SCTO

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Schedule TO

Tender Offer Statement under Section 14(d)(1) or 13(e)(1)

Of the Securities Exchange Act of 1934

 

 

Nabi Biopharmaceuticals

(Name of Subject Company (Issuer) and Filing Person (Offeror))

 

 

Common Stock, par value $0.10 per share

(Title of Class of Securities)

629519109

(CUSIP Number of Class of Securities)

Raafat E.F. Fahim, Ph.D.

12270 Wilkins Avenue

Rockville, Maryland 20852

(301) 770-3099

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Filing Persons)

 

 

With a copy to:

Joseph E. Gilligan

Eun Ah Choi

Hogan Lovells US LLP

555 Thirteenth Street, NW

Washington, District of Columbia 20004

(202) 637-5600

CALCULATION OF FILING FEE

 

 

Transaction Valuation*   Amount of Filing Fee**

$23,000,000

  $2,635.80

 

 

* The transaction value is estimated only for purposes of calculating the filing fee. This amount is based on the offer to purchase for not more than $23,000,000 in aggregate of up to 14,556,962 shares of common stock, $0.10 par value, at the minimum tender offer price of $1.58 per share.
** The amount of the filing fee, calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934, as amended, as modified by Fee Rate Advisory No. 3 for fiscal year 2012, equals $114.60 per million dollars of the value of the transaction.

 

¨  

Check the box if any part of the fee is offset as provided by Rule 0–11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

Amount Previously Paid: Not Applicable

   Filing Party: Not Applicable

Form or Registration No.: Not Applicable

   Date Filed: Not Applicable

 

¨  

Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

 

  ¨ third-party tender offer subject to Rule 14d–1.

 

  x issuer tender offer subject to Rule 13e–4.

 

  ¨ going-private transaction subject to Rule 13e–3.

 

  ¨ amendment to Schedule 13D under Rule 13d–2.

Check the following box if the filing is a final amendment reporting the results of the tender offer:  ¨

 

 

 


SCHEDULE TO

This Tender Offer Statement on Schedule TO (“Schedule TO”) is being filed by Nabi Biopharmaceuticals, a Delaware corporation (“Nabi” or the “Company”), pursuant to Rule 13e–4 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in connection with the Company’s offer to purchase for cash up to $23,000,000 in value of shares of its common stock, $0.10 par value per share (the “Common Stock”) (collectively the “Shares”) (or a lower amount if not enough Shares are properly tendered to allow us to purchase $23,000,000 in value of Shares) at a price not greater than $1.72 nor less than $1.58 per Share, net to the seller in cash, less any applicable withholding taxes and without interest (the “Offer”). The Company’s Offer is being made upon the terms and subject to the conditions set forth in the Offer to Purchase, dated July 2, 2012 (“Offer to Purchase”), and in the related Letter of Transmittal (“Letter of Transmittal”) which, as amended or supplemented from time to time, together constitute the Offer. This Schedule TO is being filed in accordance with Rule 13e–4(c)(2) under the Exchange Act.

All information in the Offer to Purchase and the related Letter of Transmittal is hereby expressly incorporated by reference in answer to all items in this Schedule TO, and as more particularly set forth below.

ITEM 1. Summary Term Sheet.

The information set forth in the section titled “Summary Term Sheet” in the Offer to Purchase, a copy of which is filed with this Schedule TO as Exhibit (a)(1)(A), is incorporated herein by reference.

ITEM 2. Subject Company Information.

(a) The name of the issuer is Nabi Biopharmaceuticals, a Delaware corporation. The address of the Company’s principal executive offices is 12270 Wilkins Avenue, Rockville, MD 20852. The Company’s telephone number is (301) 770-3099. The information set forth in the Section 9 (“Certain Information Concerning the Company”) of the Offer to Purchase is incorporated herein by reference.

(b) This Schedule TO relates to the Shares of Nabi. As of July 1, 2012, there were 42,876,030 Shares issued and outstanding. The information set forth in the section of the Offer to Purchase titled “Introduction” is incorporated herein by reference.

(c) The information set forth in Section 7 (“Price Range of Shares; Dividends”) of the Offer to Purchase is incorporated herein by reference.

ITEM 3. Identity and Background of Filing Person.

(a) Nabi Biopharmaceuticals is the filing person and subject company. The information set forth in Item 2(a) of this Schedule TO is incorporated herein by reference. The information set forth in Section 9 (“Certain Information Concerning the Company”) and Section 10 (“Interests of Directors, Executive Officers and Affiliates; Recent Securities Transactions; Transactions and Arrangements Concerning the Shares”) of the Offer to Purchase is incorporated herein by reference.

ITEM 4. Terms of the Transaction.

(a)(1)(i) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and “Introduction,” and in Section 1 (“Number of Shares; Purchase Price; Proration”) of the Offer to Purchase is incorporated herein by reference.

(a)(1)(ii) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and “Introduction,” and in Section 1 (“Number of Shares; Purchase Price; Proration”), Section 5 (“Purchase of Shares and Payment of Purchase Price”) and Section 8 (“Source and Amount of Funds”) of the Offer to Purchase is incorporated herein by reference.

 

2


(a)(1)(iii) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and “Introduction,” and in Section 1 (“Number of Shares; Purchase Price; Proration”), Section 3 (“Procedures for Tendering Shares”) and Section 14 (“Extension of the Offer; Termination; Amendment”) of the Offer to Purchase is incorporated herein by reference.

(a)(1)(iv) Not applicable.

(a)(1)(v) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and in Section 14 (“Extension of the Offer; Termination; Amendment”) of the Offer to Purchase is incorporated herein by reference.

(a)(1)(vi) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and in Section 4 (“Withdrawal Rights”) of the Offer to Purchase is incorporated herein by reference.

(a)(1)(vii) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and in Section 3 (“Procedures for Tendering Shares”) and Section 4 (“Withdrawal Rights”) of the Offer to Purchase is incorporated herein by reference.

(a)(1)(viii) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet,” in Section 3 (“Procedures for Tendering Shares”) and Section 5 (“Purchase of Shares and Payment of Purchase Price”) of the Offer to Purchase is incorporated herein by reference.

(a)(1)(ix) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet,” “Introduction,” in Section 1 (“Number of Shares; Purchase Price; Proration”) and in Section 5 (“Purchase of Shares and Payment of Purchase Price”) of the Offer to Purchase is incorporated herein by reference.

(a)(1)(x) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and in Section 2 (“Purpose of the Offer; Certain Effects of the Offer”) of the Offer to Purchase is incorporated herein by reference.

(a)(1)(xi) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and in Section 2 (“Purpose of the Offer; Certain Effects of the Offer”) of the Offer to Purchase is incorporated herein by reference.

(a)(1)(xii) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and in Section 3 (“Procedures for Tendering Shares”) and Section 12 (“United States Federal Income Tax Consequences”) of the Offer to Purchase is incorporated herein by reference.

(a)(2)(i–vii) Not applicable.

(b) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and “Introduction” and in Section 2 (“Purpose of the Offer; Certain Effects of the Offer”) and Section 10 (“Interests of Directors, Executive Officers and Affiliates; Recent Securities Transactions; Transactions and Arrangements Concerning the Shares”) of the Offer to Purchase is incorporated herein by reference.

ITEM 5. Past Contacts, Transactions, Negotiations and Agreements.

(e) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and in Section 10 (“Interests of Directors, Executive Officers and Affiliates; Recent Securities Transactions; Transactions and Arrangements Concerning the Shares”) of the Offer to Purchase is incorporated herein by reference.

 

3


ITEM 6. Purposes of the Transaction and Plans or Proposals.

(a) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and in Section 2 (“Purpose of the Offer; Certain Effects of the Offer”) of the Offer to Purchase is incorporated herein by reference.

(b) The information set forth in Section 2 (“Purpose of the Offer; Certain Effects of the Offer”) of the Offer to Purchase is incorporated herein by reference.

(c)(1–10) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and “Introduction” and in Section 2 (“Purpose of the Offer; Certain Effects of the Offer”), Section 8 (“Source and Amount of Funds”), Section 9 (“Certain Information Concerning the Company”) and Section 10 (“Interests of Directors, Executive Officers and Affiliates; Recent Securities Transactions; Transactions and Arrangements Concerning the Shares”) of the Offer to Purchase is incorporated herein by reference.

ITEM 7. Source and Amount of Funds or Other Consideration.

(a) and (b) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and in Section 8 (“Source and Amount of Funds”) of the Offer to Purchase is incorporated herein by reference.

(d) Not applicable.

ITEM 8. Interest in Securities of the Subject Company.

(a) and (b) The information set forth in Section 10 (“Interests of Directors, Executive Officers and Affiliates; Recent Securities Transactions; Transactions and Arrangements Concerning the Shares”) of the Offer to Purchase is incorporated herein by reference.

ITEM 9. Persons/Assets, Retained, Employed, Compensated or Used.

(a) The information set forth in the section of the Offer to Purchase titled “Introduction” and in Section 2 (“Purpose of the Offer; Certain Effects of the Offer”) and Section 15 (“Fees and Expenses”) of the Offer to Purchase is incorporated herein by reference.

ITEM 10. Financial Statements.

(a) and (b) Not applicable.

ITEM 11. Additional Information.

(a)(1) The information set forth in Section 10 (“Interests of Directors, Executive Officers and Affiliates; Recent Securities Transactions; Transactions and Arrangements Concerning the Shares”) of the Offer to Purchase is incorporated herein by reference.

(a)(2) The information set forth in Section 11 (“Certain Legal Matters; Regulatory Approvals”) of the Offer to Purchase is incorporated herein by reference.

(a)(3) The information set forth in Section 11 (“Certain Legal Matters; Regulatory Approvals”) of the Offer to Purchase is incorporated herein by reference.

(a)(4) The information set forth in Section 2 (“Purpose of the Offer; Certain Effects of the Offer”) and Section 13 (“Effects of the Offer on the Market for Shares; Registration under the Exchange Act”) of the Offer to Purchase is incorporated herein by reference.

(a)(5) None.

 

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(c) The information set forth in the Offer to Purchase and the related Letter of Transmittal, copies of which are filed as Exhibits (a)(l)(A) and (a)(l)(B) hereto, respectively, as each may be amended or supplemented from time to time, is incorporated herein by reference. The information set forth in the Preliminary Proxy Statement, attached as Annex A to the Offer to Purchase and incorporated therein by reference, including the information contained under the caption “Unaudited Pro Forma Condensed Consolidated Financial Information,” is incorporated herein by reference. The information contained in all of the exhibits referred to in Item 12 below is incorporated herein by reference.

ITEM 12. Exhibits.

 

Exhibit

  Number  

  

Description

(a)(1)(A)

   Offer to Purchase, dated July 2, 2012.

(a)(1)(B)

   Letter of Transmittal (including Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9).

(a)(1)(C)

   Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.

(a)(1)(D)

   Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies and Other Nominees.

(a)(2)

   Not applicable.

(a)(3)

   Not applicable.

(a)(4)

   Not applicable.

(a)(5)(A)

   Press Release issued by Nabi Biopharmaceuticals on July 2, 2012.

(b)

   Not applicable.

(d)(1)

   Merger Implementation Agreement between Nabi Biopharmaceuticals and Biota Holdings Limited, dated April 22, 2012 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, as filed with the SEC on April 23, 2012).

(d)(2)

   Rights Agreement dated as of August 25, 2011 between Nabi Biopharmaceuticals and American Stock Transfer & Trust Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, as filed with the SEC on August 25, 2011).

(d)(3)

   2004 Stock Plan for Non-Employee Directors (incorporated by reference to Appendix C to the Company’s Definitive Proxy Statement filed with the SEC on April 9, 2004).

(d)(4)

   1998 Non-Qualified Employee Stock Option Plan (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998).

(d)(5)

   2000 Equity Incentive Plan, as amended (incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement filed with the SEC on April 9, 2004).

(d)(6)

   2000 Equity Incentive Plan Award Letter (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended December 25, 2004).

(d)(7)

   2000 Equity Incentive Plan Special Award Letter (incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year ended December 25, 2004).

(d)(8)

   2007 Omnibus Equity and Incentive Plan (incorporated by reference to Appendix A of the Company’s Definitive Proxy Statement filed with the SEC on April 12, 2007).

(g)

   Not applicable.

(h)

   Not applicable.

Item 13. Information Required by Schedule 13E-3.

Not applicable.

 

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SIGNATURES

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

NABI BIOPHARMACEUTICALS

By:

  

/s/ Raafat E.F. Fahim, Ph.D.

Name:

  

Raafat E.F. Fahim, Ph.D.

 

Title:

   President and CEO

Date: July 2, 2012

Offer to Purchase
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Exhibit (a)(1)(A)

 

LOGO

OFFER TO PURCHASE FOR CASH

BY

NABI BIOPHARMACEUTICALS

UP TO $23,000,000 IN VALUE OF SHARES OF ITS COMMON STOCK

AT A PURCHASE PRICE NOT GREATER THAN $1.72

NOR LESS THAN $1.58 PER SHARE

 

THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, AT THE END OF THE DAY, NEW YORK CITY TIME, ON MONDAY, JULY 30, 2012, UNLESS THE OFFER IS EXTENDED (SUCH DATE AND TIME, AS THEY MAY BE EXTENDED, THE “EXPIRATION DATE”).

Nabi Biopharmaceuticals (“Nabi,” the “Company,” “we,” “us,” or “our”) invites our stockholders to tender shares of our common stock, $0.10 par value per share (the “Shares”) at a purchase price of not greater than $1.72 nor less than $1.58 per Share, net to the seller in cash, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions described in this Offer to Purchase and in the related Letter of Transmittal (which together, as they may be amended or supplemented from time to time, constitute the “Offer”).

We are offering to purchase up to $23,000,000 in value of Shares in the Offer. Upon the terms and subject to the conditions of the Offer, we will determine a single per Share price that we will pay for Shares properly tendered and not properly withdrawn from the Offer, taking into account the total number of Shares tendered and the prices specified by tendering stockholders. We will select the single lowest price per Share (in multiples of $0.02) (the “Purchase Price”) within the price range for the Offer that will allow us to purchase $23,000,000 in value of Shares. If Shares having an aggregate value of less than $23,000,000 are properly tendered and not properly withdrawn, we will buy all Shares properly tendered and not properly withdrawn. All Shares acquired in the Offer will be acquired at the same price regardless of whether the stockholder tendered at a lower price. However, because of the proration provisions described in this Offer to Purchase, all of the Shares tendered at or below the Purchase Price may not be purchased if, based on the Purchase Price, Shares having an aggregate value in excess of $23,000,000 are properly tendered and not properly withdrawn Shares tendered but not purchased in the Offer will be returned to the tendering stockholders at our expense promptly after the Expiration Date. We reserve the right, in our sole discretion, to change the per Share purchase price range and to increase or decrease the value of Shares sought in the Offer, subject to applicable law. See Sections 1 and 3.

In accordance with the rules of the Securities and Exchange Commission, in the event that more than $23,000,000 in value of Shares are tendered in the Offer at or below the Purchase Price, we may exercise our right to amend the Offer to purchase up to an additional 2% of our outstanding Shares without extending the Expiration Date. We also expressly reserve the right, in our sole discretion, to purchase additional Shares, subject to applicable law and the limits set forth in the Transaction Agreement. See Sections 1 and 14.

At the maximum Purchase Price of $1.72 per Share, we would purchase 13,372,093 Shares if the Offer is fully subscribed, which would represent approximately 31.19% of the issued and outstanding Shares as of July 1, 2012, the last day before we commenced the Offer. At the minimum Purchase Price of $1.58 per Share, we would purchase 14,556,962 Shares if the Offer is fully subscribed, which would represent approximately 33.95% of our issued and outstanding Shares as of July 1, 2012.

The Offer is not conditioned upon the receipt of any minimum number of Shares being tendered. The Offer is, however, subject to other conditions. See Section 6.

The Shares are listed on the NASDAQ Global Select Market (“NASDAQ”) and trade under the symbol “NABI.” On June 29, 2012, the last full trading day before we commenced the Offer, the last reported sale price of the Shares was $1.58 per Share. Stockholders are urged to obtain current market quotations for the Shares before deciding whether to tender their Shares. See Section 7.

If you have questions or need assistance, you should contact the Information Agent at the address and telephone number set forth on the back cover of this Offer to Purchase. If you require additional copies of this Offer to Purchase, the Letter of Transmittal or other related materials, you should contact the Information Agent.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of this transaction or passed upon the merits or fairness of such transaction or passed upon the adequacy or accuracy of the information contained in this Offer to Purchase. Any representation to the contrary is a criminal offense.

Offer to Purchase dated July 2, 2012


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IMPORTANT

OUR BOARD OF DIRECTORS HAS AUTHORIZED US TO MAKE THE OFFER. HOWEVER, NEITHER WE NOR OUR BOARD OF DIRECTORS NOR THE INFORMATION AGENT OR DEPOSITARY MAKES ANY RECOMMENDATION TO YOU AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING YOUR SHARES OR AS TO THE PRICE OR PRICES AT WHICH YOU MAY CHOOSE TO TENDER THEM. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO TENDER YOUR SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH YOU WILL TENDER THEM. IN DOING SO, YOU SHOULD READ CAREFULLY THE INFORMATION IN THIS OFFER TO PURCHASE AND IN THE RELATED LETTER OF TRANSMITTAL, INCLUDING THE PURPOSES AND EFFECTS OF THE OFFER. SEE SECTION 2. YOU SHOULD DISCUSS WHETHER TO TENDER YOUR SHARES WITH YOUR BROKER, IF ANY, OR OTHER FINANCIAL OR TAX ADVISOR.

The Transaction

On April 22, 2012, before we commenced the Offer, we entered into a Merger Implementation Agreement (the “Transaction Agreement”) by and between Nabi and Biota Holdings Limited (“Biota”), pursuant to which Nabi will acquire all of the outstanding shares of Biota in exchange for shares of Nabi common stock, and Biota will become a wholly-owned subsidiary of Nabi (the “Transaction”). Immediately after the completion of the Transaction, Nabi’s existing stockholders collectively will own approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders collectively will own approximately 74% of the outstanding common stock of the combined company. Pursuant to the terms of the Transaction Agreement, the completion of the Transaction is conditioned on, among other things, Nabi having a closing net cash balance of no less than $54 million after satisfying outstanding liabilities. Nabi plans to return to its stockholders, before the completion of the Transaction, its remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction after satisfying outstanding liabilities. Such distribution will take the form of the Offer and, for any remaining amounts, through a dividend or other return of capital. After the completion of the Offer but prior to the completion of the Transaction, Nabi plans to declare a dividend or implement a return of capital, as applicable, to distribute any remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction that is not required to satisfy any outstanding liabilities. Such remaining cash amount is currently expected to be in the range of approximately $2 million to $5 million. The completion of the Offer is not conditioned upon the completion of the Transaction. Furthermore, the completion of the Transaction is not conditioned upon the completion of the Offer. However, we shall have the right to terminate the Offer if the Transaction Agreement is terminated in accordance with its terms. Please see Section 6 below for a description of conditions to the completion of the Offer. In addition, we intend, subject to approval by our stockholders, to implement a reverse stock split to become effective immediately prior to the completion of the Transaction as described in more detail in the Preliminary Proxy Statement attached hereto as Annex A.

The foregoing description of the Transaction, including the Transaction Agreement, is qualified in its entirety by reference to our preliminary proxy statement related to the Transaction, which is in preliminary form and is subject to completion (the “Preliminary Proxy Statement”) attached hereto as Annex A, which is incorporated herein by reference and contains, among other things, a copy of the Transaction Agreement and a description of the Transaction and related matters, including the pro forma financial information. Nabi currently plans to file with the Securities and Exchange Commission and distribute a definitive form of the proxy statement after the completion of this Offer. See Sections 2 and 10.

Considerations by Nabi’s Board of Directors If the Transaction is Not Completed

After the completion of the Offer, in the event that the Transaction is not completed, either because of the failure of either our or Biota’s stockholders to approve the Transaction, or the failure of another condition to completion of the Transaction, our Board of Directors will consider the liquidation and dissolution of Nabi. If our Board of Directors determines that liquidation and dissolution is advisable, it will approve a plan of liquidation and dissolution and submit it to our stockholders for their approval. If our Board of Directors recommends liquidation and dissolution to the stockholders, a meeting of our stockholders to consider any proposed plan of liquidation and dissolution likely would not be held until approximately three or four months after the


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termination of the Transaction Agreement. Thereafter, if the plan is approved by stockholders, it will take us no less than three years to complete the dissolution and winding-up process and distribute all remaining assets to our stockholders in accordance with the General Corporation Law of the State of Delaware (the “DGCL”).

Following stockholder approval of a plan of liquidation and dissolution and the filing of a certificate of dissolution with the Secretary of State of the State of Delaware but prior to the completion of the dissolution and winding-up process, we likely will make one or more initial or interim liquidating distribution to our stockholders of a majority of our remaining cash assets, which distribution amounts will depend on known, unknown, contingent and pending claims at the time of the distributions. We currently estimate such initial or interim liquidating distributions to be approximately $1.42 to $1.59 per share in the aggregate (assuming we purchase 13,372,093 Shares in the Offer, which is based on the Offer being fully subscribed at the maximum Purchase Price, and no other changes to our currently outstanding number of Shares) or $1.48 to $1.66 per share in the aggregate (assuming we purchase 14,556,962 Shares in the Offer, which is based on the Offer being fully subscribed at the minimum Purchase Price, and no other changes to our currently outstanding number of Shares). The estimated range of the liquidating distributions described in the preceding sentence is based on Nabi having cash of $92.7 million as of June 30, 2012, less approximately $2.5 million of estimated operating expenses until September 30, 2012, less approximately $23.2 million to be used for purchasing Shares in this Offer (including related fees and expenses), and less a reserve of approximately $20 million to $25 million in the aggregate to pay, and make provision for, existing and future contingent and potential claims and liabilities, including severance payments and transaction-related fees and liabilities, expenses related to continuing operations including making required regulatory filings and the establishment of a mechanism for collecting and distributing any future distributions, milestone or royalty payments under existing agreements with respect to NicVAX® (Nicotine Conjugate Vaccine) and Phoslyra® . The estimated reserve amount of approximately $20 million to $25 million in the aggregate includes approximately $5 million to $10 million to be set aside for the satisfaction of future contingent and potential claims and liabilities in accordance with the DGCL. The amount remaining from the $5 million to $10 million reserve, if any, together with any other remaining assets, after satisfying Nabi’s remaining, actual, contingent or potential claims and liabilities will be distributed to the stockholders. We currently are unable to predict the precise nature, amount or timing of the liquidating distributions described above. The range of the liquidating distributions and the other amounts referred to in this paragraph are preliminary estimates based on the information currently available to Nabi and are subject to change based on factors currently unknown to Nabi that may affect its remaining cash in the future, such as additional expenditures and/or liabilities. Therefore, the actual amounts of the liquidating distributions may be significantly lower than our current estimates.

