Angiotech Pharmaceuticals, Inc. (JOBS) to Create New Unit; Investors to Buy Convertible Notes

VANCOUVER, July 7 /PRNewswire-FirstCall/ - Angiotech Pharmaceuticals, Inc. , a global specialty pharmaceutical and medical device company, today announced that Angiotech's Board of Directors has authorized a transaction to create a new subsidiary, Angiotech Pharmaceutical Interventions, Inc. ("API"). Angiotech will contribute to API certain business assets and intellectual property, which include primarily business assets of Angiotech other than the intellectual property and royalty revenue related to the TAXUS(R) coronary stent system. The Company has entered into a note purchase agreement with Ares Management and New Leaf Venture Partners, under which the investors will purchase between $200 and $300 million, at the Company's option, of convertible notes issued by API that will be convertible into a significant minority equity interest in API. Angiotech and its shareholders will benefit from the future performance of API based on retaining a significant continuing equity interest in the newly formed subsidiary. The net proceeds from the issuance of the convertible notes will be used to reduce Angiotech's existing debt, pursuant to tender offers announced and commenced concurrent with this announcement. The transaction is subject to approval of the Company's shareholders and other customary closing conditions.

"We are pleased to announce a transaction today that we believe offers significant immediate value and risk mitigation for our shareholders and bondholders, while retaining significant participation in API for our shareholders," said Dr. William Hunter, President and Chief Executive Officer of Angiotech. "We are excited to work with our new partners at Ares and New Leaf, who offer us considerable capital resources and business experience, to execute our strategy of developing drug-device combinations, locally deliverable drugs, or other novel technologies that improve the outcomes of surgical or other medical interventions."

"This transaction offers Angiotech the opportunity for meaningful reduction of debt and interest expense, and allows us to raise a total amount of proceeds greater than would have been reasonably achievable through the consolidated company's capital alternatives," said Thomas Bailey, Chief Financial Officer of Angiotech. "After considering a wide range of strategic alternatives with the assistance of our advisors, our Board determined that this transaction establishes a more flexible capital structure to support our various business and product development initiatives."

"We are pleased, together with New Leaf, to have the opportunity to work with Angiotech to establish and capitalize API," said Bennett Rosenthal, Senior Partner of Ares Management. "The combination of our firms' significant capital resources, financial expertise and health care investing experience make us ideal partners for API. We are all tremendously excited about the market potential and growth trajectory of the company's various product opportunities."

"New Leaf and Ares believe that Angiotech has a very attractive portfolio of marketed products and pipeline programs, and that this transaction puts the Company in the best position to support these assets with the investments needed to maximize their long term potential," said Ron Hunt, Managing Director of New Leaf Venture Partners, LLC.

Goldman, Sachs & Co. is serving as Angiotech's financial advisor and Sullivan & Cromwell LLP and Borden Ladner Gervais LLP are serving as its legal advisors. Merrill Lynch Canada Inc. is serving as financial advisor to the Special Committee of the Board of Directors of Angiotech, and Lawson Lundell LLP is serving as the legal advisor to the Special Committee.

Proskauer Rose LLP is serving as legal advisor to Ares Management, and Latham & Watkins LLP is serving as legal advisor to New Leaf Venture Partners.

Conference Call Information

A conference call to discuss this transaction will be held today, Monday, July 7, 2008 at 5:30 AM PT (8:30 AM ET).

Enter passcode: 83196265

A replay archive of the conference call will be available until July 14 by calling (888) 286-8010 (North America) or (617) 801-6888 (International) and entering passcode 57624159.

A live webcast will be available to all interested parties through the Investors section of Angiotech's website at www.angiotech.com

Cautionary Statement Regarding Forward-Looking Statements

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

Statements contained in this press release that are not based on historical fact, including without limitation statements containing the words "believes", "may", "plans", "will", "estimate", "continue", "anticipates", "intends", "expects" and similar expressions, constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of applicable Canadian securities laws. All such statements are made pursuant to the "safe harbor" provisions of applicable securities legislation. Forward-looking statements may involve, but are not limited to, comments with respect to our objectives and priorities for the second half of 2008 and beyond, our strategies or future actions, our targets, expectations for our financial condition and the results of, or outlook for, our operations, research, development, product and drug development and our plans and anticipated effects of the transaction described in this press release. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements.

