New Alkermes may be unable to apply Alkermes’ net operating loss carryforwards to offset the taxable income or gain recognized by reason of the transfer by Alkermes of properties, or the license by Alkermes of any property to New Alkermes, as part of the merger (including the IP Transfer) or during the ten-year period following the merger under Section 7874 of the Code. These limitations would apply if the former shareholders of Alkermes hold 80 percent or more (60 percent, in the case of subparagraph (2) above) of the vote or value of the shares of New Alkermes by reason of holding stock in Alkermes, and New Alkermes’ “expanded affiliated group” after the merger does not have “substantial business activities” in Ireland relative to its worldwide activities.

 

Alkermes does not believe that either of these limitations should apply as a result of the merger. As a result of the merger, New Alkermes will indirectly acquire all of the assets of Alkermes, and the former shareholders of Alkermes will acquire approximately 75% of the stock in New Alkermes by reason of holding stock in Alkermes, less than the 80 percent needed for New Alkermes to potentially be treated as a U.S. corporation. Therefore, New Alkermes should not be treated as a U.S. corporation for U.S. federal income tax purposes.

 

In order to avoid precluding Alkermes from using its net operating loss carryforwards to offset taxable income generated by the IP Transfer, which would constitute inversion gain for purposes of Section 7874, the

expanded affiliated group that includes New Alkermes must have substantial business activities in Ireland after the merger. After the merger, the expanded affiliated group that includes New Alkermes intends to conduct business activities in Ireland that should qualify as “substantial business activities” for purposes of Section 7874, including continuing the significant amount of business activities that members of the New Alkermes expanded affiliated group currently conduct. Section 7874 does not define the term “substantial business activities” or otherwise quantify the activities that the foreign corporation and its expanded affiliated group should have in the foreign corporation’s country of incorporation. Rather, temporary Treasury Regulations issued under section 7874 of the Code in 2009, which are referred to in this proxy statement/prospectus as the 2009 Regulations, provide a facts and circumstances test that looks to whether a foreign corporation’s expanded affiliated group has substantial business activities in the foreign corporation’s country of organization relative to its worldwide activities, in order to determine whether the “substantial business activities” test is satisfied. Among the factors identified are (i) the historical conduct of continuous business activities in the foreign country by the expanded affiliated group; (ii) the conduct of continuous business activities in the foreign country by the expanded affiliated group in the ordinary course of one or more active trades or businesses, involving property located in the foreign country that is owned by members of the expanded affiliated group, the performance of services in the foreign country by employees of the expanded affiliated group, and the sales of goods to customers; (iii) the performance in the foreign country of substantial managerial activities by officers and employees of the expanded affiliated group who are based in the foreign country; (iv) a substantial degree of ownership of the expanded affiliated group by investors resident in the foreign country; and (v) business activities in the foreign country that are material to the achievement of the overall business objectives of the expanded affiliated group.

 

It is expected that the activities the New Alkermes expanded affiliated group will conduct in Ireland following the merger should satisfy the substantial business activities test set forth in the 2009 Regulations. However, the IRS could assert a contrary position, in which case, New Alkermes could become involved in tax controversy with the IRS regarding possible additional U.S. tax liability. If New Alkermes is unsuccessful in resolving any such tax controversy in its favor, New Alkermes could be liable for significantly greater U.S. federal income tax than New Alkermes anticipates being liable for through the merger and the reorganization, including as a result of the IP Transfer.

 

While not entirely free from doubt, Alkermes believes that the receipt of the New Alkermes ordinary shares for shares of Alkermes common stock pursuant to the merger should be a taxable transaction for U.S. federal income tax purposes. Under such treatment, in general, for U.S. federal income tax purposes, a U.S. holder will recognize capital gain or loss equal to the difference between the shareholder’s adjusted tax basis in the shares of the Alkermes common stock surrendered in the exchange, and the fair market value of the New Alkermes ordinary shares received as consideration in the merger. A U.S. holder’s adjusted basis in the shares of Alkermes common stock generally should equal the holder’s purchase price for such shares of Alkermes common stock, as adjusted to take into account stock dividends, stock splits, or similar transactions.