*  *  *  *  *

If you want to tender all or part of your Shares, you must do one of the following before 12:00 midnight, at the end of the day, New York City time, on Monday, July 30, 2012, or any later time and date to which the Offer may be extended:

 

   

if your Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, contact the nominee and have the nominee tender your Shares for you;

 

   

if you hold Shares in your own name, complete and sign a Letter of Transmittal according to its instructions and deliver it, together with any required signature guarantees, certificates for your Shares and any other documents required by the Letter of Transmittal, to American Stock Transfer & Trust Company, LLC, the Depositary for the Offer;

 

   

if you are an institution participating in The Depository Trust Company, tender your Shares according to the procedure for book-entry transfer described in Section 3 of this Offer to Purchase; or

 

   

if you are a holder of vested stock options to purchase Shares under the Company’s equity compensation plans, you may exercise your vested stock options and tender any of the Shares issued upon exercise in accordance with the Company’s policies and procedures for the applicable equity plan.


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If you wish to maximize the chance that your Shares will be purchased by us, you should check the box in the section of the Letter of Transmittal captioned “Shares Tendered at a Price Determined Pursuant to the Offer.” If you agree to accept the purchase price determined in the Offer, your Shares will be deemed to be tendered at the minimum price of $1.58 per share. You should understand that this election may lower the purchase price paid for all purchased Shares in the Offer and could result in your Shares being purchased at the minimum price of $1.58 per Share. The closing market price on NASDAQ for the Shares on June 29, 2012, the last full trading day before we commenced the Offer, was $1.58. See Section 3.

WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR SHARES OR AS TO THE PRICE OR PRICES AT WHICH YOU MAY CHOOSE TO TENDER YOUR SHARES IN THE OFFER. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED LETTER OF TRANSMITTAL. IF ANYONE MAKES ANY RECOMMENDATION OR GIVES ANY INFORMATION OR REPRESENTATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION, INFORMATION OR REPRESENTATION AS HAVING BEEN AUTHORIZED BY US, THE DEPOSITARY OR THE INFORMATION AGENT.

Questions and requests for assistance may be directed to Morrow & Co., LLC, the Information Agent for the Offer, at the telephone number and address on the back cover of this Offer to Purchase. You may request additional copies of this Offer to Purchase and other Offer documents from the Information Agent at the telephone number and address on the back cover of this Offer to Purchase.


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TABLE OF CONTENTS

 

       Page    

SUMMARY TERM SHEET

     i   

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

     x   

INTRODUCTION

     1   

THE OFFER

     5   

1.

   Number of Shares; Purchase Price; Proration      5   

2.

   Purpose of the Offer; Certain Effects of the Offer      6   

3.

   Procedures for Tendering Shares      11   

4.

   Withdrawal Rights      16   

5.

   Purchase of Shares and Payment of Purchase Price      16   

6.

   Conditions of the Offer      17   

7.

   Price Range of Shares; Dividends      20   

8.

   Source and Amount of Funds      21   

9.

   Certain Information Concerning the Company      21   

10.

  

Interests of Directors, Executive Officers and Affiliates; Recent Securities Transactions; Transactions and Arrangements Concerning the Shares

     23   

11.

   Certain Legal Matters; Regulatory Approvals      30   

12.

   United States Federal Income Tax Consequences      30   

13.

   Effects of the Offer on the Market for Shares; Registration under the Exchange Act      33   

14.

   Extension of the Offer; Termination; Amendment      33   

15.

   Fees and Expenses      34   

16.

   Miscellaneous      35   

ANNEX A Preliminary Proxy Statement


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SUMMARY TERM SHEET

This summary highlights material information from this Offer to Purchase, but it does not describe the Offer to the same extent as it is described elsewhere in this Offer to Purchase. To understand the Offer fully, and for a more complete description of the terms of the Offer, you should read carefully this entire Offer to Purchase, the Letter of Transmittal and the other documents that constitute part of the Offer. We have included references to the sections of this Offer to Purchase where you will find a more complete description of the topics in this summary. As used in this Offer to Purchase, “we,” “us,” “our,” “Nabi” or “the Company” refers to Nabi Biopharmaceuticals.

Who is offering to purchase Shares?

The issuer of the Shares, Nabi Biopharmaceuticals, is offering to purchase your Shares. See Section 1.

How many Shares is Nabi offering to purchase?

We are offering to purchase up to $23,000,000 in value of Shares in the Offer (or a lower amount if not enough Shares are properly tendered to allow us to purchase $23,000,000 in value of Shares). See Sections 1 and 2.

At the maximum Purchase Price of $1.72 per Share, we would purchase 13,372,093 Shares if the Offer is fully subscribed, which would represent approximately 31.19% of the issued and outstanding Shares as of July 1, 2012. At the minimum Purchase Price of $1.58 per Share, we would purchase 14,556,962 Shares if the Offer is fully subscribed, which would represent approximately 33.95% of the issued and outstanding Shares as of July 1, 2012.

In addition, if more than $23,000,000 in value of Shares are tendered in the Offer at or below the Purchase Price, we may exercise our right to amend the Offer to purchase up to an additional 2% of our outstanding Shares without extending the Expiration Date. We also expressly reserve the right, in our sole discretion, to purchase additional Shares, subject to applicable law and the limits set forth in the Transaction Agreement. See Section 14.

The Offer is not conditioned on any minimum number of Shares being tendered by stockholders but is subject to certain other conditions. See Section 6.

What will be the purchase price for the Shares and what will be the form of payment?

We are conducting this Offer through a procedure commonly called a “modified Dutch auction.” This procedure allows you to select the price within a price range specified by us at which you are willing to sell your Shares. The price range for the Offer is $1.58 to $1.72 per Share. See Section 1.

We will select the single lowest purchase price (in multiples of $0.02) (the “Purchase Price”) within the price range for the Offer that will allow us to purchase $23,000,000 in value of Shares at such price or, if a lesser number of Shares are properly tendered, such lesser number of Shares as are properly tendered. We will purchase all Shares acquired in the Offer at the Purchase Price, even if you have selected a purchase price lower than the Purchase Price, but we will not purchase any Shares tendered at a price above the Purchase Price. See Sections 1 and 2.

If you wish to maximize the chance that your Shares will be purchased, you should check the box in the section on the Letter of Transmittal indicating that you will accept the Purchase Price we determine. You should understand that this election may have the effect of lowering the Purchase Price and could result in your Shares being purchased at the minimum price of $1.58 per Share. The closing market price on NASDAQ for the Shares on June 29, 2012, the last full trading day before we commenced the Offer, was $1.58. The minimum purchase price of $1.58 per share could be below the closing market price for the Shares on NASDAQ on the Expiration Date. See Section 3.

 

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If your Shares are purchased in the Offer, you will receive the Purchase Price, net to the seller in cash, less any applicable withholding taxes and without interest, promptly after the Expiration Date. Under no circumstances will we pay interest on the Purchase Price, including but not limited to, by reason of any delay in making payment. The Offer is scheduled to expire at 12:00 midnight, at the end of the day, New York City time, on Monday, July 30, 2012, unless the Offer is extended by us. See Sections 1 and 5.

What is the Transaction Agreement and how is it related to the Offer?

On April 22, 2012, before we commenced the Offer, we entered into the Transaction Agreement, pursuant to which Nabi will acquire all of the outstanding shares of Biota in exchange for shares of Nabi common stock, and Biota will become a wholly-owned subsidiary of Nabi. Immediately after the completion of the Transaction, Nabi’s existing stockholders collectively will own approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders collectively will own approximately 74% of the outstanding common stock of the combined company. Pursuant to the terms of the Transaction Agreement, the completion of the Transaction is conditioned on, among other things, Nabi having a closing net cash balance of no less than $54 million after satisfying outstanding liabilities. Nabi plans to return to its stockholders, before the completion of the Transaction, its remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction after satisfying outstanding liabilities. Such distribution will take the form of the Offer and, for any remaining amounts, through a dividend or other return of capital. After the completion of the Offer but prior to the completion of the Transaction, Nabi plans to declare a dividend or implement a return of capital, as applicable, to distribute any remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction that is not required to satisfy any outstanding liabilities. Such remaining cash amount is currently expected to be in the range of approximately $2 million to $5 million. The completion of the Offer is not conditioned upon the completion of the Transaction. Furthermore, the completion of the Transaction is not conditioned upon the completion of the Offer. However, we shall have the right to terminate the Offer if the Transaction Agreement is terminated in accordance with its terms. Please see Section 6 below for a description of conditions to the completion of the Offer. The foregoing description of the Transaction, including the Transaction Agreement, is qualified in its entirety by reference to the Preliminary Proxy Statement attached hereto as Annex A, which is incorporated herein by reference and contains, among other things, a copy of the Transaction Agreement and a description of the Transaction and related matters, including the pro forma financial information. See Sections 2, 6 and 10.

What will happen if the Transaction is not completed?

After the completion of the Offer, in the event that the Transaction is not completed, either because of the failure of either our or Biota’s stockholders to approve the Transaction, or the failure of another condition to completion of the Transaction, our Board of Directors will consider the liquidation and dissolution of Nabi. If our Board of Directors determines that liquidation and dissolution is advisable, it will approve a plan of liquidation and dissolution and submit it to our stockholders for their approval. If our Board of Directors recommends liquidation and dissolution to the stockholders, a meeting of our stockholders to consider any proposed plan of liquidation and dissolution likely would not be held until approximately three or four months after the termination of the Transaction Agreement. Thereafter, if the plan is approved by stockholders, it will take us no less than three years to complete the dissolution and winding-up process and distribute all remaining assets to our stockholders in accordance with the DGCL.

Following stockholder approval of a plan of liquidation and dissolution and the filing of a certificate of dissolution with the Secretary of State of the State of Delaware but prior to the completion of the dissolution and winding-up process, we likely will make one or more initial or interim liquidating distribution to our stockholders of a majority of our remaining cash assets, which distribution amounts will depend on known, unknown, contingent and pending claims at the time of the distributions. We currently estimate such initial or interim liquidating distributions to be approximately $1.42 to $1.59 per share in the aggregate (assuming we purchase 13,372,093 Shares in the Offer, which is based on the Offer being fully subscribed at the maximum

 

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Purchase Price, and no other changes to our currently outstanding number of Shares) or $1.48 to $1.66 per share in the aggregate (assuming we purchase 14,556,962 Shares in the Offer, which is based on the Offer being fully subscribed at the minimum Purchase Price, and no other changes to our currently outstanding number of Shares). The estimated range of the liquidating distributions described in the preceding sentence is based on Nabi having cash of $92.7 million as of June 30, 2012, less approximately $2.5 million of estimated operating expenses until September 30, 2012, less approximately $23.2 million to be used for purchasing Shares in this Offer (including related fees and expenses), and less a reserve of approximately $20 million to $25 million in the aggregate to pay, and make provision for, existing and future contingent and potential claims and liabilities, including severance payments and transaction-related fees and liabilities, expenses related to continuing operations including making required regulatory filings and the establishment of a mechanism for collecting and distributing any future distributions, milestone or royalty payments under existing agreements with respect to NicVAX® (Nicotine Conjugate Vaccine) and Phoslyra® . The estimated reserve amount of approximately $20 million to $25 million in the aggregate includes approximately $5 million to $10 million to be set aside for the satisfaction of future contingent and potential claims and liabilities in accordance with the DGCL. The amount remaining from the $5 million to $10 million reserve, if any, together with any other remaining assets after satisfying Nabi’s remaining, actual, contingent or potential claims and liabilities will be distributed to the stockholders. We currently are unable to predict the precise nature, amount or timing of the liquidating distributions described above. The range of the liquidating distributions and the other amounts referred to in this paragraph are preliminary estimates based on the information currently available to Nabi and are subject to change based on factors currently unknown to Nabi that may affect its remaining cash in the future, such as additional expenditures and/or liabilities. Therefore, the actual amounts of the liquidating distributions may be significantly lower than our current estimates. See Sections 2 and 10.

How will Nabi pay for the Shares?

The maximum value of Shares purchased in the Offer will be $23,000,000. We expect the maximum aggregate cost of this purchase, including all fees and expenses applicable to the Offer, to be approximately $23.2 million. We will use available cash to purchase the Shares in the Offer and to pay all related fees and expenses. See Sections 5, 6 and 8.

What is the purpose of the Offer?

Nabi plans to return to its stockholders, before the completion of the Transaction, its remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction after satisfying outstanding liabilities. Such distribution will take the form of the Offer and, for any remaining amounts, through a dividend or other return of capital. See Sections 2 and 10.

We believe that the tender offer set forth in this Offer to Purchase represents an efficient mechanism to provide our stockholders with the opportunity to tender all or a portion of their Shares and thereby receive a return of some or all of their investment if they so elect. The Offer provides stockholders (particularly those who, because of the size of their shareholdings, might not be able to sell their Shares without potential disruption to the trading of the Shares on NASDAQ) with an opportunity to obtain liquidity with respect to all or a portion of their Shares without potential disruption to the Share price. In addition, if we complete the Offer, stockholders who do not participate in the Offer will automatically increase their relative percentage ownership interest in the Company at no additional cost to them. Please note, however, that immediately after the completion of the Transaction, Nabi’s existing stockholders collectively will own approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders collectively will own approximately 74% of the outstanding common stock of the combined company. In addition, we intend, subject to approval by our stockholders, to implement a reverse stock split to become effective immediately prior to the completion of the Transaction as described in more detail in the Preliminary Proxy Statement attached hereto as Annex A. See Sections 2 and 10.

The Offer also provides our stockholders with an efficient way to sell their shares without incurring broker’s fees or commissions associated with open market sales. See Sections 1 and 3.

 

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In determining to proceed with the Offer, our management and our Board of Directors evaluated the Company’s operations, financial condition, capital needs and expectations for the period prior to the anticipated completion of the Transaction and believe that the Offer, is a prudent use of our financial resources. In addition, we expect that our current cash balances will be sufficient to satisfy our obligations and liabilities prior to the completion of the Transaction. See Section 2.

How long do I have to tender my Shares?

You may tender your Shares until the Expiration Date. The Offer will expire on Monday, July 30, 2012 at 12:00 midnight, at the end of the day, New York City time, unless we extend the Offer. We may choose to extend the Offer in our sole discretion at any time. We cannot assure you, however, that we will extend the Offer or, if we extend it, for how long. See Sections 1 and 14.

If a broker, dealer, commercial bank, trust company or other nominee holds your Shares, it is likely that they have an earlier deadline for accepting the Offer. We urge you to contact the broker, dealer, commercial bank, trust company or other nominee holding your Shares to find out their deadline. See Section 3.

Can the Offer be extended, amended or terminated and, if so, under what circumstances?

Yes. We can extend or amend the Offer in our sole discretion. If we extend the Offer, we will delay the acceptance of any Shares that have been tendered. We can also terminate the Offer under certain circumstances. See Sections 6 and 14.

How will I be notified if the Offer is extended or amended?

If the Offer is extended, we will make a public announcement of the extension no later than 9:00 a.m., New York City time, on the first business day after the previously scheduled Expiration Date. We will announce any amendment to the Offer by making a public announcement of the amendment. See Section 14. If we extend the Offer, you may withdraw your Shares until the Expiration Date, as extended. See Section 4.

Are there any conditions to the Offer?

Yes. Our obligation to accept for payment and pay for your tendered Shares depends upon a number of conditions that must be satisfied in our reasonable judgment or waived by us, on or prior to the Expiration Date, including but not limited to:

 

   

No legal action shall have been instituted, threatened in writing, pending or taken that challenges or affects the Offer, the purchase of the Shares or the Transaction Agreement (or the Transaction pursuant to the Transaction Agreement) or materially and adversely affects our and our subsidiaries’ business, properties, assets, liabilities, capitalization, stockholders’ equity, condition (financial or otherwise), operations, results of operations or prospects or otherwise materially impairs the contemplated future conduct of our business or our ability to exercise full rights of ownership or purchase and hold some or all of the Shares purchased in the Offer or our ability to complete the Transaction pursuant to the Transaction Agreement;

 

   

No decrease of more than 10% in the market price for the Shares or in the general level of market prices for equity securities in the Dow Jones Industrial Average, New York Stock Exchange Index, NASDAQ Composite Index or the Standard & Poor’s 500 Composite Index measured from the close of trading on June 29, 2012 shall have occurred;

 

   

No material adverse change in our and our subsidiaries’ business, properties, assets, liabilities, capitalization, stockholders’ equity, condition (financial or otherwise), operations, results of operations or prospects shall have occurred;

 

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No determination shall have been made by us that the consummation of the Offer and the purchase of the Shares may cause us to be unable to satisfy the initial listing standards of NASDAQ immediately prior to the completion of the Transaction;

 

   

No termination of the Transaction Agreement shall have occurred;

 

   

No event shall have occurred or circumstance shall exist that would cause us to determine that there may be a reasonable likelihood that we will not have a net closing cash balance in excess of $54 million immediately prior to the completion of the Transaction pursuant to the conditions set forth in the Transaction Agreement; and

 

   

No determination shall have been made by us that the consummation of the Offer and the purchase of the Shares may cause the reasonable likelihood of the Shares either (i) to be held of record by less than 300 persons or (ii) to be delisted from NASDAQ or to be eligible for deregistration under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

For a more detailed discussion of these and other conditions to the Offer, please see Section 6.

How will the Offer affect the number of Shares outstanding and the number of record holders of Nabi?

As of July 1, 2012, the day before we commenced the Offer, we had 42,876,030 issued and outstanding Shares. At the maximum Purchase Price of $1.72 per Share, we would purchase 13,372,093 Shares if the Offer is fully subscribed, which would represent approximately 31.19% of our outstanding Shares as of July 1, 2012. At the minimum Purchase Price of $1.58 per Share, we would purchase 14,556,962 Shares if the Offer is fully subscribed, which would represent approximately 33.95% of our outstanding Shares as of July 1, 2012.

If the Offer is fully subscribed at the maximum Purchase Price, we will have approximately 29,503,940 Shares outstanding following the purchase of Shares tendered in the Offer. If the Offer is fully subscribed at the minimum Purchase Price, we will have approximately 28,319,070 Shares outstanding following the purchase of Shares tendered in the Offer. The actual number of Shares outstanding will depend on the number of Shares tendered and purchased in the Offer as well as the Purchase Price for such Shares. See Section 2.

If any of our stockholders:

 

   

who hold Shares in their own name as holders of record, or

 

   

who are “registered holders” as participants in The Depository Trust Company’s (“DTC”) system whose names appear on a security position listing,

tender their Shares in full and that tender is accepted in full, the number of our record holders would be reduced. See Section 2.

Stockholders who do not have their Shares purchased in the Offer will realize a proportionate increase in their relative ownership interest in the Company. See Section 2.

Please note, however, that following the completion of the Transaction, Nabi’s existing stockholders collectively will own approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders collectively will own approximately 74% of the outstanding common stock of the combined company. In addition, we intend, subject to approval by our stockholders, to implement a reverse stock split to become effective immediately prior to the completion of the Transaction as described in more detail in the Preliminary Proxy Statement attached hereto as Annex A. See Section 2.

Following the Offer, will Nabi continue as a public company?

Yes. The completion of the Offer in accordance with its terms and conditions will not cause the Company to be delisted from NASDAQ or to stop being subject to the periodic reporting requirements of the Exchange Act.

 

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However, if we make a determination that the consummation of the Offer and the purchase of the Shares may cause the reasonable likelihood of the Shares to be delisted from NASDAQ or to be eligible for deregistration under the Exchange Act, we may not accept for payment and pay for your tendered Shares. See Section 6.

How do I tender my Shares?

 

   

If you hold your Shares in your own name as a holder of record and decide to tender your Shares, you must complete and sign a Letter of Transmittal according to its instructions or an Agent’s Message and deliver it, together with any required signature guarantees, certificates for your Shares and any other documents required by the Letter of Transmittal, to the Depositary before 12:00 midnight, at the end of the day, New York City time, on Monday, July 30, 2012, or such later time and date to which we may extend the Offer. See Section 3 and the instructions to the Letter of Transmittal;

 

   

If you hold your Shares in a brokerage account or otherwise through a broker, dealer, commercial bank, trust company or other nominee (i.e., in “street name”), you must contact your broker, dealer, commercial bank, trust company or other nominee if you wish to tender your Shares. See Section 3 and the instructions to the Letter of Transmittal;

 

   

If you are an institution participating in DTC, tender your Shares according to the procedure for book-entry transfer described in Section 3 of this Offer to Purchase; or

 

   

If you are a holder of vested stock options to purchase Shares under the Company’s equity compensation plans, you may exercise your vested stock options you may exercise such options in accordance with the terms of the Company’s policies and procedures for the applicable equity compensation plan and your awards and tender the Shares received upon such exercise in accordance with this Offer.