Many such risks, uncertainties and other factors are taken into account as part of our assumptions underlying these forward-looking statements and include, among others, the following: the inability to consummate the transaction described in this press release or that the transaction will not provide the anticipated benefits described in this press release; general economic and business conditions, both nationally and in the regions in which we operate; market demand; technological changes that could impact our existing products or our ability to develop and commercialize future products; competition; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; adverse results or unexpected delays in pre-clinical and clinical product development processes; adverse findings related to the safety and/or efficacy of our products or products sold by our partners; decisions, and the timing of decisions, made by health regulatory agencies regarding approval of our technology and products; the requirement for substantial funding to conduct research and development and to expand manufacturing and commercialization activities or consummate acquisitions; and any other factors that may affect performance. In addition, our business is subject to certain operating risks that may cause the actual results expressed or implied by the forward-looking statements in this press release to differ materially from our actual results. These operating risks include: our ability to attract and retain qualified personnel; our ability to successfully complete pre-clinical and clinical development of our products; changes in business strategy or development plans; our failure to obtain patent protection for discoveries; loss of patent protection resulting from third-party challenges to our patents; commercialization limitations imposed by patents owned or controlled by third parties; our ability to obtain rights to technology from licensors; liability for patent claims and other claims asserted against us; our ability to obtain and enforce timely patent and other intellectual property protection for our technology and products; the ability to enter into, and to maintain, corporate alliances relating to the development and commercialization of our technology and products; market acceptance of our technology and products; our ability to successfully manufacture, market and sell our products; the continued availability of capital to finance our activities; and any other factors referenced in our other filings with the SEC. For a more thorough discussion of the risks associated with our business, see the "Risk Factors" section in our annual report for the year ended December 31, 2007 filed with the SEC on Form 40-F and our quarterly report for the three months ended March 31, 2008 filed with the SEC on Form 10-Q.

Given these uncertainties, assumptions and risk factors, readers are cautioned not to place undue reliance on such forward-looking statements. Except as required by law, we disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained in this press release to reflect future results, events or developments.

Additional Information and Where to Find It

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

This communication may be deemed to be solicitation material in respect of the proposed investment of Ares Corporate Opportunities Fund III, L.P., New Leaf Ventures I, L.P. and New Leaf Ventures II, L.P. in Angiotech Pharmaceuticals, Inc.'s ("Angiotech") subsidiary, Angiotech Pharmaceutical Interventions, Inc. In connection with the proposed investment, Angiotech intends to file relevant materials with the SEC, including a proxy statement on Schedule 14A. SHAREHOLDERS OF ANGIOTECH ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING ANGIOTECH'S PROXY STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain the documents free of charge at the SEC's web site, http://www.sec.gov, and Angiotech shareholders will receive information at an appropriate time on how to obtain transaction-related documents for free from Angiotech. Such documents are not currently available.

Participants in Solicitation

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

Angiotech and its directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the holders of Angiotech common shares in respect of the proposed transaction. Information about the directors and executive officers of Angiotech is set forth in Angiotech's Annual Report on Form 40-F for the most recently ended fiscal year, which was filed with the SEC on March 31, 2008. Investors may obtain additional information regarding the interest of such participants by reading the proxy statement regarding the acquisition when it becomes available.

About Angiotech

Angiotech Pharmaceuticals, Inc. is a global specialty pharmaceutical and medical device company with over 1,500 dedicated employees. Angiotech discovers, develops and markets innovative treatment solutions for diseases or complications associated with medical device implants, surgical interventions and acute injury. To find out more about Angiotech , please visit our website at www.angiotech.com.

About Ares Management LLC

Founded in 1997 by a group of experienced investment professionals, Ares manages investment capital in private equity, capital markets (principally leveraged loans, high-yield bonds, and distressed debt), and private debt (primarily through Ares Capital Corporation , a publicly-traded specialty finance company). Through these three complementary lines of business, Ares has the ability to provide capital to companies at any place in the capital structure and at any stage of development. Ares is an SEC registered investment advisor and has grown committed capital under management from approximately $3.8 billion of committed capital in 2003 to in excess of $25 billion as of mid-2008. As of June 2008, Ares (based in Los Angeles, California) has more than 240 employees with offices in Los Angeles, New York and London. For more information, visit the Ares website at www.aresmgmt.com.

About New Leaf Venture Partners

NLV Partners is a life science-dedicated venture capital firm with offices in Menlo Park and New York. Founded by an experienced team of venture capitalists with deep healthcare industry experience, NLV Partners invests primarily in companies focused on clinical-stage biopharmaceutical products, early-stage medical devices, and molecular diagnostics. NLV Partners manages over $1.3 billion of assets, including NLV-I, NLV-II and the healthcare technology portfolio of Sprout Group. For further information, visit the NLV Partners website at www.nlvpartners.com.

CONTACT: Sage Baker, Investor Relations and Corporate Communications, Angiotech Pharmaceuticals, Inc., (604) 221-6933, sbaker@angio.com; Deirdre Neary, Investor Relations and Corporate Communications, Angiotech Pharmaceuticals, Inc., (604) 222-7056, dneary@angio.com; Steve Frankel, Joele Frank, Wilkinson Brimmer Katcher, Office (212) 355-4449 x 119, Cell (917) 952-0676, sfrankel@joelefrank.com, www.joelefrank.com

CONTACT: Sage Baker, Investor Relations and Corporate Communications,
Angiotech Pharmaceuticals, Inc., (604) 221-6933, sbaker@angio.com; Deirdre
Neary, Investor Relations and Corporate Communications, Angiotech
Pharmaceuticals, Inc., (604) 222-7056, dneary@angio.com; Steve Frankel,
Joele Frank, Wilkinson Brimmer Katcher, Office (212) 355-4449 x 119, Cell
(917) 952-0676, sfrankel@joelefrank.com, www.joelefrank.com

Back to news