 

A U.S. holder’s gain or loss on the receipt of New Alkermes ordinary shares for shares of Alkermes common stock generally will be capital gain or loss. Net capital gain (i.e., generally, capital gain in excess of capital loss) recognized by individuals, estates, and trusts from the sale of property held more than one year would generally be taxed at a rate not to exceed 15% for U.S. federal income tax purposes. Net capital gain from property held for one year or less will be subject to tax at ordinary income tax rates. In addition, capital gains recognized by a corporate taxpayer will be subject to tax at the ordinary income tax rates applicable to corporations. In general, capital losses are deductible only against capital gains and are not available to offset ordinary income. However, individual taxpayers are allowed to offset a limited amount of capital losses against ordinary income.

 

It is possible that the IRS could assert an alternative characterization of the merger that would prevent a U.S. holder from recognizing taxable loss on the exchange of Alkermes common stock for New Alkermes ordinary shares pursuant to the merger. Under such an alternative characterization, the U.S. holder’s basis in New Alkermes ordinary shares received will be the same as the basis of Alkermes common stock surrendered

in exchange therefor, increased by any gain recognized on the exchange (as determined on a share-by-share basis). The holding period of New Alkermes ordinary shares to be received by a U.S. holder will include the holding period of the Alkermes common stock surrendered in exchange therefor. Under such an alternative characterization, a U.S. holder would still recognize capital gain, if any, on the exchange. U.S. holders are urged to consult their advisers as to the particular consequences of the exchange of Alkermes common stock for New Alkermes ordinary shares pursuant to the merger.

 

The gross amount of any dividend (including any related applicable dividend withholding tax, which is referred to in this proxy statement/prospectus as DWT) paid by New Alkermes to a U.S. holder out of its current or accumulated earnings and profits (as determined for U.S. Federal income tax purposes) is subject to U.S. Federal income taxation. Dividends paid to a non-corporate U.S. holder prior to January 1, 2013 that constitute qualified dividend income will be taxable to the holder at a maximum federal tax rate of 15% provided that the U.S. holder holds the New Alkermes ordinary shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and the holder meets other holding period requirements. Dividends paid by New Alkermes with respect to its common stock generally will be qualified dividend income. The dividend will not be eligible for the dividends received deduction generally allowed to corporations. The amount of any dividend will be the U.S. dollar value of the euro payment (determined at the spot U.S. dollar/euro exchange rate) on the date of actual or constructive receipt by the U.S. holder, regardless of whether the payment is converted into dollars. Gain or loss, if any resulting from currency exchange fluctuations during the periods from the date or U.S. holder includes the dividend payment on income to the date such U.S. holder converts the payment into U.S. dollars, generally will be ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income and generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. Federal income tax purposes, will be treated as a non-taxable return of capital to the extent of the U.S. holder’s basis in its shares of New Alkermes ordinary shares, and thereafter as capital gain.

 

Subject to certain limitations, any Irish tax (including DWT) withheld and paid over to Ireland will be creditable against the U.S. holder’s U.S. federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the maximum 15% federal tax rate. To the extent a refund of the tax withheld is available to a U.S. holder under Irish law or the Tax Treaty, the amount of tax withheld that is refundable will not be eligible for credit against a U.S. holder’s U.S. Federal income tax liability.

 

Dividends paid by New Alkermes with respect to New Alkermes ordinary shares will be income from sources outside the United States and will, depending on a U.S. holder’s circumstances, generally be ‘passive’ income. For purposes of computing the foreign tax credit affordable to the holder, U.S. holders should consult their own tax advisers concerning the implications of U.S. foreign tax credit rules in light of their particular circumstances.

 

Gain on Disposition

 

Upon the sale, exchange or other disposition of New Alkermes ordinary shares, a U.S. holder will recognize gain or loss, if any, equal to the difference between the U.S. dollar amount realized upon the sale, exchange, or other disposition and the U.S. holder’s tax basis in the stock. Capital gain of a non-corporate U.S. holder that is recognized before January 1, 2013 is generally taxed at a maximum rate of 15% where the U.S. holder has a holding period greater than one year. The deductibility of capital losses is subject to limitations. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.