We are not aware of any jurisdiction where the making of the Offer is not in compliance with applicable law. If we become aware of any jurisdiction within the United States where the making of the Offer or the acceptance of Shares pursuant to the Offer is not in compliance with any valid applicable law, we will make a good faith effort to comply with the applicable law. If, after a good faith effort, we cannot comply with the applicable law, the Offer will not be made to, nor will tenders be accepted from or on behalf of, the holders of Shares residing in that jurisdiction within the United States. See Sections 3 and 16 and the instructions to the Letter of Transmittal.

You may contact the Information Agent or your broker, dealer, commercial bank, trust company or other nominee for assistance. The contact information for the Information Agent is on the back cover page of this Offer to Purchase.

How do holders of vested stock options for Shares participate in the Offer?

If you hold vested but unexercised stock options, you may exercise such options in accordance with the terms of the Company’s policies and procedures for the applicable equity compensation plan and your awards and tender the Shares received upon such exercise in accordance with this Offer. An exercise of a stock option cannot be revoked for any reason even if Shares received upon the exercise thereof and tendered in the Offer are not purchased in the Offer for any reason. See Section 3. You should evaluate this Offer to Purchase carefully to determine if participation would be advantageous to you, based on your stock option exercise prices, the date of your stock option grants, the years left to exercise your stock options and the provisions for pro rata purchases by the Company described in Section 1. We encourage you to discuss the Offer with your financial or tax advisor or broker, if any.

May I tender only a portion of the Shares that I hold?

Yes. You do not have to tender all of the Shares that you own to participate in the Offer.

 

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How do I withdraw Shares previously tendered?

You must deliver a written notice of your withdrawal to the Depositary at the address appearing on the back cover page of this Offer to Purchase prior to the Expiration Date. Your written notice of withdrawal must specify your name, the number of Shares to be withdrawn and the name of the registered holder of such Shares. If you have used more than one Letter of Transmittal or have otherwise tendered Shares in more than one group of Shares, you may withdraw Shares using either separate notices of withdrawal or a combined notice of withdrawal, so long as the required information is included. Some additional requirements apply if your Shares have been tendered under the procedure for book-entry transfer set forth in Section 3. If you have tendered your Shares by giving instructions to a broker, dealer, commercial bank, trust company or other nominee, you must instruct the nominee to arrange for the withdrawal of your Shares. See Section 4.

Until what time can I withdraw previously tendered Shares?

You may withdraw your tendered Shares at any time before 12:00 midnight, at the end of the day, New York City time, on Monday, July 30, 2012, or such later time and date to which we may extend the Offer. In addition, unless we have already accepted your tendered Shares for payment, you may withdraw your tendered Shares at any time after 11:59 p.m., New York City time, on August 27, 2012. See Section 4.

Will tendered Shares be prorated? What happens if more than $23,000,000 in value of Shares are tendered at or below the Purchase Price?

If more than $23,000,000 in value of Shares (or such greater value of Shares as we may elect to purchase, subject to applicable law and the limits set forth in the Transaction Agreement) are properly tendered and not properly withdrawn, we will purchase Shares at the Purchase Price from all holders who properly tender Shares at or below the Purchase Price and who do not properly withdraw them before the Expiration Date, on a pro rata basis, with appropriate adjustments to avoid purchases of fractional Shares, until we have acquired $23,000,000 in value of Shares. Therefore, we may not purchase all of the Shares that you tender even if you tender them at or below the Purchase Price. See Sections 1 and 6.

Has Nabi or its Board of Directors adopted a position on the Offer?

Our Board of Directors has authorized us to make the Offer. However, neither we nor the Board of Directors, the Information Agent or the Depositary makes any recommendation to you as to whether you should tender or refrain from tendering your Shares or as to the price or prices at which you may choose to tender your Shares. You must make your own decision as to whether to tender your Shares and, if so, how many Shares to tender and the price or prices at which you tender your Shares. In doing so, you should read carefully the information in this Offer to Purchase and the Letter of Transmittal, including our reasons for making the Offer. See Section 2.

Does Nabi intend to repurchase any Shares other than pursuant to the Offer during or after the Offer?

Rule 13e–4(f)(6) under the Exchange Act prohibits us from purchasing any Shares, other than pursuant to the Offer, until at least ten business days have elapsed after the Expiration Date. Accordingly, any additional purchases outside the Offer may not be consummated until at least ten business days have elapsed after the Expiration Date. In addition, the Transaction Agreement contains certain limits on our ability to make additional purchases that would cause us to have closing net cash balance of less than $54 million at the completion of the Transaction. Our Board of Directors has previously authorized the purchase of up to $150 million of the Company’s outstanding Shares, of which $27.8 million is remaining. We do not intend to make any further purchases pursuant to this share repurchase program. See Sections 2, 10 and 16.

 

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What will happen if I do not tender my Shares?

Stockholders who choose not to tender will own a greater percentage ownership of our outstanding Shares following the consummation of the Offer. In addition, stockholders who retain an equity interest in the Company as a result of a partial tender of Shares or proration may also own a greater percentage ownership of our outstanding Shares following the consummation of the Offer. Please note, however, that immediately after the completion of the Transaction, Nabi’s existing stockholders collectively will own approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders collectively will own approximately 74% of the outstanding common stock of the combined company. In addition, we intend, subject to approval by our stockholders, to implement a reverse stock split to become effective immediately prior to the completion of the Transaction as described in more detail in the Preliminary Proxy Statement attached hereto as Annex A. See Section 2.

When and how will Nabi pay for the Shares I tender that are accepted for purchase?

We will pay the Purchase Price, net to the seller in cash, less any applicable withholding taxes and without interest, for the Shares we purchase promptly after the Expiration Date and the acceptance of the Shares for payment. We plan to announce the preliminary results of the Offer, including the Purchase Price and preliminary information about any expected proration, on the business day following the Expiration Date. We do not expect, however, to announce the final results of any proration or the Purchase Price and begin paying for tendered Shares until approximately three business days after the Expiration Date. We will pay for the Shares accepted for purchase by depositing the aggregate Purchase Price with the Depositary after the Expiration Date. The Depositary will act as your agent and will transmit to you the payment for all of your Shares accepted for payment. See Section 5.

What is the recent market price for the Shares?

On June 29, 2012, the last full trading day before we commenced the Offer, the last reported sale price of the Shares on NASDAQ was $1.58 per Share. You are urged to obtain current market quotations for the Shares before deciding whether to tender your Shares. See Section 7.

Will I have to pay brokerage fees and commissions if I tender my Shares?

If you are a holder of record of your Shares and you tender your Shares directly to the Depositary, you will not incur any brokerage fees or commissions. If you hold your Shares through a broker, dealer, commercial bank, trust company or other nominee and your broker tenders Shares on your behalf, your broker may charge you a fee for doing so. We urge you to consult your broker, dealer, commercial bank, trust company or other nominee to determine whether any charges will apply. See Section 5.

What are the United States federal income tax consequences if I tender my Shares?

If you are a U.S. Holder (as defined in Section 12), the receipt of cash for your tendered Shares generally will be treated for United States federal income tax purposes either as (i) a sale or exchange eligible for capital gain or loss treatment or (ii) a dividend. See Section 12. If you are a Non-U.S. Holder (as defined in Section 12), the payment of cash for your tendered Shares may be subject to United States federal income tax withholding. See Section 3.

Will I have to pay stock transfer tax if I tender my Shares?

If you instruct the Depositary in the Letter of Transmittal to make the payment for the Shares to you as the registered holder, you will not incur any domestic stock transfer tax. See Section 5.

 

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Whom do I contact if I have questions about the Offer?

For additional information or assistance, you may contact Morrow & Co., LLC, the Information Agent for the Offer, at the telephone number and address set forth on the back cover of this Offer to Purchase. You may request additional copies of the Offer to Purchase, the Letter of Transmittal and other Offer documents from the Information Agent at the telephone number and address on the back cover of this Offer to Purchase.

 

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CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

This Offer to Purchase and the documents incorporated by reference in this Offer to Purchase may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have generally used the words “may,” “will,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend” and similar expressions in this Offer to Purchase and the documents incorporated by reference in this Offer to Purchase to identify forward-looking statements. We have based these forward-looking statements on our current views with respect to future events and financial performance. Actual results could differ materially from those projected in these forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things:

 

   

the number of Shares tendered and the Purchase Price at which we purchase Shares in the Offer;

 

   

the outcome of legal proceedings, if any, instituted against Nabi and/or others relating to the Offer or the Transaction Agreement (or the Transaction pursuant to the Transaction Agreement);

 

   

diversion of management’s attention from ongoing business concerns;

 

   

the effect of the announcement of the Offer on our business relationships, operating results and business generally;

 

   

the amount of the costs, fees, expenses and charges related to the Offer;

 

   

the actual amount of operating expenses, costs, liabilities, obligations and other variables that may affect the amount and timing of any distributions to stockholders in connection with any liquidation and dissolution of Nabi in the event that the Transaction is not completed;

 

   

competition in the markets in which we operate;

 

   

our ability to raise capital in the future;

 

   

changes in regulation and the regulatory environment;

 

   

uncertainties related to a downturn in general economic conditions or consumer confidence, including changes in conditions of U.S. or international lending, capital and financing markets;

 

   

effects of natural catastrophes, terrorism and other interruptions to our business; and

 

   

the other factors discussed under “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as amended, under “Part II, Item 1A. Risk Factors” of our Quarterly Report on Form 10-Q for the period ended March 31, 2012, and under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in the Preliminary Proxy Statement attached hereto as Annex A and incorporated herein by reference.

You should not put undue reliance on any forward-looking statements. You should understand that many important factors, including those discussed herein or in the documents incorporated herein by reference, could cause our results to differ materially from those expressed or suggested in any forward-looking statement. Except as required by law, we do not undertake any obligation to update or revise these forward-looking statements to reflect new information or events or circumstances that occur after the date of this Offer to Purchase or to reflect the occurrence of unanticipated events or otherwise.

Notwithstanding anything in this Offer to Purchase, the Letter of Transmittal or any document incorporated by reference into this Offer to Purchase, the safe harbor protections of the Private Securities Litigation Reform Act of 1995 do not apply to statements made in connection with a tender offer.

 

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INTRODUCTION

To the Holders of our Shares:

Nabi hereby offers to purchase up to $23,000,000 in value of Shares (or a lower amount if not enough Shares are properly tendered to allow us to purchase $23,000,000 in value of Shares) at a Purchase Price not greater than $1.72 nor less than $1.58 per Share, net to the seller in cash, less any applicable withholding taxes and without interest. We will select the single lowest price (in multiples of $0.02) within the price range for the Offer that will allow us to purchase $23,000,000 in value of Shares at such price (or a lower amount if not enough Shares are properly tendered to allow us to purchase $23,000,000 in value of Shares). All Shares acquired in the Offer will be acquired at the Purchase Price, even if you have selected a purchase price lower than the Purchase Price, but we will not purchase any Shares tendered at a price above the Purchase Price. Our Offer is being made upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal which, as amended or supplemented from time to time, together constitute the Offer.

Only Shares properly tendered at prices at or below the Purchase Price we select, and not properly withdrawn, will be purchased. However, because of the proration provisions described in this Offer to Purchase, all of the Shares tendered at or below the Purchase Price may not be purchased if, based on the Purchase Price, Shares having an aggregate value in excess of $23,000,000 are properly tendered and not properly withdrawn. We will return any Shares (i) that are tendered at prices in excess of the Purchase Price we select and (ii) that we do not purchase because of proration, in each case, promptly following the Expiration Date. See Section 3.

Stockholders must complete the section of the Letter of Transmittal relating to the price at which they are tendering Shares in order to properly tender Shares.

The Offer is not conditioned on any minimum number of Shares being tendered. Our obligation to accept, and pay for, Shares properly tendered and not properly withdrawn pursuant to the Offer is conditioned upon satisfaction or waiver of certain conditions. See Section 6.

OUR BOARD OF DIRECTORS HAS AUTHORIZED US TO MAKE THE OFFER. HOWEVER, NEITHER WE NOR OUR BOARD OF DIRECTORS, THE INFORMATION AGENT OR THE DEPOSITARY MAKES ANY RECOMMENDATION TO YOU AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING YOUR SHARES OR AS TO THE PRICE OR PRICES AT WHICH YOU MAY CHOOSE TO TENDER YOUR SHARES. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO TENDER YOUR SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH YOU WILL TENDER THEM. IN DOING SO, YOU SHOULD READ CAREFULLY THE INFORMATION IN THIS OFFER TO PURCHASE AND IN THE RELATED LETTER OF TRANSMITTAL, INCLUDING THE PURPOSES AND EFFECTS OF THE OFFER. SEE SECTION 2. YOU SHOULD DISCUSS WHETHER TO TENDER YOUR SHARES WITH YOUR BROKER, IF ANY, OR OTHER FINANCIAL OR TAX ADVISOR.

On April 22, 2012, before we commenced the Offer, we entered into the Transaction Agreement, pursuant to which Nabi will acquire all of the outstanding shares of Biota in exchange for shares of Nabi common stock, and Biota will become a wholly-owned subsidiary of Nabi. Immediately after the completion of the Transaction, Nabi’s existing stockholders collectively will own approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders collectively will own approximately 74% of the outstanding common stock of the combined company. Pursuant to the terms of the Transaction Agreement, the completion of the Transaction is conditioned on, among other things, Nabi having a closing net cash balance of no less than $54 million after satisfying outstanding liabilities. Nabi plans to return to its stockholders, before the completion of the Transaction, its remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction after satisfying outstanding liabilities. Such distribution will take the form of the Offer and, for any remaining amounts, through a dividend or other return of capital. After the completion of the Offer but prior to the completion of the Transaction, Nabi plans to declare a dividend or implement a return of capital, as

 

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applicable, to distribute any remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction that is not required to satisfy any outstanding liabilities. Such remaining cash amount is currently expected to be in the range of approximately $2 million to $5 million. The completion of the Offer is not conditioned upon the completion of the Transaction. Furthermore, the completion of the Transaction is not conditioned upon the completion of the Offer. However, we shall have the right to terminate the Offer if the Transaction Agreement is terminated in accordance with its terms. Please see Section 6 below for a description of conditions to the completion of the Offer. In addition, we intend, subject to approval by our stockholders, to implement a reverse stock split to become effective immediately prior to the completion of the Transaction as described in more detail in the Preliminary Proxy Statement attached hereto as Annex A.

After the completion of the Offer, in the event that the Transaction is not completed, either because of the failure of either our or Biota’s stockholders to approve the Transaction, or the failure of another condition to completion of the Transaction, our Board of Directors will consider the liquidation and dissolution of Nabi. If our Board of Directors determines that liquidation and dissolution is advisable, it will approve a plan of liquidation and dissolution and submit it to our stockholders for their approval. If our Board of Directors recommends liquidation and dissolution to the stockholders, a meeting of our stockholders to consider any proposed plan of liquidation and dissolution likely would not be held until approximately three or four months after the termination of the Transaction Agreement. Thereafter, if the plan is approved by stockholders, it will take us no less than three years to complete the dissolution and winding-up process and distribute all remaining assets to our stockholders in accordance with the DGCL.

Following stockholder approval of a plan of liquidation and dissolution and the filing of a certificate of dissolution with the Secretary of State of the State of Delaware but prior to the completion of the dissolution and winding-up process, we likely will make one or more initial or interim liquidating distribution to our stockholders of a majority of our remaining cash assets, which distribution amounts will depend on known, unknown, contingent and pending claims at the time of the distributions. We currently estimate such initial or interim liquidating distributions to be approximately $1.42 to $1.59 per share in the aggregate (assuming we purchase 13,372,093 Shares in the Offer, which is based on the Offer being fully subscribed at the maximum Purchase Price, and no other changes to our currently outstanding number of Shares) or $1.48 to $1.66 per share in the aggregate (assuming we purchase 14,556,962 Shares in the Offer, which is based on the Offer being fully subscribed at the minimum Purchase Price, and no other changes to our currently outstanding number of Shares). The estimated range of the liquidating distributions described in the preceding sentence is based on Nabi having cash of $92.7 million as of June 30, 2012, less approximately $2.5 million of estimated operating expenses until September 30, 2012, less approximately $23.2 million to be used for purchasing Shares in this Offer (including related fees and expenses), and less a reserve of approximately $20 million to $25 million in the aggregate to pay, and make provision for, existing and future contingent and potential claims and liabilities, including severance payments and transaction-related fees and liabilities, expenses related to continuing operations including making required regulatory filings and the establishment of a mechanism for collecting and distributing any future distributions, milestone or royalty payments under existing agreements with respect to NicVAX® (Nicotine Conjugate Vaccine) and Phoslyra® . The estimated reserve amount of approximately $20 million to $25 million in the aggregate includes approximately $5 million to $10 million to be set aside for the satisfaction of future contingent and potential claims and liabilities in accordance with the DGCL. The amount remaining from the $5 million to $10 million reserve, if any, together with any other remaining assets after satisfying Nabi’s remaining, actual, contingent or potential claims and liabilities will be distributed to the stockholders. We currently are unable to predict the precise nature, amount or timing of the liquidating distributions described above. The range of the liquidating distributions and the other amounts referred to in this paragraph are preliminary estimates based on the information currently available to Nabi and are subject to change based on factors currently unknown to Nabi that may affect its remaining cash in the future, such as additional expenditures and/or liabilities. Therefore, the actual amounts of the liquidating distributions may be significantly lower than our current estimates.

 

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The foregoing description of the Transaction, including the Transaction Agreement, is qualified in its entirety by reference to the Preliminary Proxy Statement attached hereto as Annex A, which is incorporated herein by reference and contains, among other things, a copy of the Transaction Agreement and a description of the Transaction and related matters, including the pro forma financial information. See Sections 2 and 10.

In accordance with the rules of the Securities and Exchange Commission (the “SEC”), we may, and we expressly reserve the right to, amend the Offer to purchase up to an additional 2% of the outstanding Shares, without extending the Expiration Date.

If more than $23,000,000 in value of Shares (or such greater value of Shares as we may elect to purchase, subject to applicable law and the limits set forth in the Transaction Agreement) are properly tendered and not properly withdrawn, we will purchase Shares at the Purchase Price from all holders who properly tender Shares at or below the Purchase Price and who do not properly withdraw them before the Expiration Date, on a pro rata basis, with appropriate adjustments to avoid purchases of fractional Shares, until we have acquired $23,000,000 in value of Shares. Therefore, we may not purchase all of the Shares that you tender even if you tender them at or below the Purchase Price.

The Purchase Price will be paid net to the seller in cash, less any applicable withholding taxes and without interest, for all Shares purchased. Tendering stockholders who hold Shares registered in their own name and who tender their Shares directly to the Depositary will not be obligated to pay brokerage commissions, solicitation fees or stock transfer taxes on the purchase of Shares by us in the Offer. Stockholders holding Shares in a brokerage account or otherwise through brokers, dealers, commercial banks, trust companies or other nominees are urged to consult their brokers or such other nominees to determine whether transaction costs may apply if stockholders tender Shares through such brokers or other nominees and not directly to the Depositary. You should consult your broker, dealer, commercial bank, trust company or other nominee to determine whether any charges will apply. See Sections 3 and 12 regarding United States federal income tax consequences of the Offer.

Also, any tendering stockholder or other payee who fails to complete, sign and return to the Depositary the Substitute Form W-9 included with the Letter of Transmittal (or such other Internal Revenue Service (“IRS”) form as may be applicable) may be subject to United States federal income tax backup withholding (at a rate of 28% of the gross proceeds), unless such holder establishes that such holder is within the class of persons that is exempt from backup withholding, such as all corporations and Non-U.S. Holders (as defined in Section 12). See Section 3. Also see Section 12 regarding United States federal income tax consequences of the Offer.

In addition, holders of vested but unexercised stock options outstanding under the 2007 Omnibus Equity and Incentive Plan, the 2004 Stock Plan for Non-Employee Directors, the 2000 Equity Incentive Plan and the 1998 Non-Qualified Stock Option Plan (collectively, the “Stock Option Plans”) may, subject to the terms and conditions of the applicable Stock Option Plan and the applicable award, exercise such options and tender some or all of the Shares issued upon such exercise in accordance with the Company’s policies and procedures for the applicable Stock Option Plan. See Sections 3 and 10 for more information on the Stock Option Plans generally.

Stockholders who are participants in employee benefit plans not affiliated with us that hold Shares may tender some or all of such Shares as provided herein generally, subject to the provisions of such plans. See Section 3.

We will pay all fees and expenses incurred in connection with the Offer by Morrow & Co., LLC, the Information Agent for the Offer, and American Stock Transfer & Trust Company, LLC, the Depositary for the Offer. See Section 15.

As of July 1, 2012, the day before we commenced the Offer, we had 42,876,030 issued and outstanding Shares. At the maximum Purchase Price of $1.72 per Share, we would purchase 13,372,093 Shares if the Offer is fully subscribed, which would represent approximately 31.19% of our outstanding Shares as of July 1, 2012. At the minimum Purchase Price of $1.58 per Share, we would purchase 14,556,962 Shares if the Offer is fully subscribed, which would represent approximately 33.95% of our outstanding Shares as of July 1, 2012.

 

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If any of our stockholders who hold shares in their own name as holders of record or who are “registered holders” as participants in DTC’s system whose names appear on a security position listing tender their shares in full and that tender is accepted in full, the number of our record holders would be reduced.

On June 29, 2012, the last full trading day before we commenced the Offer, the last reported sale price of the Shares on NASDAQ was $1.58. You are urged to obtain current market quotations for the Shares before deciding whether to tender your Shares. See Section 7.

 

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THE OFFER

 

1. Number of Shares; Purchase Price; Proration.

Upon the terms and subject to the conditions of the Offer, we will purchase up to $23,000,000 in value of Shares properly tendered and not properly withdrawn in accordance with Section 4 before the Expiration Date, as defined below, at a Purchase Price not greater than $1.72 and not less than $1.58 per Share, net to the seller in cash, less any applicable withholding taxes and without interest. If, based on the Purchase Price, Shares having an aggregate value of less than $23,000,000 are properly tendered, we will buy all Shares properly tendered and not properly withdrawn (upon the terms and subject to the conditions of the Offer).

The term “Expiration Date” means 12:00 midnight, at the end of the day, New York City time, on Monday, July 30, 2012. We may, in our sole discretion, extend the period of time during which the Offer will remain open. In the event of an extension, the term “Expiration Date” will refer to the latest time and date at which the Offer, as extended by us, will expire. See Section 14 for a description of our right to extend, delay, terminate or amend the Offer.

If the Offer is over-subscribed as described below, Shares properly tendered at or below the Purchase Price and not properly withdrawn will be subject to proration. The proration period and, except as described herein, withdrawal rights expire at the Expiration Date.

In accordance with Instruction 5 to the Letter of Transmittal, stockholders desiring to tender Shares must either:

 

   

specify that they are willing to sell their Shares to us at the price determined in the Offer, or

 

   

specify the price or prices, not greater than $1.72 nor less than $1.58 per Share (in multiples of $0.02), at which they are willing to sell their Shares to us in the Offer.

Promptly following the Expiration Date, we will, upon the terms and subject to the conditions of the Offer, determine a single per Share price that we will pay for Shares properly tendered and not properly withdrawn pursuant to the Offer, taking into account the number of Shares tendered and the prices at which they are tendered. We will select the lowest purchase price specified by tendering stockholders that will allow us to buy $23,000,000 in value of Shares (or a lower amount if not enough Shares are properly tendered to allow us to purchase $23,000,000 in value of Shares). All Shares purchased in the Offer will be purchased at the same Purchase Price. If tendering stockholders wish to maximize the chance that their Shares will be purchased, they should check the box in the section of the Letter of Transmittal captioned “Shares Tendered at a Price Determined Pursuant to the Offer.” Note that this election could result in the tendered Shares being purchased at the minimum price of $1.58 per Share.

Only Shares properly tendered at prices at or below the Purchase Price and not properly withdrawn will be purchased. However, because of the proration provisions described in this Offer to Purchase, all of the Shares tendered at or below the Purchase Price may not be purchased if, based on the Purchase Price, Shares having an aggregate value in excess of $23,000,000 are properly tendered and not properly withdrawn. All Shares tendered and not purchased in the Offer, including Shares tendered at or below the Purchase Price and Shares not purchased because of proration, will be returned to the tendering stockholders at our expense promptly following the Expiration Date.

If we (i) increase the price that may be paid for the Shares above $1.72 per Share or decrease the price that may be paid for the Shares below $1.58 per Share, (ii) increase the maximum number of Shares that we may purchase in the Offer by more than 2% of our outstanding Shares or (iii) decrease the amount of Shares that we may purchase in the Offer, then the Offer must remain open for at least ten business days following the date that notice of the increase or decrease is first published, sent or given in the manner specified in Section 14.

 

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THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. OUR OBLIGATION TO ACCEPT AND PAY FOR SHARES PROPERLY TENDERED PURSUANT TO THE OFFER IS, HOWEVER, SUBJECT TO OTHER CONDITIONS. SEE SECTION 6.

Proration. If more than $23,000,000 in value of Shares (or such greater value of Shares as we may elect to purchase, subject to applicable law and the limits set forth in the Transaction Agreement) are properly tendered and not properly withdrawn, we will purchase Shares at the Purchase Price from all holders who properly tender Shares at or below the Purchase Price and who do not properly withdraw them before the Expiration Date, on a pro rata basis, with appropriate adjustments to avoid purchases of fractional Shares, until we have acquired $23,000,000 in value of Shares. Therefore, we may not purchase all of the Shares that you tender even if you tender them at or below the Purchase Price. As we noted above, we may elect to purchase more than $23,000,000 in value of Shares in the Offer, subject to applicable law and the limits set forth in the Transaction Agreement. If we do so, the preceding provisions will apply to the greater value.

If proration of tendered Shares is required, we will determine the proration factor promptly following the Expiration Date. Proration for each stockholder tendering Shares will be based on the ratio of the number of Shares properly tendered and not properly withdrawn by the stockholder to the total number of Shares properly tendered and not properly withdrawn by all stockholders. Because of the difficulty in determining the number of Shares properly tendered and not properly withdrawn, we do not expect that we will be able to announce the final proration factor or commence payment for any Shares purchased pursuant to the Offer until approximately three business days after the Expiration Date. The preliminary results of any proration will be announced by press release promptly after the Expiration Date. Stockholders may obtain preliminary proration information from the Information Agent and also may be able to obtain the information from their brokers.

As described in Section 12, the number of Shares that we will purchase from a stockholder pursuant to the Offer may affect the United States federal income tax consequences to the stockholder of the purchase and, therefore, may be relevant to a stockholder’s decision whether or not to tender Shares. The Letter of Transmittal affords each stockholder who tenders Shares registered in such stockholder’s name directly to the Depositary the opportunity to designate the order of priority in which Shares tendered are to be purchased in the event of proration. See Section 6.

This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of the Shares and will be furnished to brokers, dealers, commercial banks, trust companies or other nominee stockholders and similar persons whose names, or the names of whose nominees, appear on our stockholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing for subsequent transmittal to beneficial owners of Shares.

 

2. Purpose of the Offer; Certain Effects of the Offer.

Purpose of the Offer.

Nabi plans to return to its stockholders, before the completion of the Transaction, its remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction after satisfying outstanding liabilities. Such distribution will take the form of the Offer and, for any remaining amounts, through a dividend or other return of capital.

We believe that the tender offer set forth in this Offer to Purchase represents an efficient mechanism to provide our stockholders with the opportunity to tender all or a portion of their Shares and thereby receive a return of some or all of their investment if they so elect. The Offer provides stockholders (particularly those who, because of the size of their shareholdings, might not be able to sell their Shares without potential disruption to the trading of the Shares on NASDAQ) with an opportunity to obtain liquidity with respect to all or a portion of their Shares without potential disruption to the Share price. In addition, if we complete the Offer, stockholders who do not participate in the Offer will automatically increase their relative percentage ownership interest in the

 

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Company at no additional cost to them. Please note, however, that immediately after the completion of the Transaction, Nabi’s existing stockholders collectively will own approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders collectively will own approximately 74% of the outstanding common stock of the combined company. In addition, we intend, subject to approval by our stockholders, to implement a reverse stock split to become effective immediately prior to the completion of the Transaction as described in more detail in the Preliminary Proxy Statement attached hereto as Annex A.

The Offer also provides our stockholders with an efficient way to sell their shares without incurring broker’s fees or commissions associated with open market sales.

In determining to proceed with the Offer, our management and Board of Directors evaluated the Company’s operations, financial condition, capital needs and expectations for the period prior to the anticipated completion of the Transaction and believe that the Offer, is a prudent use of our financial resources. In addition, we expect that our current cash balances will be sufficient to satisfy our obligations and liabilities prior to the completion of the Transaction.

In addition to those factors described above, our Board of Directors determined to conduct a “modified Dutch auction” tender offer at a price range of $1.58 to $1.72 per Share for the Shares after considering, among other things, recent stock trading ranges and volumes for the Shares and liquidity opportunities available to our stockholders.

On April 22, 2012, before we commenced the Offer, we entered into the Transaction Agreement, pursuant to which Nabi will acquire all of the outstanding shares of Biota in exchange for shares of Nabi common stock, and Biota will become a wholly-owned subsidiary of Nabi. Immediately after the completion of the Transaction, Nabi’s existing stockholders collectively will own approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders collectively will own approximately 74% of the outstanding common stock of the combined company. Pursuant to the terms of the Transaction Agreement, the completion of the Transaction is conditioned on, among other things, Nabi having a closing net cash balance of no less than $54 million after satisfying outstanding liabilities. Nabi plans to return to its stockholders, before the completion of the Transaction, its remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction after satisfying outstanding liabilities. Such distribution will take the form of the Offer and, for any remaining amounts, through a dividend or other return of capital. After the completion of the Offer but prior to the completion of the Transaction, Nabi plans to declare a dividend or implement a return of capital, as applicable, to distribute any remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction that is not required to satisfy any outstanding liabilities. Such remaining cash amount is currently expected to be in the range of approximately $2 million to $5 million. The completion of the Offer is not conditioned upon the completion of the Transaction. Furthermore, the completion of the Transaction is not conditioned upon the completion of the Offer. However, we shall have the right to terminate the Offer if the Transaction Agreement is terminated in accordance with its terms. Please see Section 6 below for a description of conditions to the completion of the Offer. In addition, we intend, subject to approval by our stockholders, to implement a reverse stock split to become effective immediately prior to the completion of the Transaction as described in more detail in the Preliminary Proxy Statement attached hereto as Annex A. The foregoing description of the Transaction, including the Transaction Agreement, is qualified in its entirety by reference to the Preliminary Proxy Statement attached hereto as Annex A, which is incorporated herein by reference and contains, among other things, a copy of the Transaction Agreement and a description of the Transaction and related matters, including the pro forma financial information.

After the completion of the Offer, in the event that the Transaction is not completed, either because of the failure of either our or Biota’s stockholders to approve the Transaction, or the failure of another condition to completion of the Transaction, our Board of Directors will consider the liquidation and dissolution of Nabi. If our Board of Directors determines that liquidation and dissolution is advisable, it will approve a plan of liquidation and dissolution and submit it to our stockholders for their approval. If our Board of Directors recommends

 

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liquidation and dissolution to the stockholders, a meeting of our stockholders to consider any proposed plan of liquidation and dissolution likely would not be held until approximately three or four months after the termination of the Transaction Agreement. Thereafter, if the plan is approved by stockholders, it will take us no less than three years to complete the dissolution and winding-up process and distribute all remaining assets to our stockholders in accordance with the DGCL.

Following stockholder approval of a plan of liquidation and dissolution and the filing of a certificate of dissolution with the Secretary of State of the State of Delaware but prior to the completion of the dissolution and winding-up process, we likely will make one or more initial or interim liquidating distribution to our stockholders of a majority of our remaining cash assets, which distribution amounts will depend on known, unknown, contingent and pending claims at the time of the distributions. We currently estimate such initial or interim liquidating distributions to be approximately $1.42 to $1.59 per share in the aggregate (assuming we purchase 13,372,093 Shares in the Offer, which is based on the Offer being fully subscribed at the maximum Purchase Price, and no other changes to our currently outstanding number of Shares) or $1.48 to $1.66 per share in the aggregate (assuming we purchase 14,556,962 Shares in the Offer, which is based on the Offer being fully subscribed at the minimum Purchase Price, and no other changes to our currently outstanding number of Shares). The estimated range of the liquidating distributions described in the preceding sentence is based on Nabi having cash of $92.7 million as of June 30, 2012, less approximately $2.5 million of estimated operating expenses until September 30, 2012, less approximately $23.2 million to be used for purchasing Shares in this Offer (including related fees and expenses), and less a reserve of approximately $20 million to $25 million in the aggregate to pay, and make provision for, existing and future contingent and potential claims and liabilities, including severance payments and transaction-related fees and liabilities, expenses related to continuing operations including making required regulatory filings and the establishment of a mechanism for collecting and distributing any future distributions, milestone or royalty payments under existing agreements with respect to NicVAX® (Nicotine Conjugate Vaccine) and Phoslyra® . The estimated reserve amount of approximately $20 million to $25 million in the aggregate includes approximately $5 million to $10 million to be set aside for the satisfaction of future contingent and potential claims and liabilities in accordance with the DGCL. The amount remaining from the $5 million to $10 million reserve, if any, together with any other remaining assets, after satisfying Nabi’s remaining, actual, contingent or potential claims and liabilities will be distributed to the stockholders. We currently are unable to predict the precise nature, amount or timing of the liquidating distributions described above. The range of the liquidating distributions and the other amounts referred to in this paragraph are preliminary estimates based on the information currently available to Nabi and are subject to change based on factors currently unknown to Nabi that may affect its remaining cash in the future, such as additional expenditures and/or liabilities. Therefore, the actual amounts of the liquidating distributions may be significantly lower than our current estimates.

OUR BOARD OF DIRECTORS HAS AUTHORIZED US TO MAKE THE OFFER. HOWEVER, NEITHER WE NOR OUR BOARD OF DIRECTORS NOR THE INFORMATION AGENT OR DEPOSITARY MAKES ANY RECOMMENDATION TO YOU AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING YOUR SHARES OR AS TO THE PRICE OR PRICES AT WHICH YOU MAY CHOOSE TO TENDER THEM. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO TENDER YOUR SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH YOU WILL TENDER THEM. IN DOING SO, YOU SHOULD READ CAREFULLY THE INFORMATION IN THIS OFFER TO PURCHASE AND IN THE RELATED LETTER OF TRANSMITTAL, INCLUDING THE PURPOSES AND EFFECTS OF THE OFFER. SEE SECTION 2. YOU SHOULD DISCUSS WHETHER TO TENDER YOUR SHARES WITH YOUR BROKER, IF ANY, OR OTHER FINANCIAL OR TAX ADVISOR.

Potential Benefits of the Offer. We believe the Offer will provide benefits to us and our stockholders, including the following:

 

   

we believe the Offer will provide our stockholders with an opportunity to obtain liquidity with respect to all or a portion of their Shares, without potential disruption to the Share price and the usual transaction costs associated with open market sales; and

 

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upon the completion of the Offer, non-tendering stockholders will realize a proportionate increase in their relative ownership interest in Nabi and an opportunity to benefit from the enhanced earnings per Share that we expect to result from the Offer. Please note, however, that immediately after the completion of the Transaction, Nabi’s existing stockholders collectively will own approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders collectively will own approximately 74% of the outstanding common stock of the combined company. In addition, we intend, subject to approval by our stockholders, to implement a reverse stock split to become effective immediately prior to the completion of the Transaction as described in more detail in the Preliminary Proxy Statement attached hereto as Annex A.

Potential Risks and Disadvantages of the Offer. The Offer also presents some potential risks and disadvantages to us and our continuing stockholders, including the following:

 

   

the Offer will reduce (at least until the Transaction is completed) our “public float” (the number of Shares owned by non-affiliate stockholders and available for trading in the securities markets) , which could result in lower stock prices or reduced liquidity in the trading market for our Shares following completion of the Offer;

 

   

the Offer will reduce the remaining cash available to be distributed to the continuing stockholders in the form of a dividend or return of capital prior to the completion of the Transaction, or if the Transaction is not completed, then at a future time in connection with a potential liquidation and dissolution of Nabi or otherwise; and

 

   

Shares that are tendered and accepted in the Offer cannot be voted at the special meeting of Nabi’s stockholders described in the Preliminary Proxy Statement attached hereto as Annex A.

Certain Effects of the Offer. As of July 1, 2012, the day before we commenced the Offer, we had 42,877,227 issued and outstanding Shares. At the maximum Purchase Price of $1.72 per Share, we would purchase 13,372,093 Shares if the Offer is fully subscribed, which would represent approximately 31.19% of our outstanding Shares as of July 1, 2012 . At the minimum Purchase Price of $1.58 per Share, we would purchase 14,556,962 Shares if the Offer is fully subscribed, which would represent approximately 33.95% of our outstanding Shares as of July 1, 2012.

If the Offer is fully subscribed at the maximum Purchase Price and we do not exercise our right to purchase any additional Shares, we will have approximately 29,503,940 Shares outstanding following the purchase of Shares tendered in the Offer. If the Offer is fully subscribed at the minimum Purchase Price and we do not exercise our right to purchase any additional Shares, we will have approximately 28,319,070 Shares outstanding following the purchase of Shares tendered in the Offer.

Stockholders may be able to sell non-tendered Shares in the future on NASDAQ or otherwise, at a net price higher or lower than the purchase price in the Offer. We can give no assurance, however, as to the price at which a stockholder may be able to sell such Shares in the future.

Stockholders who do not tender their Shares pursuant to the Offer and stockholders who otherwise retain an equity interest in the Company as a result of a partial tender of Shares or proration will continue to be owners of Nabi and will realize a proportionate increase in their relative equity interest in the Company and thus in the Company’s future earnings and assets at no additional cost to them, and will bear the attendant risks and rewards associated with owning the equity securities of Nabi. We can give no assurance, however, that we will not issue additional Shares or equity interests in the future in addition to the Shares to be issued in the Transaction. Furthermore, immediately after the completion of the Transaction, Nabi’s existing stockholders collectively will own approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders collectively will own approximately 74% of the outstanding common stock of the combined company. Stockholders may be able to sell non-tendered Shares in the future, on NASDAQ or otherwise, at a net price which may be significantly higher or lower than the Purchase Price in the Offer. We can give no assurance,

 

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however, as to the price at which a stockholder may be able to sell his or her Shares in the future, which may be higher or lower than the Purchase Price paid by us in the Offer. In addition, we intend, subject to approval by our stockholders, to implement a reverse stock split to become effective immediately prior to the completion of the Transaction as described in more detail in the Preliminary Proxy Statement attached hereto as Annex A.

The accounting for our purchase of Shares in the Offer will result in a reduction of our stockholders’ equity in an amount equal to the aggregate purchase price of the Shares we purchase.

Our book value per share is expected to decrease as a result of the Offer.

Shares we acquire pursuant to the Offer will become authorized and unissued Shares and will be available for us to issue without further stockholder action (except as required by applicable law or the listing standards of NASDAQ) for purposes including, without limitation, the Transaction, acquisitions, raising additional capital and the satisfaction of obligations under existing or future employee benefit or compensation programs or stock plans or compensation programs for directors.

The Offer also provides certain stockholders with an efficient way to sell their Shares without incurring brokers’ fees or commissions. Where Shares are tendered by the registered owner of those Shares directly to the Depositary, the sale of those Shares in the Offer will permit the seller to avoid the usual transaction costs associated with open market transactions.

Other Share Repurchases. Rule 13e-4(f)(6) of the Exchange Act prohibits us and our affiliates from purchasing any Shares, or other securities convertible into Shares, other than pursuant to the Offer, until at least ten business days following the Expiration Date, except pursuant to certain limited exemptions provided in Rule 14e-5 of the Exchange Act. In addition, the Transaction Agreement contains certain limits on our ability to make additional purchases that would cause us to have closing net cash balance of less than $54 million at the completion of the Transaction.

Our Board of Directors has previously authorized the purchase of up to $150 million of the Company’s outstanding Shares, of which $27.8 million is remaining. We do not intend to make any further purchases pursuant to this share repurchase program.

Whether or to what extent we choose to make additional purchases will depend upon, among other things, the limitations set forth in the Transaction Agreement, market conditions, our capital needs, our business and financial condition, and alternative investment opportunities available to us, and there is no assurance that we will conclude such purchases for all of the authorized amount. These purchases may be made from time to time at the discretion of our management on the open market or through privately negotiated transactions, and may be on the same terms or on terms and prices that are more or less favorable to stockholders than the terms of this Offer.

Other Plans. As discussed above, we entered into the Transaction Agreement on April 22, 2012. Additional information regarding the Transaction Agreement, the Transaction and related matters (including pro forma financial information) are set forth in the Preliminary Proxy Statement attached hereto Annex A, which is incorporated herein by reference. You are urged to read the Preliminary Proxy Statement carefully and in its entirety. Except as otherwise disclosed in this Offer to Purchase (including the Preliminary Proxy Statement), we currently have no plans, proposals or negotiations underway that relate to or would result in:

 

   

any extraordinary transaction, such as a merger, reorganization or liquidation, involving us or any of our subsidiaries;

 

   

any purchase, sale or transfer of a material amount of our assets or any assets of our subsidiaries;

 

   

any change in our present Board of Directors or management, including any plans or proposals to change the number or the term of directors (although we may fill vacancies arising on the Board of Directors) or to change any material term of the employment arrangements of any executive officer;

 

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any material change in our present dividend rate or policy or our capitalization or our indebtedness;

 

   

any class of our equity securities ceasing to be authorized to be quoted on NASDAQ;

 

   

any material change in our corporate structure or business;

 

   

any class of our equity securities becoming eligible for termination of registration under Section 12(g)(4) of the Exchange Act;

 

   

the suspension of our obligation to file reports under Section 15 of the Exchange Act;

 

   

the acquisition or disposition by any person of our securities, other than pursuant to our share repurchase program as described above and the grant of restricted stock, restricted stock units or stock options to employees in the ordinary course of business; or

 

   

any changes in our articles of incorporation, bylaws or other governing instruments or other actions that could impede the acquisition of control of the Company.

Notwithstanding the foregoing, as part of our long-term corporate goal of maximizing stockholder value, we have regularly considered alternatives to enhance stockholder value, including open market repurchases of Shares, strategic acquisitions, divestitures and business combinations, and we intend to continue to consider alternatives to enhance stockholder value. Except as otherwise disclosed in this Offer to Purchase (including the Preliminary Proxy Statement), as of the date hereof, no agreements, understandings or decisions have been reached with respect to, and there can be no assurance that we will decide to undertake, any such alternatives.

 

3. Procedures for Tendering Shares.

Proper Tender of Shares. For Shares to be tendered properly pursuant to the Offer the certificates for such Shares (or confirmation of receipt of such Shares pursuant to the procedure for book-entry transfer set forth below), together with a properly completed and duly executed Letter of Transmittal, including any required signature guarantees, or an “Agent’s Message” (as defined below), and any other documents required by the Letter of Transmittal, must be received before 12:00 midnight, at the end of the day, New York City time, on Monday, July 30, 2012 by the Depositary at its address set forth on the back cover of this Offer to Purchase.