Information Reporting and Backup Withholding

 

Dividends on New Alkermes ordinary shares paid within the United States or through certain U.S.-related financial intermediaries are subject to information reporting and may be subject to backup withholding (currently at a 28 percent rate) unless the holder (1) is a corporation or other exempt recipient (including generally non-U.S. holders who establish such foreign status) or (2) provides a taxpayer identification number and satisfies certain certification requirements. Information reporting requirements and backup withholding may also apply to the payment of proceeds from a sale (including a redemption) of New Alkermes ordinary shares within the United States. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, provided that the holder timely furnishes certain required information to the IRS. Holders should consult their tax advisers regarding the application of information reporting and backup withholding to their particular situations.

 

If a U.S. holder of New Alkermes ordinary shares does not provide New Alkermes (or its paying agent) the holder’s correct taxpayer identification number or other required information, the holder may be subject to penalties imposed by the IRS.

 

THE U.S. FEDERAL INCOME TAX CONSEQUENCES SUMMARIZED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACH HOLDER OF ALKERMES COMMON STOCK OR NEW ALKERMES ORDINARY SHARES SHOULD CONSULT HIS OR HER TAX ADVISER AS TO THE PARTICULAR CONSEQUENCES THAT MAY APPLY TO SUCH HOLDER.

 

Scope of Discussion

 

The following is a general summary of the main Irish tax considerations applicable to certain beneficial owners of Alkermes shares who receive New Alkermes ordinary shares in the merger and who are the beneficial owners of such New Alkermes ordinary shares. It is based on existing Irish law and practices in effect on the date of this proxy statement/prospectus and on discussions and correspondence with the Irish Revenue Commissioners. Legislative, administrative or judicial changes may modify the tax consequences described below.

 

The statements do not constitute tax advice and are intended only as a general guide. Furthermore, this information applies only to New Alkermes ordinary shares held as capital assets and does not apply to all categories of shareholders, such as dealers in securities, trustees, insurance companies, collective investment schemes and shareholders who have, or who are deemed to have, acquired their New Alkermes ordinary shares by virtue of an office or employment. This summary is not exhaustive and shareholders should consult their own tax advisers as to the tax consequences in Ireland, or other relevant jurisdictions of the business combination, including the acquisition, ownership and disposition of the New Alkermes ordinary shares.

 

Irish Tax on Chargeable Gains

 

The receipt by Alkermes shareholders of New Alkermes ordinary shares as consideration for the cancellation of their Alkermes shares in the merger will not give rise to a liability to pay Irish tax on chargeable gains for persons that are not resident or ordinarily resident in Ireland for Irish tax purposes and do not hold such shares in connection with a trade or business carried on by such holder in Ireland through a branch or agency.

 

Alkermes shareholders who are resident or ordinarily resident for tax purposes in Ireland, or who hold their shares in connection with a trade or business carried on by such holder in Ireland through a branch or agency, should consult their own tax advisers as to the Irish tax consequences of the business combination, including the merger.

Withholding Tax on Dividends

 

While New Alkermes does not currently intend to pay dividends, distributions made by New Alkermes would generally be subject to DWT, at the standard rate of income tax (currently 20%) unless one of the exemptions described below applies, which New Alkermes believes will be the case for the majority of shareholders. For DWT purposes, a dividend includes any distribution made by New Alkermes to its shareholders, including cash dividends, non-cash dividends and additional stock or units taken in lieu of a cash dividend. New Alkermes is responsible for withholding DWT at source and forwarding the relevant payment to the Irish Revenue Commissioners.