In accordance with Instruction 5 to the Letter of Transmittal, each stockholder desiring to tender Shares in the Offer must either (a) check the box in the section of the Letter of Transmittal captioned “Shares Tendered at a Price Determined Pursuant to the Offer,” in which case you will be deemed to have tendered your Shares at the minimum price of $1.58 per Share (YOU SHOULD UNDERSTAND THAT THIS ELECTION MAY LOWER THE PURCHASE PRICE PAID FOR ALL PURCHASED SHARES IN THE OFFER AND COULD RESULT IN THE TENDERED SHARES BEING PURCHASED AT THE MINIMUM PRICE OF $1.58 PER SHARE) or (b) check one of the boxes in the section of the Letter of Transmittal captioned “Shares Tendered at a Price Determined by You,” indicating the price at which Shares are being tendered. A tender of Shares will be proper if, and only if, one of these boxes is checked on the Letter of Transmittal.

If tendering stockholders wish to maximize the chance that their Shares will be purchased, they should check the box in the section on the Letter of Transmittal captioned “Shares Tendered at a Price Determined Pursuant to the Offer.” Note that this election could result in the tendered Shares being purchased at the minimum price of $1.58 per Share. 

If tendering stockholders wish to indicate a specific price (in multiples of $0.02) at which their Shares are being tendered, they must check a box under the section captioned “Shares Tendered at a Price Determined by You.” Tendering stockholders should be aware that this election could mean that none of their Shares will be purchased if they check a box other than the box representing the lowest price. A stockholder who wishes to tender Shares at more than one price must complete separate Letters of Transmittal for each price at which Shares are being tendered. The same Shares cannot be tendered (unless previously properly withdrawn in

 

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accordance with the terms of the Offer) at more than one price. Separate notices of withdrawal (described in Section 4) are not required for each Letter of Transmittal unless each Letter of Transmittal tenders Shares at different prices; however, absent a notice of withdrawal, subsequent Letters of Transmittal do not revoke prior Letters of Transmittal. Stockholders may contact the Depositary for additional instructions.

Stockholders holding their Shares in a brokerage account or otherwise through a broker, dealer, commercial bank, trust company or other nominee, must contact their brokers or such other nominee in order to tender their Shares. It is likely that the nominee has established an earlier deadline for you to act to instruct the nominee to accept the Offer on your behalf. Stockholders who hold Shares through nominee stockholders are urged to consult their nominees to determine whether transaction costs may apply if stockholders tender Shares through the nominees and not directly to the Depositary.

The proper tender of Shares by you through one of the procedures described in this Section 3 will constitute a binding agreement between you and us on the terms of, and subject to the conditions to, the Offer.

STOCKHOLDERS SHOULD CONSULT THEIR INVESTMENT AND TAX ADVISORS WITH RESPECT TO THE EFFECT OF PRORATION OF THE OFFER. See Section 12.

Signature Guarantees and Method of Delivery. No signature guarantee is required if:

(i) the Letter of Transmittal is signed by the registered holder of the Shares (which term, for purposes of this Section 3, will include any participant in DTC whose name appears on a security position listing as the owner of the Shares) tendered and the holder has not completed the section captioned “Special Issuance Instructions” on the Letter of Transmittal; or

(ii) Shares are tendered for the account of a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program or an “eligible guarantor institution,” as the term is defined in Rule 17Ad–15 under the Exchange Act (each of the foregoing constituting an “Eligible Institution”).

A “registered holder” of tendered Shares will include any participant in DTC’s system whose name appears on a security position listing as the owner of those Shares, and an “eligible institution” is a “financial institution,” which term includes most commercial banks, savings and loan associations and brokerage houses, that is a participant in any of the following: (i) the Securities Transfer Agents Medallion Program; (ii) The New York Stock Exchange, Inc. Medallion Signature Program; or (iii) the Stock Exchange Medallion Program.

Except as described above, all signatures on any Letter of Transmittal for Shares tendered thereby must be guaranteed by an eligible institution. See Instructions 6 and 8 to the Letter of Transmittal. If the certificates for Shares are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made or certificates for Shares not tendered or not accepted for payment are to be returned to a person other than the registered holder of the certificates surrendered, then the tendered certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holders or owners appear on the certificates, with the signatures on the certificates or stock powers guaranteed by an eligible institution. See Instructions 6 and 8 to the Letter of Transmittal.

If a book-entry account system is registered in the name of a person other than the person executing a Letter of Transmittal, or if payment is to be made, or Shares not purchased or tendered are to be returned, to a person other than the registered holder, then the book-entry account system must be endorsed or accompanied by an appropriate stock power, signed in either case exactly as the name of the registered holder appears on the book-entry account system, with the signature guaranteed by an Eligible Institution.

In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of a properly completed and duly executed Letter of Transmittal, including any required signature guarantees, or an Agent’s Message (as defined below) in the case of a book-entry transfer, and any other documents required by the Letter of Transmittal.

 

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Stockholders also can specify the order in which we will purchase the specified portions in the event that, as a result of the proration provisions or otherwise, we purchase some but not all of the tendered Shares pursuant to the Offer. In the event the stockholder does not designate the order and fewer than all Shares are purchased due to proration, the Depositary will select the order of Shares purchased.

The method of delivery of all documents, including the Letter of Transmittal and any other required documents, including through DTC, is at the election and risk of the tendering stockholder. Shares will be deemed delivered only when actually received by the Depositary (including, in the case of a book-entry transfer, by book-entry confirmation). If delivery is by mail, then registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.

All deliveries in connection with the Offer, including a Letter of Transmittal and certificates for Shares, must be made to the Depositary and not to us, the Information Agent or DTC. ANY DOCUMENTS DELIVERED TO US, THE INFORMATION AGENT OR DTC WILL NOT BE FORWARDED TO THE DEPOSITARY AND WILL NOT CONSTITUTE PROPER DELIVERY TO THE DEPOSITARY.

Book-Entry Delivery. For purposes of the Offer, the Depositary will establish an account with respect to the Shares for purposes of the Offer at DTC within two business days after the date of this Offer to Purchase, and any financial institution that is a participant in DTC’s system may make book-entry delivery of the Shares by causing DTC to transfer Shares into the Depositary’s account in accordance with DTC’s procedures for transfer. Although delivery of Shares may be effected through a book-entry transfer into the Depositary’s account at DTC, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, or an Agent’s Message, and any other required documents must be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase before the Expiration Date.

The term “Agent’s Message” means a message transmitted by DTC to, and received by, the Depositary and forming a part of a book-entry confirmation, which states that DTC has received an express acknowledgement from the DTC participant tendering Shares that such DTC participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Nabi may enforce such agreement against such DTC participant.

Stock Option Plans; Stock Awards. Holders of vested but unexercised stock options may exercise such options in accordance with the terms of the Company’s policies and procedures for the applicable Stock Option Plan and tender the Shares received upon such exercise in accordance with the Offer. See “Proper Tender of Shares” above. Holders of vested but unexercised stock options should evaluate this Offer to Purchase carefully to determine if participation would be advantageous to them, based on their stock option exercise prices, the date of their stock option grants, the years left to exercise their options, the range of tender prices and the provisions for pro rata purchases by us described in Section 1. We encourage those holders to discuss the Offer with their broker, if any, or tax or financial advisor. Holders of unvested stock options or unvested stock awards may not tender Shares or Shares represented by such interests unless they are fully vested and, in the case of vested stock options, exercised in accordance with the Company’s policies and procedures for the applicable Stock Option Plan.

Return of Unpurchased Shares. If any tendered Shares are not purchased or are properly withdrawn, or if less than all Shares evidenced by a stockholder’s book-entry account are tendered, the Shares not purchased will be credited to the appropriate account maintained by the tendering stockholder at DTC, in each case without expense to the stockholder. In the case of Shares in certificate form, the Depositary will return certificates as promptly as practicable after the expiration or termination of the Offer or the proper withdrawal of the Shares as applicable.

United States Federal Income Tax Withholding and Backup Withholding. Under the United States federal income tax backup withholding rules, 28% of the gross proceeds payable to a tendering U.S. Holder (as defined

 

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in Section 12) or other payee pursuant to the Offer must be withheld and remitted to the United States Treasury, unless the U.S. Holder or other payee provides his or her correct taxpayer identification number (employer identification number or social security number) to the Depositary, certifies as to no loss of exemption from backup withholding and complies with applicable requirements of the backup withholding rules, or such U.S. Holder is otherwise exempt from backup withholding. Therefore, unless an exemption exists and is proven in a manner satisfactory to the Depositary, each tendering U.S. Holder should complete and sign the Substitute Form W-9 included as part of the Letter of Transmittal so as to provide the information and certification necessary to avoid backup withholding. Certain U.S. Holders (including, among others, all corporations) are not subject to these backup withholding requirements. In addition, in order for a Non-U.S. Holder (as defined in Section 12) to avoid backup withholding, the Non-U.S. Holder must submit a statement (generally, an IRS Form W-8BEN or W-8ECI), signed under penalties of perjury, attesting to that individual’s exempt status. Such statements can be obtained from the Depositary. See “Substitute Form W-9” in the Letter of Transmittal.

ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL (OR SUCH OTHER IRS FORM AS MAY BE APPLICABLE) MAY BE SUBJECT TO UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING OF 28% OF THE GROSS PROCEEDS PAID TO SUCH STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE TENDER OFFER.

Even if a Non-U.S. Holder (as defined in Section 12) has provided the required certification to avoid backup withholding, gross proceeds payable pursuant to the Offer to the Non-U.S. Holder or his or her agent will be subject to withholding of United States federal income tax at a rate of 30%, unless we determine that a reduced rate of withholding is applicable pursuant to a tax treaty or that an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of the Non-U.S. Holder’s trade or business within the United States. A Non-U.S. Holder may be eligible to file for a refund of such tax or a portion of such tax withheld if such stockholder meets the “complete redemption,” “substantially disproportionate” or “not essentially equivalent to a dividend” tests described in Section 12 or if such stockholder is entitled to a reduced rate of withholding pursuant to a tax treaty and we withheld at a higher rate. In order to obtain a reduced rate of withholding under a tax treaty, a Non-U.S. Holder must deliver to the Depositary before the payment a properly completed and executed IRS Form W-8BEN claiming such an exemption or reduction. Such forms can be obtained from the Depositary. In order to claim an exemption from withholding on the grounds that gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the United States, a Non-U.S. Holder must deliver to the Depositary a properly executed IRS Form W-8ECI claiming such exemption. Such forms can be obtained from the Depositary. See “Substitute Form W-9” in the Letter of Transmittal. Backup withholding generally will not apply to amounts subject to the 30% or a treaty-reduced rate of withholding. Non-U.S. Holders are urged to consult their own tax advisors regarding the application of United States federal income tax withholding, including eligibility for a withholding tax reduction or exemption and the refund procedure.

Determination of Validity; Rejection of Shares; Waiver of Defects; No Obligation to Give Notice of Defects. All questions as to the number of Shares to be accepted, the Purchase Price to be paid for Shares to be accepted and the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by us, in our sole discretion, and our determination will be final and binding on all persons participating in the Offer, subject to such Offer participants disputing such determination in a court of competent jurisdiction. We reserve the absolute right prior to the Expiration Date to reject any or all tenders of any Shares that we determine are not in proper form or the acceptance for payment of or payment for which may, in the opinion of our counsel, be unlawful. We also reserve the absolute right, subject to applicable law, to waive any of the conditions of the Offer prior to the Expiration Date with respect to all tendered Shares and our interpretation of the terms of the Offer will be final and binding on all persons participating in the Offer, subject to such Offer participants disputing such determination in a court of competent jurisdiction. We also reserve the absolute right to waive any defect or irregularity in any tender with respect to any particular Shares or any particular stockholder. No tender of Shares will be deemed to have been properly made until all defects or

 

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irregularities have been cured by the tendering stockholder or waived by us. We will not be liable for failure to waive any condition of the Offer, or any defect or irregularity in any tender of Shares. None of us, the Depositary, the Information Agent or any other person will be obligated to give notice of any defects or irregularities in tenders, nor will any such person incur any liability for failure to give any notice. Our interpretations of the terms of and conditions to the Offer, including the Letter of Transmittal and the instructions thereto, will be final and binding on all persons participating in the Offer, subject to such Offer participants disputing such determination in a court of competent jurisdiction.

Tendering Stockholder’s Representation and Warranty; Acceptance by Nabi Constitutes an Agreement. A tender of Shares pursuant to any of the procedures described above will constitute the tendering stockholder’s acceptance of the terms and conditions of the Offer, as well as the tendering stockholder’s representation and warranty to us that (i) the stockholder has a “net long position,” within the meaning of Rule 14e-4 promulgated by the SEC under the Exchange Act, in the Shares or equivalent securities at least equal to the Shares being tendered, and (ii) the tender of Shares complies with Rule 14e–4. It is a violation of Rule 14e–4 for a person, directly or indirectly, to tender Shares for that person’s own account unless, at the time of tender and at the end of the proration period or period during which Shares are accepted by lot (including any extensions thereof), the person so tendering (i) has a net long position equal to or greater than the amount of (a) Shares tendered or (b) other securities convertible into or exchangeable or exercisable for the Shares tendered and will acquire the Shares for tender by conversion, exchange or exercise and (ii) will deliver or cause to be delivered the Shares in accordance with the terms of the Offer. Rule 14e–4 provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. Our acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and us upon the terms and conditions of the Offer.

A tender of Shares made pursuant to any method of delivery set forth herein will also constitute a representation and warranty to us that the tendering stockholder has full power and authority to tender, sell, assign and transfer the Shares tendered, and that, when the same are accepted for purchase by us, we will acquire good, marketable and unencumbered title thereto, free and clear of all security interests, liens, restrictions, claims, encumbrances, conditional sales agreements and other obligations relating to the sale or transfer of the Shares, and the same will not be subject to any adverse claim or right. Any such tendering stockholder will, on request by the Depositary or us, execute and deliver any additional documents deemed by the Depositary or us to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered, all in accordance with the terms of the Offer.

A properly completed Letter of Transmittal and any other documents required by the Letter of Transmittal must be delivered to the Depositary and not to us or the Information Agent. All authority conferred or agreed to be conferred by delivery of the Letter of Transmittal shall be binding on the successors, assigns, heirs, personal representatives, executors, administrators and other legal representatives of the tendering stockholder and shall not be affected by, and shall survive, the death or incapacity of such tendering stockholder.

Lost Certificates. If the share certificates which a registered holder wants to surrender have been lost, destroyed or stolen, the stockholder should follow the instructions set forth in the Letter of Transmittal. See Instruction 13 of the Letter of Transmittal.

WE WILL DECIDE, IN OUR REASONABLE DISCRETION, ALL QUESTIONS AS TO THE NUMBER OF SHARES TO BE ACCEPTED, THE PRICE TO BE PAID FOR SHARES TO BE ACCEPTED AND THE VALIDITY, FORM, ELIGIBILITY (INCLUDING TIME OF RECEIPT) AND ACCEPTANCE FOR PAYMENT OF ANY TENDER OF SHARES, AND EACH SUCH DECISION WILL BE FINAL AND BINDING ON ALL PERSONS PARTICIPATING IN THE OFFER, SUBJECT TO SUCH OFFER PARTICIPANTS DISPUTING SUCH DETERMINATION IN A COURT OF COMPETENT JURISDICTION.

 

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CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL, OR AN AGENT’S MESSAGE, AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL, MUST BE DELIVERED TO THE DEPOSITARY AND NOT TO US OR THE INFORMATION AGENT. ANY SUCH DOCUMENTS DELIVERED TO US OR THE INFORMATION AGENT WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT BE DEEMED TO BE PROPERLY TENDERED.

 

4. Withdrawal Rights.

Shares tendered pursuant to the Offer may be withdrawn at any time before the Expiration Date. In addition, unless we have already accepted your tendered Shares for payment, you may withdraw your tendered Shares at any time after 11:59 p.m., New York City time, on August 27, 2012. Except as otherwise provided in this Section 4, tenders of Shares pursuant to the Offer are irrevocable.

If we extend the period of time during which the Offer is open, are delayed in accepting for payment or paying for Shares or are unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to our rights under the Offer, the Depositary may, on our behalf, retain all Shares tendered, and such Shares may not be withdrawn except as otherwise provided in this Section 4, subject to Rule 13e–4(f)(5) under the Exchange Act, which provides that the issuer making the Offer shall either pay the consideration offered, or return the tendered securities, promptly after the termination or withdrawal of the Offer.

For a withdrawal to be effective, a notice of withdrawal must be in writing, must be received in a timely manner by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of the Shares to be withdrawn, if different from the name of the person who tendered the Shares.

A stockholder who has tendered Shares at more than one price must complete a separate notice of withdrawal for Shares tendered at each price, so long as the information specified above is included. If Shares have been tendered pursuant to the procedure for book-entry transfer described in Section 3, the notice of withdrawal also must specify the name and the number of the account at DTC to be credited with the withdrawn Shares and must otherwise comply with DTC’s procedures.

All questions as to the form and validity, including the time of receipt, of any notice of withdrawal will be determined by us, in our sole discretion, which determination will be final and binding on all persons participating in the Offer, subject to such Offer participants disputing such determination in a court of competent jurisdiction. We also reserve the absolute right to waive any defect or irregularity in the withdrawal of Shares by any stockholder. However, if we waive any defect or irregularity in any withdrawal with respect to any stockholder, we also waive such defect or irregularity with respect to all stockholders. None of us, the Depositary, the Information Agent or any other person will be obligated to give notice of any defects or irregularities in any notice of withdrawal, nor will any such person incur liability for failure to give any notice.

Withdrawals may not be rescinded, and any Shares properly withdrawn will be deemed not properly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered before the Expiration Date by again following one of the procedures described in Section 3.

 

5. Purchase of Shares and Payment of Purchase Price.

Upon the terms and subject to the conditions of the Offer, promptly following the Expiration Date, we (i) will determine which stockholders tendered Shares at or below the Purchase Price and (ii) will accept for payment and pay for (and thereby purchase) up to $23,000,000 in value of Shares (or such greater value of Shares as we may elect to purchase, subject to applicable law and the limits set forth in the Transaction Agreement) which are properly tendered at prices at or below the Purchase Price and not properly withdrawn on

 

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or before the Expiration Date. For purposes of the Offer, we will be deemed to have accepted for payment (and therefore purchased), subject to the proration provisions of the Offer, Shares that are properly tendered at or below the Purchase Price and not properly withdrawn only when, as and if we give oral or written notice to the Depositary of our acceptance of the Shares for payment in the Offer.

Upon the terms and subject to the conditions of the Offer, we will accept for payment and pay the Purchase Price for all such Shares promptly after the Expiration Date. In all cases, payment for Shares tendered and accepted for payment in the Offer will be made promptly, subject to the possible delay in the event of proration, but only after timely receipt by the Depositary of certificates for Shares or book-entry confirmation of Shares into the Depositary’s account at DTC, a properly completed and duly executed Letter of Transmittal or an Agent’s Message, in the case of a book-entry transfer, and any other documents required by the Letter of Transmittal.

We will pay for Shares purchased in the Offer by depositing the aggregate Purchase Price for the Shares with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from us and transmitting payment to the tendering stockholders.

In the event of proration, we will determine the proration factor and pay for those tendered Shares accepted for payment promptly after the Expiration Date. However, we do not expect to be able to announce the final results of any proration and commence payment for Shares purchased until approximately three business days after the Expiration Date. Unless a stockholder specified otherwise in the Letter of Transmittal, certificates for all Shares tendered and not purchased, including Shares tendered at prices in excess of the Purchase Price and Shares not purchased due to proration, will be returned or, in the case of Shares tendered by book-entry transfer, will be credited to the account maintained with DTC by the participant who delivered the Shares, to the tendering stockholder at our expense promptly after the Expiration Date or termination of the Offer without expense to the tendering stockholders. Under no circumstances will we pay interest on the Purchase Price for any reason, including but not limited to, by reason of any delay in making payment. In addition, if certain events occur, we may not be obligated to purchase Shares in the Offer. See Section 6.

We will pay all stock transfer taxes, if any, payable on the transfer to us of Shares purchased pursuant to the Offer. If, however, payment of the Purchase Price is to be made to, or (in the circumstances permitted by the Offer) unpurchased Shares are to be registered in the name of, any person other than the registered holder, or if tendered book-entry accounts are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of all stock transfer taxes, if any (whether imposed on the registered holder or the other person), payable on account of the transfer to the person will be deducted from the Purchase Price unless satisfactory evidence of the payment of the stock transfer taxes, or exemption from payment of the stock transfer taxes, is submitted.

Any tendering stockholder or other payee who fails to complete fully, sign and return to the Depositary the Substitute Form W-9 included with the Letter of Transmittal (and an IRS Form W-8BEN or other applicable form, if the tendering stockholder or other payee is a Non-U.S. Holder), may be subject to required United States federal income tax backup withholding of 28% of the gross proceeds paid to the stockholder or other payee pursuant to the Offer. See Section 3. Non-U.S. Holders are urged to consult their tax advisors regarding the application of United States federal income tax withholding, including eligibility for a withholding tax reduction or exemption, and the refund procedure.