 

Certain shareholders (both individual and corporate) are also entitled to an exemption from DWT. In particular, a non-Irish resident shareholder is not subject to DWT on dividends received from New Alkermes if the shareholder is:

 

 

 

and provided that, in all cases noted above but subject to the matters described below, the shareholder has provided the appropriate forms to his or her broker (and the relevant information is further transmitted to New Alkermes’ qualifying intermediary) before the record date for the dividend (in the case of shares held beneficially), or to New Alkermes’ transfer agent at least 14 business days before such record date (in the case of shares held directly).

 

Should it decide to pay a dividend, New Alkermes will enter into an agreement with an institution which will be recognized by the Irish Revenue Commissioners as a “qualifying intermediary” prior to paying any dividends or making any distributions. This will satisfy one of the Irish requirements for dividends to be paid free of DWT to certain shareholders who hold their shares through the Depositary Trust Company, which is referred to in this proxy statement/prospectus as DTC, as described below. The agreement will generally provide for certain arrangements relating to cash distributions in respect of those shares of New Alkermes that are held through DTC. The agreement will also provide that the qualifying intermediary shall distribute or otherwise make available to Cede & Co., as nominee for DTC, any cash dividend or other cash distribution to be made to holders of the deposited securities, after New Alkermes delivers or causes to be delivered to the qualifying intermediary the cash to be distributed.

New Alkermes will rely on information received directly or indirectly from brokers and its transfer agent in determining where shareholders reside, whether they have provided the required U.S. forms and whether they have provided the required Irish dividend withholding tax forms, as described below. Shareholders who are required to file Irish forms in order to receive their dividends free of DWT should note that such forms are valid for five years and new forms must be filed before the expiration of that period in order to continue to enable them to receive dividends without DWT.

 

Links to the various Irish Revenue forms are available at:

 

http://www.revenue.ie/en/tax/dwt/forms/index.html.

 

In most cases, individual shareholders resident in a relevant territory should complete a non-resident Form V2A and corporate (company) shareholders resident in a relevant territory should complete a non-resident Form V2B. Where a shareholder is neither an individual nor a company but is resident in a relevant territory, it should complete a non-resident Form V2C. Please contact your broker or your tax adviser if you have any questions regarding Irish dividend withholding tax.

 

Shares Held by U.S. Resident Shareholders

 

Dividends paid on New Alkermes ordinary shares that are owned by residents of the United States and held beneficially through DTC will not be subject to DWT provided that the address of the beneficial owner of the shares in the records of the broker is in the United States. Alkermes strongly recommends that such shareholders ensure that their information has been properly recorded by their brokers (so that such brokers can further transmit the relevant information to New Alkermes’ qualifying intermediary) by filing a Form W-9 with their broker.

 

Dividends paid on New Alkermes ordinary shares that are owned by residents of the United States and held directly will not be subject to DWT if the shareholder held shares on the date on which it is publicly announced that the last shareholder vote approving the transactions has been passed, which is referred to as the relevant date in this proxy statement/prospectus, and has provided a valid Form W-9 showing a U.S. address or a valid U.S. taxpayer identification number to New Alkermes’ transfer agent or if the shareholder became a shareholder after the relevant date and has provided the appropriate Irish dividend withholding tax forms to New Alkermes’ transfer agent, in either case, at least 14 business days before the record date for the first dividend to which the shareholder is entitled. Alkermes strongly recommends that such shareholders ensure that an appropriate Form W-9 or taxpayer identification number or Irish dividend withholding tax form has been provided to New Alkermes’ transfer agent.

 

If any shareholder who is resident in the United States receives a dividend subject to DWT, he or she should generally be able to make an application for a refund from the Irish Revenue Commissioners on the prescribed form.

 

Shares Held by Residents of “Relevant Territories” Other Than the United States

 

Dividends paid to New Alkermes shareholders who are residents of “relevant territories” other than the United States and (in the case of companies) who are not under the control, directly or indirectly, of a person or persons who are resident in Ireland, generally will not be subject to Irish dividend withholding tax, but those shareholders will need to provide the appropriate tax forms in order to receive their dividends without any Irish dividend withholding tax as summarized below.