 

6. Conditions of the Offer.

The Offer is not conditioned on any minimum number of Shares being tendered. Notwithstanding any other provision of the Offer, we will not be required to accept for payment, purchase or pay for any Shares tendered, and may terminate or amend the Offer or may postpone the acceptance for payment of, or the purchase of and the

 

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payment for Shares tendered, subject to Rule 13e-4(f) under the Exchange Act, if at any time on or after the commencement of the Offer and before or on the Expiration Date any of the following events occur (or shall have been reasonably determined by us to have occurred):

 

   

there has been threatened in writing, instituted, pending or taken any action, suit or proceeding by any government or governmental, regulatory or administrative agency, authority or tribunal or by any other person, domestic, foreign or supranational, before any court, authority, agency or other tribunal that directly or indirectly:

 

   

challenges or seeks to challenge, makes illegal, or delays or otherwise directly or indirectly restrains, prohibits or otherwise affects the making of the Offer, the acquisition by us of some or all of the Shares pursuant to the Offer or the Transaction Agreement (or the Transaction pursuant to the Transaction Agreement) or any other matter relating to the Offer or the Transaction Agreement (or the Transaction pursuant to the Transaction Agreement), or seeks to obtain any material damages or otherwise relating to the transactions contemplated by the Offer or the Transaction Agreement (or the Transaction pursuant to the Transaction Agreement);

 

   

seeks to make the purchase of, or payment of, some or all of the Shares pursuant to the Offer illegal or results in a delay in our ability to accept for payment or pay for some or all of the Shares;

 

   

materially impairs the contemplated benefits to us of the Offer;

 

   

seeks to impose limitations on our affiliates’ ability to acquire or hold or to exercise full rights of ownership, including, but not limited to, the right to vote their Shares on all matters validly presented to our stockholders; or

 

   

could be expected to materially and adversely affect our and our subsidiaries’ business, properties, assets, liabilities, capitalization, stockholders’ equity, condition (financial or otherwise), operations, results of operations or prospects, taken as a whole, or otherwise materially impair in any way the contemplated future conduct of the business of us or any of our subsidiaries or our ability to complete the Transaction pursuant to the Transaction Agreement;

 

   

any change in the general political, market, economic or financial conditions, domestically or internationally, that could reasonably be expected to materially and adversely affect our business or the trading in the Shares, including, but not limited to, the following:

 

   

any general suspension of trading in, or limitation on prices for, securities on any U.S. national securities exchange or in the over-the-counter market;

 

   

the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, whether or not mandatory;

 

   

the commencement or escalation, on or after July 2, 2012, of war, armed hostilities or other international or national calamity, including, but not limited to, an act of terrorism, directly or indirectly involving the United States, or any material escalation, on or after July 2, 2012, of any war or armed hostilities which had commenced prior to July 2, 2012;

 

   

any limitation, whether or not mandatory, by any governmental, regulatory or administrative agency or authority on, or any event that, in our reasonable judgment, could materially affect, the extension of credit by banks or other lending institutions in the United States;

 

   

any decrease of more than 10% in the market price for the Shares or in the general level of market prices for equity securities in the Dow Jones Industrial Average, New York Stock Exchange Index, NASDAQ Composite Index or the Standard & Poor’s 500 Composite Index measured from the close of trading on June 29, 2012, or any changes in the general political, market, economic or financial conditions in the United States or abroad that could have, in our reasonable judgment, a material adverse effect on the business, properties, assets, liabilities, capitalization, stockholders’

 

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equity, condition (financial or otherwise), income, operations, results of operations or prospects of us, our subsidiaries and our affiliates, taken as a whole, or on the trading in the Shares, or on the benefits of the Offer to us;

 

   

a material change in U.S. or any other currency exchange rates or a suspension of or limitation on the markets for such currencies that could have, in our reasonable judgment, a material adverse effect on our and our subsidiaries’ business, properties, assets, liabilities, capitalization, stockholders’ equity, condition (financial or otherwise), operations, results of operations or prospects, taken as a whole, or on the trading in the Shares, or on the benefits of the Offer to us; or

 

   

in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof;

 

   

a tender or exchange offer for any or all of the Shares (other than the Offer), or any merger, acquisition, business combination or other similar transaction with or involving us or any of our subsidiaries, has been commenced, proposed or announced by any person or has been publicly disclosed or we have entered into a definitive agreement or an agreement in principle with any person with respect to a merger, acquisition, business combination or other similar transaction, other than in the ordinary course of business and other than the Transaction Agreement;

 

   

we learn that:

 

   

any entity, “group” (for purposes of the conditions of the Offer, as that term is defined in Section 13(d)(3) of the Exchange Act and Rule 13d-5(b) thereunder) or person has acquired or proposes to acquire beneficial ownership of more than 5% of our outstanding Shares, whether through the acquisition of stock, the formation of a group, the grant of any option or right, or otherwise (other than as and to the extent disclosed in a Schedule 13D or Schedule 13G filed with the SEC before July 2, 2012);

 

   

any entity, group or person who has filed a Schedule 13D or Schedule 13G with the SEC before July 2, 2012 has acquired or proposes to acquire, whether through the acquisition of stock, the formation of a group, the grant of any option or right, or otherwise (other than by virtue of the Offer), beneficial ownership of an additional 1% or more of our outstanding Shares; or

 

   

any new group has been formed that beneficially owns more than 5% of our outstanding Shares (options for and other rights to acquire Shares that are acquired or proposed to be acquired being deemed to be immediately exercisable or convertible for purposes of this clause);

 

   

any person, entity or group has filed a Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, reflecting an intent to acquire us or any Shares, or has made a public announcement reflecting an intent to acquire us or any of our subsidiaries or any of our respective assets or securities;

 

   

any action has been taken or any statute, rule, regulation, judgment, decree, injunction or order (preliminary, permanent or otherwise) has been proposed, sought, enacted, entered, promulgated, enforced or deemed to be applicable to the Offer or the Transaction Agreement (or the Transaction pursuant to the Transaction Agreement) or us or any of our subsidiaries or affiliates by any court, government or governmental agency or other regulatory or administrative authority, domestic or foreign, which, in our reasonable judgment:

 

   

indicates that any approval or other action of any such court, agency or authority may be required in connection with the Offer or the purchase of Shares thereunder or the Transaction Agreement (or the Transaction pursuant to the Transaction Agreement other than the approval of the Supreme Court of Victoria, Australia as described in the Preliminary Proxy Statement attached hereto as Annex A);

 

   

could reasonably be expected to prohibit, restrict or delay consummation of the Offer or the completion of the Transaction pursuant to the Transaction Agreement; or

 

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otherwise could reasonably be expected to materially and adversely affect the business, properties, assets, liabilities, capitalization, stockholders’ equity, financial condition, operations, results of operations or prospects of us and our subsidiaries, taken as a whole;

 

   

any change or changes have occurred in our or our subsidiaries’ business, properties, assets, liabilities, capitalization, stockholders’ equity, financial condition, operations, results of operations or prospects that, in our reasonable judgment, has a material adverse effect on us or our subsidiaries, taken as a whole, or on the trading in the Shares, or on the benefits of the Offer to us; or

 

   

we shall have determined that the consummation of the Offer and the purchase of the Shares may cause us to breach or fail, in any material respect, to perform or to comply with any agreement or covenant to be performed or complied with by us under the Transaction Agreement;

 

   

any event shall have occurred or any circumstance shall exist that would cause us to determine that there may be a reasonable likelihood that we will not have a net closing cash balance in excess of $54 million immediately prior to the completion of the Transaction pursuant to the conditions set forth in the Transaction Agreement (as described in the Preliminary Proxy Statement attached hereto as Annex A);

 

   

the Transaction Agreement shall have been terminated pursuant to its terms;

 

   

we shall have determined that the consummation of the Offer and the purchase of the Shares may cause us to be unable to satisfy the initial listing standards of NASDAQ immediately prior to the completion of the Transaction;

 

   

we shall have determined that the consummation of the Offer and the purchase of the Shares may cause the Shares to be:

 

   

held of record by less than 300 persons; or

 

   

delisted from NASDAQ or to be eligible for deregistration under the Exchange Act.

The foregoing addresses the only conditions under which we are not obligated to complete the Offer. The conditions referred to above are for our sole benefit and may be asserted by us regardless of the circumstances (other than any action or omission to act by us) giving rise to any condition, and may be waived by us, in whole or in part, at any time and from time to time in our reasonable discretion prior to the Expiration Date. Our failure at any time to exercise any of the foregoing rights will not be deemed a waiver of any right, and each such right will be deemed an ongoing right that may be asserted at any time prior to the Expiration Date and from time to time. However, once the Offer has expired, then all of the conditions to the Offer, other than those requiring receipt of necessary governmental approvals, must have been satisfied or waived. In certain circumstances, if we waive any of the conditions described above, we may be required to extend the Expiration Date. Any determination by us concerning the events described above will be final and binding on all persons participating in the Offer, subject to such Offer participants disputing such determination in a court of competent jurisdiction. Our right to terminate or amend the Offer or to postpone the acceptance for payment of, or the purchase of and the payment for Shares tendered if any of the above listed events occur (or shall have been reasonably determined by us to have occurred) at any time on or prior to the Expiration Date shall not be affected by any subsequent event regardless of whether such subsequent event would have otherwise resulted in the event having been “cured” or ceasing to exist.

 

7. Price Range of Shares; Dividends.

Our Shares are listed for trading on NASDAQ. Our Shares trade on NASDAQ under the symbol “NABI.”

Price Range of Shares. The following table sets forth, for the period indicated, the high and low sales prices per share for our Shares as reported on NASDAQ consolidated tape.

 

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Fiscal 2012 (Year ending December 31, 2012)

 

     High      Low  

First Quarter

   $ 2.03       $ 1.74   

Second Quarter (through June 29, 2012)

   $ 1.95       $ 1.53   

Fiscal 2011 (Year ending December 31, 2011)

 

     High      Low  

First Quarter

   $ 5.98       $ 5.30   

Second Quarter

   $ 5.88       $ 4.64   

Third Quarter

   $ 5.82       $ 1.55   

Fourth Quarter

   $ 2.07       $ 1.50   

Fiscal 2010 (Year ended December 25, 2010)

 

     High      Low  

First Quarter

   $ 6.42       $ 4.70   

Second Quarter

   $ 5.98       $ 4.40   

Third Quarter

   $ 5.85       $ 4.68   

Fourth Quarter

   $ 5.75       $ 4.75   

On June 29, 2012, the last full trading day before we commenced the Offer, the last reported sale price of the Shares on NASDAQ was $1.58 per Share. We urge stockholders to obtain a current market quotation for the Shares before deciding whether and at what price or prices to tender their Shares.

Dividends. We have never declared or paid cash dividends on our capital stock. However, we plan to return to our stockholders, before the completion of the Transaction, our remaining cash in excess of the $54 million required to be held by us at the completion of the Transaction after satisfying outstanding liabilities. Such distribution will take the form of the Offer and, for any remaining amounts, through a dividend or other return of capital. After the completion of the Offer but prior to the completion of the Transaction, Nabi plans to declare a dividend or implement a return of capital, as applicable, to distribute any remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction that is not required to satisfy any outstanding liabilities. Such remaining cash amount is currently expected to be in the range of approximately $2 million to $5 million.

 

8. Source and Amount of Funds.

The maximum value of Shares purchased in the Offer will be $23,000,000. We expect the maximum aggregate cost of this purchase, including all fees and expenses applicable to the Offer, to be approximately $23.2 million. We will use available cash to purchase the Shares in the Offer and to pay all related fees and expenses.

 

9. Certain Information Concerning the Company.

General. We are a biopharmaceutical company that has focused on the development of vaccines addressing unmet medical needs, including nicotine addiction. We have sought to leverage our experience and knowledge in powering the human immune system to target these serious unmet medical needs. We have been incorporated in Delaware since 1969 and our operations are located in Rockville, Maryland. Our principal executive offices are located at 12270 Wilkins Avenue, Rockville, MD 20852, and our telephone number is (301) 770-3099. Our website is located at www.nabi.com (the contents of which do not constitute part of this Offer to Purchase).

 

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Our sole remaining product currently in development is NicVAX® (Nicotine Conjugate Vaccine), an innovative and proprietary investigational vaccine for the treatment of nicotine addiction and prevention of smoking relapse based on patented technology. We suffered a significant setback in 2011 when NicVAX did not achieve the primary endpoint in two Phase III efficacy trials conducted in the U.S. As of March 31, 2012, our remaining assets include the following: (i) $94.9 million of cash and cash equivalents, (ii) the potential residual value of NicVAX as well as any next-generation nicotine vaccine which was licensed to GlaxoSmithKline (“GSK”) in 2010, (iii) the potential royalty from Phoslyra which was sold to Fresenius USA Manufacturing, Inc. in 2006, and (iv) the potential value of our NOLs.

Where You Can Find More Information. We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the public at the SEC’s website at www.sec.gov or at our website at www.nabi.com. Unless otherwise provided below, the information provided in our SEC filings (or available on our website) is not part of this Offer to Purchase and is not incorporated by reference.

Incorporation by Reference. The rules of the SEC allow us to “incorporate by reference” information into this document, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The following documents contain important information about us and we incorporate them by reference:

 

   

Annual Report on Form 10-K for the year ended December 31, 2011, as amended by the Form 10-K/A filed with the SEC on April 30, 2012;

 

   

Quarterly Report on Form 10-Q for the quarter ended March 31, 2012;

 

   

Current Reports on Form 8-K filed with the SEC on April 23, 2012, April 26, 2012 and June 14, 2012; and

 

   

the description of our Shares under the heading “Description of Capital Stock” included in our Registration Statement on Form S-3 filed on May 25, 2005, as amended on July 22, 2005.

You can obtain any of the documents incorporated by reference in this document from the SEC’s website at the address described above. You may also request a copy of these filings, at no cost, by writing or telephoning the Information Agent at its address and telephone number set forth below.

The Information Agent for the Offer is:

 

LOGO

You may obtain information regarding the Offer

from the Information Agent as follows:

470 West Avenue

Stamford, CT 06902

(203) 658-9400

Stockholders Call Toll Free: (800) 607-0088

Banks and Brokerage Firms Call: (203) 658-9400

E-mail: nabi.info@morrowco.com

 

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10.    Interests of Directors, Executive Officers and Affiliates; Recent Securities Transactions; Transactions and Arrangements Concerning the Shares.

Beneficial Ownership. As of July 1, 2012, the last day before we commenced the Offer, we had 42,876,030 issued and outstanding Shares. If the Offer is fully subscribed at the maximum Purchase Price, the 13,372,093 Shares that the Company would purchase in the Offer represent approximately 31.19% of the Shares outstanding on July 1, 2012. If the Offer is fully subscribed at the minimum Purchase Price, the 14,556,962 Shares that the Company would purchase in the Offer represent approximately 33.95% of the Shares outstanding on July 1, 2012.

Our directors and executive officers have indicated that they will not participate in the Offer. As of July 1, 2012, our directors and executive officers as a group (8 persons) beneficially owned, as defined in accordance with the rules of the SEC, an aggregate of approximately 2,722,663 Shares, representing approximately 6.3% of the total number of outstanding Shares. Accordingly, assuming the completion of the Offer, the proportional holdings of our non-executive directors and of any executive officer who does not participate in the Offer will increase. Further, our directors and executive officers may, in compliance with applicable law and subject to any applicable restrictions on transfer, sell their Shares in open market transactions at prices that may or may not be more favorable than the Purchase Price to be paid to our stockholders in the Offer.

The following table sets forth information as of July 1, 2012 as to the Shares beneficially owned by (i) all directors, (ii) each named executive officer, (iii) current directors and executive officers of Nabi as a group, and (iv) each person who is known to Nabi to be the beneficial owner of more than 5% of the Shares. Unless otherwise noted, this information has been provided by the persons named in the table. Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of Shares beneficially owned by a person and the percentage ownership of that person, Shares subject to (i) stock options held by that person that are currently exercisable or exercisable within 60 days of July 1, 2012, and (ii) Shares of restricted stock that vest within 60 days of July 1, 2012, are deemed issued and outstanding. These Shares, however, are not deemed outstanding for purposes of computing percentage ownership of each other stockholder.

 

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Except as otherwise noted in the footnotes below, to our knowledge each person or entity identified below has sole voting and investment power with respect to such securities.

 

     Amount of Beneficial
Ownership (1)
    Percentage (2)  

Directors

    

Jason M. Aryeh

     249,183 (3)     *   

David L. Castaldi

     189,389 (4)     *   

Geoffrey F. Cox, Ph.D.

     239,679 (5)     *   

Peter Davis

     132,630 (6)     *   

Richard A. Harvey, Jr.

     164,996 (7)     *   

Named Executive Officers

    

Raafat E.F. Fahim, Ph.D.

     1,070,328 (8)     2.5 %

Paul D. Kessler, M.D.

     481,241 (9)     1.1 %

Matthew W. Kalnik, Ph.D.

     190,050 (10)     *   

Current Directors and Executive Officers as a group (8 persons)

     2,717,496 (11)     6.3 %

5% Beneficial Owners

    

Renaissance Technologies LLC and Renaissance Technologies Holding

Corporation

300 Third Avenue

New York, NY 10022

     2,772,843 (12)     6.5 %

The Vanguard Group, Inc.

100 Vanguard Avenue

Malvern, PA 19355

     2,308,413 (13)     5.4 %

BlackRock, Inc.

40 East 52nd Street

New York, NY 10022

     2,377,972 (14)      5.5 %

The Mangrove Partners Fund, L.P.

10 East 53rd Street

31st Floor

New York, NY 10022

     2,961,974 (15)      6.9 %

 

* Less than 1%
(1) Unless otherwise noted, the nature of beneficial ownership consists of sole voting and investment power. No director or named executive officer has pledged any of his or her Nabi common stock as security.
(2) Based on 42,876,030 shares of Nabi common stock outstanding as of July 1, 2012.
(3) Consists of (i) 131,183 shares beneficially owned by Jason Aryeh through his relationship with JALAA Equities, LP and JLV Investments, LP (the Aryeh Entities); and (ii) 118,000 shares of Nabi common stock that may be acquired under stock options that are presently exercisable or will be exercisable on August 30, 2012. Mr. Aryeh disclaims beneficial ownership of all securities beneficially owned by the Aryeh Entities, except to the extent of any indirect pecuniary interest he may have therein.
(4) Consists of (i) 49,189 shares of Nabi common stock owned by Mr. Castaldi; (ii) 6,200 shares of Nabi common stock owned by Mr. Castaldi’s wife and daughters; and (iii) 134,000 shares of Nabi common stock that may be acquired under stock options that are presently exercisable or will be exercisable on August 30, 2012.
(5) Consists of (i) 25,679 shares of Nabi common stock owned directly by Dr. Cox and (ii) 214,000 shares of Nabi common stock that may be acquired under stock options that are presently exercisable or will be exercisable on August 30, 2012.
(6) Consists of (i) 14,630 shares of Nabi common stock owned by the Davis Family Trust dated August 29, 1996, of which Mr. Davis is a Trustee; and (ii) 118,000 shares of Nabi common stock that may be acquired under stock options that are presently exercisable or will be exercisable on August 30, 2012.

 

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(7) Consists of (i) 30,996 shares of Nabi common stock owned by jointly by Mr. Harvey and his wife; and (ii) 134,000 shares of Nabi common stock that may be acquired under stock options that are presently exercisable or will be exercisable on August 30, 2012.
(8) Consists of (i) 298,724 shares of Nabi common stock owned by Dr. Fahim; (ii) 1,000 shares held jointly with Dr. Fahim’s spouse; (iii) 73,750 shares of restricted Nabi common stock which are subject to future vesting but which may be voted; and (iv) 696,854 shares of Nabi common stock that may be acquired under stock options that are presently exercisable or will be exercisable on August 30, 2012.
(9) Consists of (i) 37,628 shares of Nabi common stock owned by Dr. Kessler; (ii) 52,500 shares of restricted Nabi common stock which are subject to future vesting but which may be voted; and (iii) 376,113 shares of Nabi common stock that may be acquired under stock options that are presently exercisable or will be exercisable on August 30, 2012.
(10) Consists of (i) 28,925 shares of Nabi common stock owned by Dr. Kalnik; (ii) 39,000 shares of restricted Nabi common stock which are subject to future vesting but which may be voted; and (iii) 122,125 shares of Nabi common stock that may be acquired under stock options that are presently exercisable or will be exercisable on August 30, 2012.
(11) See notes 3 through 10.
(12) The information in the table and this note is derived from a Schedule 13G/A filed with the SEC on February 13, 2012 by Renaissance Technologies LLC and Renaissance Technologies Holding Corporation. Renaissance Technologies LLC and Renaissance Technologies Holding Corporation each have (i) sole power to vote or to direct the vote of 2,331,237 shares of common stock; (ii) sole power to dispose or to direct the disposition of 2,419,772 shares of common stock; and (iii) shared power to dispose of or direct the disposition of 353,071 shares of common stock.
(13) The information in the table and this note is derived from a Schedule 13G/A filed with the SEC on February 6, 2012 by The Vanguard Group, Inc., which has (i) sole power to vote or direct the vote of 61,529 shares of common stock; (ii) sole power to dispose or director the disposition of 2,246,884 shares of common stock; and (iii) shared power to dispose or direct the disposition of 61,529 shares of common stock.
(14) The information in the table and this note is derived from a Schedule 13G/A filed with the SEC on February 13, 2012 by BlackRock, Inc., which has (i) sole power to vote or to direct the vote; and (ii) sole power to dispose or to direct the disposition of 2,377,972 shares of common stock.
(15) The information in the table and this note is derived from a Schedule 13D filed with the SEC on June 29, 2012 by The Mangrove Partners Fund, L.P., Mangrove Partners, Mangrove Capital, Nathaniel August, who collectively have (i) shared power to vote or to direct the vote of 2,961,974 shares of common stock; and (ii) shared power to dispose of or direct the disposition of 2,961,974 shares of common stock.

Transactions and Arrangements Concerning the Shares.

Recent Securities Transactions. Based on the Company’s records and information provided to the Company by its directors, executive officers, associates and subsidiaries, neither the Company, nor, to the best of the Company’s knowledge, any directors or executive officers of the Company or any associates or subsidiaries of the Company, has effected any transactions in Shares during the 60 day period before the date hereof.

Termination of Rights Agreement. Nabi and American Stock Transfer and Trust Company, LLC, as rights agent (the “Rights Agent”), entered into the First Amendment to Rights Agreement (the “Amendment”) between Nabi and the Rights Agent, dated as of April 20, 2012, which amended the Nabi’s existing Rights Agreement, dated as of August 25, 2011 (the “Rights Agreement”).

The Amendment provided that the Rights (as defined in the Rights Agreement) effectively terminate immediately prior to the execution of the Transaction Agreement. Additionally, the Amendment provides that (i) neither Biota nor any of its Affiliates or Associates (each as defined in the Rights Agreement) shall be deemed an Acquiring Person (as defined in the Rights Agreement), (ii) no Distribution Date, Stock Acquisition Date or Trigger Event (each as defined in the Rights Agreement) will be deemed to have occurred, and (iii) no holder of any Rights will be entitled to exercise such Rights, in any case solely as a result of the approval, execution,

 

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delivery or effectiveness of the Transaction Agreement. The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is attached as Exhibit 4.1 to our Current Report on Form 8-K as filed April 26, 2012, which is incorporated herein by reference.

Transaction Agreement. On April 22, 2012, before we commenced the Offer, we entered into the Transaction Agreement, pursuant to which Nabi will acquire all of the outstanding shares of Biota in exchange for shares of Nabi common stock, and Biota will become a wholly-owned subsidiary of Nabi. Immediately after the completion of the Transaction, Nabi’s existing stockholders collectively will own approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders collectively will own approximately 74% of the outstanding common stock of the combined company. Pursuant to the terms of the Transaction Agreement, the completion of the Transaction is conditioned on, among other things, Nabi having a closing net cash balance of no less than $54 million after satisfying outstanding liabilities. Nabi plans to return to its stockholders, before the completion of the Transaction, its remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction after satisfying outstanding liabilities. Such distribution will take the form of the Offer and, for any remaining amounts, through a dividend or other return of capital. After the completion of the Offer but prior to the completion of the Transaction, Nabi plans to declare a dividend or implement a return of capital, as applicable, to distribute any remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction that is not required to satisfy any outstanding liabilities. Such remaining cash amount is currently expected to be in the range of approximately $2 million to $5 million. The completion of the Offer is not conditioned upon the completion of the Transaction. Furthermore, the completion of the Transaction is not conditioned upon the completion of the Offer. However, we shall have the right to terminate the Offer if the Transaction Agreement is terminated in accordance with its terms. Please see Section 6 below for a description of conditions to the completion of the Offer. In addition, we intend, subject to approval by our stockholders, to implement a reverse stock split to become effective immediately prior to the completion of the Transaction as described in more detail in the Preliminary Proxy Statement attached hereto as Annex A. The foregoing description of the Transaction, including the Transaction Agreement, is qualified in its entirety by reference to the Preliminary Proxy Statement attached hereto as Annex A, which is incorporated herein by reference and contains, among other things, a copy of the Transaction Agreement and a description of the Transaction and related matters, including the pro forma financial information.

Stock Based Plans

2007 Omnibus Equity and Incentive Plan. Our Board of Directors previously adopted the 2007 Omnibus Equity and Incentive Plan (“2007 Omnibus Plan”), which as of June 30, 2012 provided for the award of up to 5,707,614 shares of our common stock in the form of non-qualified stock options, restricted stock and other equity and incentive awards. The 2007 Omnibus Plan amended and restated our 2000 Equity Incentive Stock Plan. The 2007 Omnibus Plan also superseded and replaced our 1998 Stock Option Plan and the Nabi 2004 Stock Plan for Non-Employee Directors (“2004 Directors Plan”) for future awards to our employees, consultants and directors. Both the 1998 Stock Option Plan and the 2004 Directors Plan remain in effect with respect to currently outstanding awards. The number of shares available for award under the 2007 Omnibus Plan is automatically increased by any shares subject to awards that expire, terminate or are forfeited to Nabi under the 1998 Stock Option Plan and the 2004 Directors Plan.

The number of shares to be issued upon exercise of outstanding options and available for future grants under the 2007 Omnibus Plan is subject to adjustment in the event of a stock dividend, stock split or combination of shares, recapitalization, or other change in our capital stock.

Persons eligible to receive awards under the 2007 Omnibus Plan include all employees, consultants, and directors of Nabi who, in the opinion of our Board of Directors, are in a position to make a significant contribution to the success of Nabi and its subsidiaries.

 

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The exercise price of options granted under the 2007 Omnibus Plan may not be less than 100% of the fair market value of our common stock on the date of the award. The exercise date of options granted under the 2007 Omnibus Plan is at the discretion of the Compensation Committee of our Board of Directors which may at any time accelerate the exercisability of all or any portion of any option. The expiration date of options granted under the 2007 Omnibus Plan may not be more than 10 years after the date of grant.

In the event that an optionee’s employment or service with Nabi terminates for any reason including death, disability, retirement or other termination, our Compensation Committee, in its sole discretion, may determine the extent to which, and the period during which, options granted may be exercised, but in no event shall the options be exercisable beyond the option expiration date.

In the event of a consolidation, merger or sale of all or substantially all of the assets of Nabi in which outstanding shares of our common stock are exchanged for securities, cash, or other property of any other business entity or in the event of a liquidation of Nabi, then under the 2007 Omnibus Plan our Compensation Committee may, in its discretion, (i) provide for the acceleration of any time period relating to the exercise or realization of an award, (ii) provide for the purchase of an award upon the participant’s request for an amount of cash or other property that could have been received upon the exercise or realization of an award had the award been currently exercisable or payable, (iii) adjust the terms of an award in a manner determined by our Compensation Committee, (iv) cause an award to be assumed, or new rights to be substituted for the award, by another entity, or (v) make such other provision as the Compensation Committee may consider equitable and in the best interests of Nabi.

As of June 30, 2012, 2,782,873 shares were subject to outstanding options granted under the 2007 Omnibus Plan, and 2,293,132 shares were available for future grants under the 2007 Omnibus Plan.

1998 Non-Qualified Employee Stock Option Plan. In 1998, our Board of Directors adopted the 1998 Non-Qualified Employee Stock Option Plan (“1998 Stock Option Plan”), which provided for the award of up to 7,400,000 shares of our common stock in the form of non-qualified stock options. The 1998 Stock Option Plan has not been approved by our stockholders. The 1998 Stock Option Plan terminated upon stockholder approval at the 2007 Annual Meeting of the 2007 Omnibus Equity and Incentive Plan, except with respect to then outstanding awards.

Persons who received awards under the 1998 Stock Option Plan that remain outstanding include employees, consultants and advisors of Nabi who, in the opinion of our Compensation Committee or our Board of Directors at the time such awards were made, were in a position to make a significant contribution to the success of Nabi and its subsidiaries. Directors and officers of Nabi were not eligible to receive awards under the 1998 Stock Option Plan.

Options granted under the 1998 Stock Option Plan generally have an exercise price equal to the fair market value of our common stock on the date of grant. The options generally become exercisable in four equal annual installments beginning one year after the date of grant. In the event that an optionee’s employment or service with Nabi terminates for any reason other than by death, options that are not then exercisable generally terminate immediately, but options that are exercisable on the date that employment or service terminates generally continue to be exercisable for a period of 90 days or such longer period as our Compensation Committee may determine, but in no event beyond the option expiration date.

In the event of a consolidation, merger or sale of all or substantially all of the assets of Nabi in which outstanding shares of our common stock are exchanged for securities, cash, or other property of any other business entity or in the event of a liquidation of the Company, the 1998 Stock Option Plan provides that our Compensation Committee may, in its discretion, (i) provide that outstanding options shall be assumed or replaced, (ii) provide that all unexercised options will terminate within a specified period, (iii) provide for a cash payment in exchange for the termination of outstanding options, or (iv) provide that outstanding options shall become exercisable in full immediately prior to such event.

 

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As of June 30, 2012, 173,657 shares were subject to outstanding options granted under the 1998 Stock Option Plan, and no shares were available for future grants under the 1998 Stock Option Plan.

Amendment to Options. On June 8, 2012, our Board of Directors amended all outstanding Nabi stock options held by all current employees, officers and directors of Nabi to provide that the term of any Nabi stock option held by any person whose employment with or service to Nabi ends while the Transaction Agreement is in effect or after completion of the Transaction, other than as a result of such person’s voluntary termination while the Transaction Agreement is in effect or termination by Nabi for cause, shall be the full original term of such option. Without the modification, the stock options held by Nabi employees and employed officers would terminate 90 days after the termination of their employment and the stock options held by Nabi directors and the corporate secretary would terminate one year after their service to Nabi ends. The majority of Nabi’s outstanding options have terms of seven years. Prior to 2007, most Nabi stock options had a term of 10 years. Nabi’s outstanding stock options had a weighted average exercise price of $5.99 as of June 30, 2012. The lowest currently outstanding stock option exercise price is $1.87. 

Director Equity Compensation. Under the Company’s compensation policy for non-employee directors, each non-employee director (other than the non-executive Chairman of the Board of Directors) receives an annual retainer of $20,000 plus a fee of $1,500 for each Board of Directors and committee meeting attended by the director (whether the meeting is in person or by conference telephone), other than meetings of the Nominating and Governance Committee. The non-executive Chairman of the Board of Directors receives an annual retainer of $80,000 plus a fee of $1,500 for each Board meeting attended by him. Currently, the chairmen of the Compensation Committee and the Audit Committee receive an annual retainer of $10,000. Fees are paid for attendance at committee meetings even if they are held on the same day as Board of Directors meetings. Directors are reimbursed for out-of-pocket expenses incurred in connection with attendance at Board of Directors and committee meetings. Each non-employee director may elect to be paid his or her annual retainer, in whole or in part, in shares of common stock in lieu of cash, and each non-employee director is eligible to receive an option to purchase shares of common stock upon his or her initial election to the Board of Directors and each reelection to the Board of Directors at any meeting of stockholders. Awards are made under the 2007 Omnibus Plan. The number of shares of common stock underlying such options is determined by the Board of Directors at the time of grant in its sole discretion. The options have an exercise price equal to the fair market value of the common stock on the date of grant. The options become exercisable quarterly over a 12 month period after the date of grant, and the options expire seven years after the date of grant. To the extent that options are exercisable on the date that a director’s service on the board terminates, they will remain exercisable for 12 months after such termination, but in no event later than the original option expiration date. In May 2011, the Company granted options to purchase 20,000 shares of common stock to each of its non-employee directors, except the Chairman of the Board of Directors who received an option to purchase 40,000 shares of common stock.

Retirement Savings Plan. We maintain a retirement savings plan which permits employees to contribute pre-tax annual compensation up to annual statutory limitations. The discretionary company match for employee contributions to the plan is 100% of up to the first 4% of the participant’s earnings contributed to the plan. Our matching contributions to the plan were approximately $0.2 million in 2010, 2009 and 2008. In 2000, the stockholders approved the issuance of up to 425,000 shares of our common stock to our employees participating in our retirement saving plan. To date, no shares have been issued under this plan.

Share Repurchase Program. Rule 13e–4(f)(6) under the Exchange Act prohibits us from purchasing any Shares, other than pursuant to the Offer, until at least ten business days have elapsed after the Expiration Date. Accordingly, any additional purchases outside the Offer may not be consummated until at least ten business days have elapsed after the Expiration Date. In addition, the Transaction Agreement contains certain limits on our ability to make additional purchases that would cause us to have closing net cash balance of less than $54 million at the completion of the Transaction. Our Board of Directors has previously authorized the purchase of up to $150 million of the Company’s outstanding Shares, of which $27.8 million is remaining. We do not intend to make any further purchases pursuant to this share repurchase program.

 

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Nabi 401(k) Plan. The Nabi Savings & Retirement Plan (the “401(k) Plan”) is a defined contribution plan that is intended to qualify under Section 401(a) of the Code, covering substantially all of Nabi’s U.S. employees, including our executive officers. Participants in the 401(k) Plan may select the investments in which their account balances are invested. Historically, participants were entitled to invest a portion of their account balances in the Company stock fund, which invests in our Shares. The 401(k) Plan no longer allows active investments in our Shares by participants, but the Shares continue to be part of the 401(k) Plan’s investment portfolio. 

General. Except as otherwise described herein, neither Nabi nor, to the best of the its knowledge, any of its affiliates, directors or executive officers, is a party to any agreement, arrangement or understanding with any other person relating, directly or indirectly, to the Offer or with respect to any securities of the Company, including, but not limited to, any agreement, arrangement or understanding concerning the transfer or the voting of the securities of the Company, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, or the giving or withholding of proxies, consents or authorizations.

Contingent Value Rights. After the completion of the Offer, Nabi plans to issue contingent value rights (the “CVRs”) to its stockholders before the completion of the Transaction. Nabi expects that one CVR will be issued for each Share outstanding as of a record date to be set at a date prior to the completion of the Transaction. However, the CVRs will not be attached to the Shares. Nabi plans to enter into a Contingent Value Rights Agreement (the “CVR Agreement”) with a rights agent for the purpose of establishing the terms and conditions of the CVRs and the procedures by which payments, if any, will be made to the CVR holders. The form of the CVR Agreement is attached to the Preliminary Proxy Statement attached hereto as Annex A and is incorporated by reference herein.

The following is a summary of the material terms of the CVR Agreement. This summary does not purport to describe all of the terms of the CVR Agreement and is qualified by reference to the complete text of the form of the CVR Agreement. We urge you to read the form of the CVR Agreement carefully and in its entirety.

The CVRs will be nontransferable, subject to certain limited exceptions as set forth in the CVR Agreement. The CVRs will not represent an equity or ownership interest, and CVR holders will have no voting or dividend rights. The rights of CVR holders will be limited to those rights expressly set forth in the CVR Agreement.

Pursuant to the CVR Agreement, CVR holders may, under certain circumstances, have rights to receive a portion of the cash proceeds actually received by the combined company (after the Transaction) in connection with a NicVAX Transaction. A “NicVAX Transaction” means a full or partial sale, license, transfer or any other similar transaction entered into by Nabi or the combined company with respect to the NicVAX Program (which is defined in the CVR Agreement to include those assets of Nabi that currently are or have been used in the research, development and manufacture of Nabi’s products for the prevention or treatment of nicotine addiction or for use as an aid to smoking prevention and/or cessation, including Nabi’s proprietary vaccine known as NicVAX® (Nicotine Conjugate Vaccine). NicVAX Transactions also include those transactions contemplated by the Exclusive Option and License Agreement, dated as of November 13, 2009, between Nabi and GSK, and any transactions involving any Nabi intellectual property not licensed to GSK under such agreement.

Subject to the terms and conditions of the CVR Agreement, if the combined company consummates a NicVAX Transaction within the 18-month period following the completion of the Transaction (the “Initial CVR Term”), CVR holders will be entitled to receive cash payments equal to such holder’s pro rata portion of (1) 75% of the cash proceeds in excess of $5 million actually received by the combined company in connection with such NicVAX Transaction during the Initial CVR Term (provided that such right is triggered only when the combined company actually receives $5.5 million or more in connection with such NicVAX Transaction) and (2) 75% of the first cash milestone payment actually received by the combined company in connection with such NicVAX Transaction during a five-year tail period following the expiration of the Initial CVR Term (provided that such right is triggered only when the combined company actually receives $0.5 million or more as such milestone payment and certain other thresholds are met). If the combined company does not consummate a NicVAX

 

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Transaction during the Initial CVR Term, or if the cash proceeds actually received by the combined company in connection with a NicVAX Transaction do not exceed certain thresholds as set forth in the CVR Agreement, no cash payment will be payable to CVR holders.

Under the CVR Agreement, the combined company will not have any obligation whatsoever to pursue, engage in, negotiate, enter into or consummate an actual or potential NicVAX Transaction or to research, develop or commercialize NicVAX® (Nicotine Conjugate Vaccine) or any other product that would trigger a payment to CVR holders; provided, that if the combined company makes a decision to pursue, engage in, negotiate or enter into a NicVAX Transaction, then it will need to use commercially reasonable efforts to seek to ensure that consideration paid to it in connection with a NicVAX Transaction is paid in cash and prior to the expiration of the Initial CVR Term.

Although Nabi currently plans to enter into the CVR Agreement and issue CVRs to Nabi stockholders, there is no assurance that CVRs will be issued at all or based on the terms currently set forth in the form of the CVR Agreement. Nabi currently has not entered into the CVR Agreement and Nabi’s Board of Directors may determine in its sole discretion not to issue the CVRs based on, among other things, the progress of the remaining investigator-initiated combination clinical trial in the Netherlands for NicVAX with Pfizer Inc.’s varenicline (Chantix/Champix). Furthermore, if Nabi and Biota agree, the terms of the CVR Agreement as currently contemplated may be changed prior to Nabi entering into the CVR Agreement.

 

11. Certain Legal Matters; Regulatory Approvals.

Except as described above, we are not aware of any license or regulatory permit that appears material to our business that might be adversely affected by the acquisition of Shares as contemplated by the Offer or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic, foreign or supranational, that would be required for the acquisition of Shares by us as contemplated by the Offer. Should any approval or other action be required, we presently contemplate that we will seek that approval or other action. We are unable to predict whether it will be required to delay the acceptance for payment of or payment for Shares tendered under the Offer pending the outcome of any such matter. There can be no assurance that any approval or other action, if needed, would be obtained or would be obtained without substantial cost or conditions or that the failure to obtain the approval or other action might not result in adverse consequences to our business and financial condition. Our obligation under the Offer to accept for payment and pay for Shares is subject to conditions. See Section 6.

 

12. United States Federal Income Tax Consequences.

The following describes certain United States federal income tax consequences relevant to the Offer for U.S. Holders and Non-U.S. Holders (as defined below). This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed Treasury Regulations, administrative pronouncements and judicial decisions, changes to which could materially affect the tax consequences described herein and could be made on a retroactive basis.

This discussion deals only with Shares held as capital assets and does not deal with all tax consequences that may be relevant to all categories of holders (including, without limitation, dealers in securities or commodities, traders in securities that elect to mark their holdings to market, financial institutions, regulated investment companies, real estate investment trusts, holders whose functional currency is not the United States dollar, insurance companies, tax-exempt organizations or persons who hold Shares as part of a hedging, conversion or constructive sale transaction or as a position in a straddle). In particular, different rules may apply to Shares acquired as compensation (including Shares acquired upon the exercise of options). This discussion does not address the consequences of the alternative minimum tax, or any state, local or foreign tax consequences of participating in the Offer. Holders of Shares should consult their tax advisors as to the particular consequences to them of participation in the Offer.

 

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As used herein, a “U.S. Holder” means a beneficial holder of Shares that is for United States federal income tax purposes: (i) an individual citizen or resident of the United States, (ii) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, or (iii) an estate the income of which is subject to United States federal income taxation regardless of its source, or (iv) a trust if it (a) is subject to the primary supervision of a court within the U.S. and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

Holders of Shares who are neither U.S. Holders nor partnerships (or any other entity treated as a partnership for U.S. federal income tax purposes) (“Non-U.S. Holders”) should consult their tax advisors regarding the United States federal income tax consequences and any applicable foreign tax consequences of the Offer and also should see Section 3 for a discussion of the applicable United States withholding tax rules and the potential for obtaining a refund of all or a portion of any tax withheld.

If a partnership holds Shares, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Holders that are partners of a partnership holding Shares should consult their own tax advisors.

Non-Participation in the Offer. Stockholders who do not participate in the Offer will not incur any tax liability as a result of the consummation of the Offer.

U.S. Holders. An exchange of Shares for cash pursuant to the Offer will be a taxable transaction for United States federal income tax purposes. A U.S. Holder who participates in the Offer will be treated, depending on such U.S. Holder’s particular circumstances, either as recognizing gain or loss from the disposition of the Shares or as receiving a dividend distribution from us.

Under Section 302 of the Code, a U.S. Holder will recognize gain or loss on an exchange of Shares for cash if the exchange (i) results in a “complete termination” of all such U.S. Holder’s equity interest in us, (ii) results in a “substantially disproportionate” redemption with respect to such U.S. Holder, or (iii) is “not essentially equivalent to a dividend” with respect to the U.S. Holder (together, as described below, the “Section 302 Tests”). In applying the Section 302 Tests, a U.S. Holder must take account of stock that such U.S. Holder constructively owns under attribution rules set forth in Section 318 of the Code, pursuant to which the U.S. Holder will be treated as owning our Shares owned by certain family members (except that in the case of a “complete termination” a U.S. Holder may waive, under certain circumstances, attribution from family members) and related entities and our stock that the U.S. Holder has the right to acquire by exercise of an option. An exchange of Shares for cash pursuant to the Offer will be a “complete termination” of a U.S. Holder’s equity interest in us if the U.S. Holder owns none of our Shares either actually or constructively (taking into account any effective waivers of attribution from family members) immediately after the exchange. An exchange of Shares for cash will be a substantially disproportionate redemption with respect to a U.S. Holder if (a) the percentage of the then outstanding Shares owned by such U.S. Holder in us immediately after the exchange is less than 80% of the percentage of the Shares owned by such U.S. Holder in us immediately before the exchange, (b) the percentage of the then outstanding voting stock owned by such U.S. Holder in us immediately after the exchange is less than 80% of the percentage of the voting stock owned by such U.S. Holder in us immediately before the exchange, and (c) the U.S. Holder owns less than 50% of the outstanding voting stock immediately after the exchange. If an exchange of Shares for cash fails to satisfy either the “complete termination” or “substantially disproportionate” test, the U.S. Holder nonetheless may satisfy the “not essentially equivalent to a dividend” test. An exchange of Shares for cash will satisfy the “not essentially equivalent to a dividend” test if it results in a “meaningful reduction” of the U.S. Holder’s equity interest in us. An exchange of Shares for cash that results in a reduction of the proportionate equity interest in us of a U.S. Holder whose relative equity interest in us is minimal (an interest of less than one percent should satisfy this requirement) and who does not exercise any control over or participate in the management of our corporate affairs should be treated as “not essentially equivalent to a dividend.” U.S.