 

Shareholders who are residents of “relevant territories” other than the United States who acquired their shares on or before the relevant date generally will receive dividends paid on or before one year after the relevant date without any DWT. For shares held beneficially through DTC, dividends will be paid on or before one year after the relevant date without any DWT if the address of the relevant shareholder in his or her broker’s records as evidenced by a Form W-8 is in a “relevant territory” other than the United States. Alkermes strongly recommends that such shareholders ensure that their information has been properly recorded by their brokers (so that such brokers can further transmit the relevant information to New Alkermes’ qualifying intermediary). For shares held directly, dividends will be paid on or before one year after the

relevant date without any DWT if the shareholder has provided a valid U.S. Form W-8 showing an address in a “relevant territory” other than the United States to New Alkermes’ transfer agent at least 14 business days before the record date for the first dividend to which they are entitled. Alkermes strongly recommends that such shareholders ensure that the appropriate tax form has been provided to New Alkermes’ transfer agent.

 

Shareholders who are residents of “relevant territories” other than the United States who acquire all of their shares after the relevant date must complete the appropriate Irish dividend withholding tax forms in order to receive their dividends without DWT. Such shareholders must provide the appropriate Irish dividend withholding tax forms to their brokers (so that such brokers can further transmit the relevant information to New Alkermes’ qualifying intermediary) before the record date for the first dividend payment to which they are entitled (in the case of shares held beneficially), or to New Alkermes’ transfer agent at least 14 business days before such record date (in the case of shares held directly). Alkermes strongly recommends that such shareholders complete the appropriate Irish forms and provide them to their brokers or New Alkermes’ transfer agent, as the case may be, as soon as possible after acquiring their shares.

 

In addition, all shareholders who are residents of “relevant territories” other than the United States (regardless of when such shareholders acquired their shares) must complete the appropriate Irish dividend withholding tax forms in order to receive dividends paid later than one year after the relevant date without DWT. Such shareholders must provide the appropriate Irish forms to their brokers (so that such brokers can further transmit the relevant information to New Alkermes’ qualifying intermediary) before the record date for the first dividend paid later than one year after the relevant date (in the case of shares held beneficially), or to New Alkermes’ transfer agent at least 14 business days before such record date (in the case of shares held directly). Alkermes strongly recommends that such shareholders complete the appropriate Irish forms and provide them to their brokers or New Alkermes’ transfer agent, as the case may be, as soon as possible.

 

Shares Held by Residents of Ireland

 

Most Irish tax resident or ordinarily resident shareholders (other than Irish resident companies) will be subject to DWT in respect of dividend payments on their New Alkermes ordinary shares.

 

Shareholders that are residents of Ireland but are entitled to receive dividends without DWT must complete the appropriate Irish forms and provide them to their brokers (so that such brokers can further transmit the relevant information to New Alkermes’ qualifying intermediary) before the record date for the first dividend to which they are entitled (in the case of shares held beneficially), or to New Alkermes’ transfer agent at least 14 business days before such record date (in the case of shares held directly). Shareholders who are resident or ordinarily resident in Ireland or are otherwise subject to Irish tax should consult their own tax advisers.

 

Shares Held by Other Persons

 

New Alkermes shareholders who do not reside in “relevant territories” or in Ireland will be subject to DWT, but there are a number of other exemptions that could apply on a case-by-case basis. Dividends paid to such shareholders will be paid subject to DWT unless the relevant shareholder has provided the appropriate Irish dividend withholding tax form to his or her broker (so that such broker can further transmit the relevant information to New Alkermes’ qualifying intermediary) prior to the record date for the first dividend to which they are entitled (in the case of shares held beneficially), or to New Alkermes’ transfer agent at least 14 business days before such record date (in the case of shares held directly). Alkermes strongly recommends that such shareholders to whom an exemption applies complete the appropriate Irish forms and provide them to their brokers or New Alkermes’ transfer agent, as the case may be, as soon as possible.

 

If any shareholder who is not a resident of a “relevant territory” or Ireland but is exempt from withholding receives a dividend subject to DWT, he or she may make an application for a refund from the Irish Revenue Commissioners on the prescribed form.