 

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Holders should consult their tax advisors regarding the application of the rules of Section 302 in their particular circumstances and regarding the possibility that the Transaction and the Offer may be integrated for purposes of applying the Section 302 Tests to the Offer.

If a U.S. Holder is treated as recognizing gain or loss from the disposition of the Shares for cash, such gain or loss will be equal to the difference between the amount of cash received and such U.S. Holder’s adjusted basis in the Shares exchanged therefor. Any such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the holding period of the Shares exceeds one year as of the date of the exchange. The maximum United States federal income tax rate applicable to long-term capital gains is currently15%. Statutory limitations apply to the ability of a U.S. Holder to make use of capital losses.

If a U.S. Holder is not treated under the Section 302 Tests as recognizing gain or loss on an exchange of Shares for cash, the entire amount of cash received by such U.S. Holder pursuant to the exchange will be treated as a dividend to the extent of the portion of our current and accumulated earnings and profits allocable to such Shares. Provided certain holding period requirements are satisfied, non-corporate holders generally will be subject to United States federal income tax at a maximum rate of 15% on amounts treated as dividends, i.e., the entire amount of cash received without reduction for the tax basis of the Shares exchanged. To the extent that cash received in exchange for Shares is treated as a dividend to a corporate U.S. Holder, (i) it will be eligible for a dividends-received deduction (subject to applicable limitations) and (ii) it will be subject to the “extraordinary dividend” provisions of the Code. U.S. Holders should consult their tax advisors concerning the rules discussed in this paragraph in light of their particular circumstances.

To the extent that amounts received pursuant to the Offer exceed a U.S. Holder’s allocable share of our current and accumulated earnings and profits, the distribution will first be treated as a non-taxable return of capital, causing a reduction in the adjusted basis of such U.S. Holder’s Shares, and any amounts in excess of the U.S. Holder’s adjusted basis will constitute capital gain. Any remaining adjusted basis in the Shares tendered will be transferred to any remaining Shares held by such U.S. Holder.

We cannot predict whether or the extent to which the Offer will be oversubscribed. If the Offer is oversubscribed, proration of tenders pursuant to the Offer will cause us to accept fewer Shares than are tendered. Therefore, a U.S. Holder can be given no assurance that a sufficient number of such U.S. Holder’s Shares will be purchased pursuant to the Offer to ensure that such purchase will be treated as a sale or exchange, rather than as a dividend, for United States federal income tax purposes pursuant to the rules discussed above.

Non-U.S. Holders. The Depositary will withhold U.S. federal income taxes equal to 30% of the gross payments payable to a Non-U.S. Holder or his or her agent unless the Depositary determines that a reduced rate of withholding is available pursuant to a tax treaty or that an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of a trade or business within the U.S. In order to obtain an exemption from withholding on the grounds that the gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the U.S., a Non-U.S. Holder must deliver to the Depositary a properly completed and executed IRS Form W-8ECI. The Depositary will determine a holder’s status as a Non-U.S. Holder and eligibility for a reduced rate of, or exemption from, withholding by reference to any outstanding certificates or statements concerning eligibility for a reduced rate of, or exemption from, withholding (e.g. IRS Forms W-8BEN or W-8ECI) unless facts and circumstances indicate that such reliance is not warranted. A Non-U.S. Holder may be eligible to obtain a refund of all or a portion of any tax withheld if such Non-U.S. Holder meets one of the Section 302 Tests described above or is otherwise able to establish that no tax or a reduced amount of tax is due. Backup withholding generally will not apply to amounts subject to the 30% or a treaty-reduced rate of withholding. Non-U.S. Holders are urged to consult their own tax advisors regarding the application of U.S. federal income tax withholding, including eligibility for a withholding tax reduction or exemption, and the refund procedure.

United States Federal Income Tax Backup Withholding. See Section 3 with respect to the application of United States federal income tax backup withholding to both U.S. and Non-U.S. Holders.

 

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13. Effects of the Offer on the Market for Shares; Registration under the Exchange Act.

The purchase by Nabi of Shares under the Offer will reduce (at least until the Transaction is completed) our “public float” (the number of Shares owned by non-affiliate stockholders and available for trading in the securities markets). This reduction in our public float may result in lower stock prices and/or reduced liquidity in the trading market for the Shares following completion of the Offer. In addition, the Offer may reduce the number of Nabi stockholders. As of July 1, 2012, the last day before we commenced the Offer, we had 42,876,030 issued and outstanding Shares. Stockholders may be able to sell non-tendered Shares in the future, on NASDAQ or otherwise, at a net price higher or lower than the Purchase Price in the Offer. We can give no assurance, however, as to the price at which a stockholder may be able to sell such Shares in the future.

We anticipate that there will be a sufficient number of Shares outstanding and publicly traded following completion of the Offer to ensure a continued trading market for such Shares. Based upon published guidelines of NASDAQ, we do not believe that our purchase of Shares under the Offer will cause the remaining outstanding Shares to be delisted from NASDAQ.

The Shares are now “margin securities” under the rules of the Board of Governors of the Federal Reserve System. This classification has the effect, among other things, of allowing brokers to extend credit to their customers using the Shares as collateral. Nabi believes that, following the purchase of Shares under the Offer, the Shares remaining outstanding will continue to be margin securities for purposes of the Federal Reserve Board’s margin rules and regulations.

The Shares are registered under the Exchange Act, which requires, among other things, that we furnish certain information to our stockholders and the SEC and comply with the SEC’s proxy rules in connection with meetings of our stockholders. We believe that our purchase of Shares under the Offer will not result in the Shares becoming eligible for deregistration under the Exchange Act.

 

14. Extension of the Offer; Termination; Amendment.

We expressly reserve the right, in our sole discretion, at any time and from time to time, and regardless of whether or not any of the events set forth in Section 6 shall have occurred or shall be deemed by us to have occurred, to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and payment for, any Shares by giving oral or written notice of such extension to the Depositary and making a public announcement of such extension.

We also expressly reserve the right, in our sole discretion, to terminate the Offer and reject for payment and not pay for any Shares not theretofore accepted for payment or paid for, or, subject to applicable law, to postpone payment for Shares, upon the occurrence of an event that results in any of the conditions specified in Section 6 being triggered by giving oral or written notice of the termination or postponement to the Depositary and making a public announcement of the termination or postponement. Our reservation of the right to delay payment for Shares which we have accepted for payment is limited by Rule 13e-4(f)(5) under the Exchange Act, which requires that we must pay the consideration offered or return the Shares tendered promptly after termination or withdrawal of an Offer. Subject to compliance with applicable law, we further reserve the right, in our sole discretion, regardless of whether any of the events set forth in Section 6 have occurred or are deemed by us to have occurred, to amend the Offer in any respect (including, without limitation, by decreasing or increasing the consideration offered in the Offer or by decreasing or increasing the number of Shares being sought in the Offer). Amendments to the Offer may be made at any time and from time to time by public announcement of the amendment. In the case of an extension, the notice of the amendment must be issued no later than 9:00 a.m., New York City time, on the next business day after the last previously scheduled or announced Expiration Date. Any public announcement made pursuant to the Offer will be disseminated promptly to stockholders in a manner reasonably designed to inform stockholders of the change. In addition, we would file such press release as an exhibit to the Schedule TO.

 

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If we materially change the terms of the Offer or the information concerning the Offer, or if we waive a material condition of the Offer, we will extend the Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) promulgated under the Exchange Act. These rules provide that the minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer (other than a change in price or a change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of the terms or information. If:

(i) we increase or decrease the price to be paid for Shares or increase or decrease the value of Shares sought in the Offer (and thereby increase or decrease the number of Shares being sought in the Offer) and, in the event of an increase in the value of Shares purchased in the Offer, the increase exceeds 2% of the Shares outstanding, and

(ii) the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that notice of an increase or decrease is first published, sent or given in the manner specified in this Section 14,

then in each case the Offer will be extended until the expiration of the period of at least ten business days. For purposes of the Offer, a “business day” means any day other than a Saturday, Sunday or Federal holiday and consists of the time period from 12:01 a.m., at the beginning of the day, through 12:00 midnight, at the end of the day, New York City time.

 

15. Fees and Expenses.

We have retained Morrow & Co., LLC to act as Information Agent in connection with the Offer. As Information Agent, Morrow & Co., LLC may contact holders of Shares by mail, telephone, facsimile and personal interviews and may request brokers, dealers, commercial banks, trust companies or other nominee stockholders to forward materials relating to the Offer to beneficial owners. Morrow & Co., LLC, in its capacity as Information Agent, will receive reasonable and customary compensation for its services, will be reimbursed by us for reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection with the Offer, including liabilities under the federal securities laws.

We have retained American Stock Transfer & Trust Company, LLC to act as Depositary in connection with the Offer. American Stock Transfer & Trust Company, LLC, in its capacity as Depositary, will receive reasonable and customary compensation for its services, will be reimbursed by us for reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection with the Offer, including liabilities under the federal securities laws.

Certain officers and employees of the Company may render services in connection with the Offer but they will not receive any additional compensation for such services.

We will not pay any fees or commissions to brokers, dealers, commercial banks, trust companies or other nominees (other than fees to the Information Agent) for soliciting tenders of Shares pursuant to the Offer. Stockholders holding Shares through brokers, dealers, commercial banks, trust companies or other nominee stockholders are urged to consult the brokers, banks and other nominee stockholders to determine whether transaction costs may apply if stockholders tender Shares through the brokers, dealers, commercial banks, trust companies or other nominee stockholders and not directly to the Depositary. We will, however, upon request, reimburse brokers, dealers and commercial banks for customary mailing and handling expenses incurred by them in forwarding the Offer and related materials to the beneficial owners of Shares held by them as a nominee or in a fiduciary capacity. No broker, dealer, commercial bank, trust company or other nominee has been authorized to act as the agent of Nabi, the Information Agent or the Depositary for purposes of the Offer. We will pay or cause to be paid all stock transfer taxes, if any, on the purchase of Shares in the Offer, except as otherwise described in Section 5.

 

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16. Miscellaneous.

We are not aware of any jurisdiction where the making of the Offer is not in compliance with applicable law. If we become aware of any jurisdiction within the United States where the making of the Offer or the acceptance of Shares pursuant to the Offer is not in compliance with any valid applicable law, we will make a good faith effort to comply with the applicable law. If, after a good faith effort, we cannot comply with the applicable law, the Offer will not be made to, nor will tenders be accepted from or on behalf of, the holders of Shares residing in that jurisdiction within the United States. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on our behalf by one or more registered brokers or dealers licensed under the laws of the jurisdiction.

Pursuant to Rule 13e-4 promulgated under the Exchange Act, we have filed with the SEC a Tender Offer Statement on Schedule TO, which contains additional information relating to the Offer. The Schedule TO, including the exhibits and any amendments thereto, may be examined, and copies may be obtained, at the same places and in the same manner set forth in Section 9 with respect to information concerning Nabi.

We have not authorized anyone to provide you with information or make any representation on behalf of us or in connection with the Offer other than those contained in this Offer to Purchase, the related Letter of Transmittal or in the other documents that constitute a part of the Offer. If given or made, you should not rely on that information or representation as having been authorized by us.

Nabi Biopharmaceuticals

July 2, 2012

 

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ANNEX A

Preliminary Proxy Statement


Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

(Rule 14a-101)

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.      )

 

Filed by the Registrant x

 

Filed by a Party other than the Registrant ¨

 

Check the appropriate box:

x   Preliminary Proxy Statement
¨   Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
¨   Definitive Proxy Statement
¨   Definitive Additional Materials
¨   Soliciting Material Under § 240.14a-12

 

Nabi Biopharmaceuticals


(Name of Registrant as Specified In Its Charter)

 

N/A


(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

¨   No fee required.
x   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)   Title of each class of securities to which transaction applies:

Common stock, par value $0.10 per share, of Nabi Biopharmaceuticals (the “common stock”)

 

  


  (2)   Aggregate number of securities to which transaction applies:

126,000,000 shares of common stock to be issued in the transaction

 

  


  (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

The maximum aggregate value of the transaction was calculated, solely for purposes of determining the filing fee, by multiplying 126,000,000 shares of common stock by $1.58 per share (value of one share of common stock, based on the average of high and low prices of Nabi Biopharmaceuticals common stock as reported on the NASDAQ Global Select Market on June 4, 2012). In accordance with Section 14(g) of the U.S. Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying 0.0001146 by the sum under item (4) below.

 

  


  (4)   Proposed maximum aggregate value of transaction: $199,080,000

 

  


  (5)   Total fee paid: $22,815
¨   Fee paid previously with preliminary materials.

 

¨   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
  (1)   Amount Previously Paid:

 

  


  (2)   Form, Schedule or Registration Statement No.:

 

  


  (3)   Filing Party:

 

  


  (4)   Date Filed:

 

  


 


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Preliminary Proxy Statement

Subject to completion, dated June 8, 2012

 

LOGO

[*****], 2012

PROPOSED TRANSACTION—YOUR VOTE IS VERY IMPORTANT

The board of directors of Nabi Biopharmaceuticals (“Nabi”) has unanimously approved and declared advisable a Merger Implementation Agreement (the “Transaction Agreement”), dated as of April 22, 2012, by and between Nabi and Biota Holdings Limited (“Biota”), pursuant to which Nabi will acquire all of the outstanding shares of Biota in exchange for shares of Nabi common stock, and Biota will become a wholly-owned subsidiary of Nabi (the “Transaction”). Upon the completion of the Transaction, shares of Nabi common stock representing approximately 74% of the outstanding common stock of the combined company will be issued to former Biota stockholders, and the shares of common stock held by existing Nabi stockholders will represent approximately 26% of the outstanding common stock of the combined company immediately after the completion of the Transaction. The combined company will be named Biota Pharmaceuticals, Inc., and the shares of the combined company will be traded on the NASDAQ Global Select Market under the symbol “[*****].”

We are sending you the accompanying proxy statement to ask you to attend a special meeting of the stockholders of Nabi, or to vote your shares by proxy, in respect of the following proposals in connection with the Transaction:

 

   

to approve an amendment to the Nabi Restated Certificate of Incorporation (the “Nabi certificate of incorporation”) to increase the authorized shares of Nabi common stock from 125,000,000 shares to 200,000,000 shares;

 

   

to approve an amendment to the Nabi certificate of incorporation to change the name of Nabi from “Nabi Biopharmaceuticals” to “Biota Pharmaceuticals, Inc.”;

 

   

to approve an amendment to the Nabi certificate of incorporation to effect a reverse stock split of Nabi common stock at any time prior to December 31, 2012 at a ratio ranging from four-to-one to eight-to-one, as determined by Nabi’s board of directors in its sole discretion;

 

   

to approve the issuance of shares of Nabi common stock to Biota stockholders contemplated by the Transaction Agreement;

 

   

to approve, on an advisory (non-binding) basis, the compensation payable to certain executive officers of Nabi under existing arrangements in connection with the Transaction; and

 

   

to approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies if there are insufficient votes at the time of the special meeting to approve any of proposals 1 through 4.

After careful consideration, Nabi’s board of directors has determined that it is advisable and in the best interests of Nabi and its stockholders to consummate the Transaction as contemplated by the Transaction Agreement, and unanimously recommends that you vote “FOR” each of the foregoing proposals.

The accompanying proxy statement provides you with information about the Transaction Agreement, the Transaction and the special meeting of Nabi’s stockholders. Nabi encourages you to read the proxy statement carefully and in its entirety, including the Transaction Agreement, which is attached as Annex A. Before deciding how to vote, you should consider the “Risk Factors” beginning on page 28 of the proxy statement. You may also obtain more information about Nabi from documents Nabi has filed with the Securities and Exchange Commission as described under “Where You Can Find More Information” beginning on page 142 of the proxy statement.


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Your vote is important.

The Transaction cannot be completed unless the proposals to approve the amendments to the Nabi certificate of incorporation to increase the number of authorized shares and to change the name of the company are approved by the affirmative vote of the holders of a majority of the outstanding shares of Nabi’s common stock entitled to vote thereon, and the proposal to approve the issuance of Nabi common stock to Biota stockholders in the Transaction is approved by the affirmative vote of the holders of a majority of the votes cast on the proposal at the special meeting of Nabi stockholders. Accordingly, whether or not you plan to attend the special meeting, you are requested to promptly vote your shares by completing, signing and dating the enclosed proxy card or voting instruction form and returning it in the postage-paid envelope provided, or by voting over the telephone or via the Internet as instructed in these materials. If you sign, date and mail your proxy card without indicating how you wish to vote, your vote will be counted as a vote “FOR” each of the proposals described above.

Thank you for your cooperation and continued support.

 

Sincerely,
Raafat E.F. Fahim Ph.D.

President and Chief Executive

Officer

 

This proxy statement is dated [*****], 2012 and, together with the accompanying proxy card, is first being mailed or otherwise distributed to stockholders of Nabi on or about [*****], 2012.


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LOGO

12270 Wilkins Avenue

Rockville, Maryland 20852

NOTICE OF

SPECIAL MEETING OF STOCKHOLDERS

To Be Held On [*****], 2012

A special meeting of stockholders of Nabi Biopharmaceuticals (“Nabi”) will be held at [*****] on [*****], 2012, at [*****] a.m. local time, for the purpose of considering and voting upon the following proposals:

 

  1. to approve an amendment to the Nabi Restated Certificate of Incorporation (the “Nabi certificate of incorporation”) to increase the authorized shares of Nabi common stock from 125,000,000 shares to 200,000,000 shares;

 

  2. to approve an amendment to the Nabi certificate of incorporation to change the name of Nabi from “Nabi Biopharmaceuticals” to “Biota Pharmaceuticals, Inc.”;

 

  3. to approve an amendment to the Nabi certificate of incorporation to effect a reverse stock split of Nabi common stock at any time prior to December 31, 2012 at a ratio ranging from four-to-one to eight-to-one, as determined by Nabi’s board of directors in its sole discretion;

 

  4. to approve the issuance of shares of Nabi common stock to Biota stockholders contemplated by the Merger Implementation Agreement (the “Transaction Agreement”), dated as of April 22, 2012, by and between Nabi and Biota Holdings Limited (“Biota”), pursuant to which Nabi will acquire all of the outstanding shares of Biota in exchange for shares of Nabi common stock, and Biota will become a wholly-owned subsidiary of Nabi (the “Transaction”);

 

  5. to approve, on an advisory (non-binding) basis, the compensation payable to certain executive officers of Nabi under existing arrangements in connection with the Transaction; and

 

  6. to approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies if there are insufficient votes at the time of the special meeting to approve any of proposals 1 through 4.

[*****], 2012 has been fixed as the record date for the determination of Nabi stockholders who are entitled to notice of, and to vote at, the special meeting or any adjournment or postponement thereof. Only holders of Nabi common stock of record as of the close of business on [*****], 2012 are entitled to notice of, and to vote at, the special meeting or any adjournment or postponement thereof.

Your vote is important. Each of the proposals to be considered and voted upon at the special meeting is subject to a separate vote by Nabi’s stockholders. The Transaction cannot be completed unless the proposals to approve the amendments to the Nabi certificate of incorporation to increase the number of authorized shares and change the name of the company are approved by the affirmative vote of the holders of a majority of the outstanding shares of Nabi’s common stock entitled to vote thereon, and the proposal to approve the issuance of Nabi common stock to Biota stockholders in the Transaction is approved by the affirmative vote of the holders of a majority of the votes cast on the proposal at the special meeting of Nabi stockholders. Accordingly, whether or not you plan to attend the special meeting, you are requested to promptly vote your shares by completing, signing and dating the enclosed proxy card or voting instruction form and returning it in the postage-paid envelope provided, or by voting over the telephone or via the Internet as instructed in these materials. If you sign, date and mail your proxy card without indicating how you wish to vote, your vote will be counted as a vote “FOR” each of the proposals described above.


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Instructions on the different ways to vote are found on the enclosed proxy card or voting instruction form. Please vote each and every proxy card or voting instruction form you receive. You may revoke your proxy at any time before it is voted at the special meeting by following the procedures set forth in the accompanying proxy statement.

Nabi’s board of directors has determined that it is advisable and in the best interests of Nabi and its stockholders to consummate the Transaction as contemplated by the Transaction Agreement, and unanimously recommends that you vote “FOR” each of the proposals to be considered and voted upon at the special meeting.

 

By Order of the Board of Directors,
  

Raafat E. F. Fahim, Ph.D.

President and Chief Executive Officer

Rockville, Maryland

[*****], 2012


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TABLE OF CONTENTS

 

SUMMARY

     1   

The Companies

     1   

Special Meeting of Nabi Stockholders

     2   

The Transaction

     4   

Selected Historical Consolidated Financial Data of Nabi

     10   

Selected Historical Consolidated Financial Information of Biota

     11   

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

     12   

COMPARATIVE PER SHARE DATA

     19   

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

     20   

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING

     22   

RISK FACTORS

     28   

Risks Related to the Transaction

     28   

Risks Related to Biota and the Combined Company

     33   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     43   

THE SPECIAL MEETING

     45   

Date, Time and Place

     45   

Purpose

     45   

Board Recommendation

     45   

Record Date; Outstanding Shares; Shares Entitled to Vote

     45   

Quorum

     46   

Security Ownership of Certain Beneficial Owners and Management of Nabi Stock

     47   

Required Vote

     48   

Voting by Proxy

     49   

How to Vote

     50   

Revoking Your Proxy

     50   

Voting in Person at the Special Meeting

     51   

Adjournments and Postponements

     51   

Householding

     51   

Solicitation of Proxies

     51   

Other Business

     52   

Assistance

     52   

THE TRANSACTION

     53   

Structure of the Transaction

     53   

Background of the Transaction

     53   

Nabi Reasons for the Transaction

     57   

Biota Reasons for the Transaction

     60   

Recommendation of the Nabi Board of Directors

     61   

Opinion of Financial Advisor to the Nabi Board of Directors

     61   

Interests of Nabi Executive Officers and Directors in the Transaction

     67   

Executive Compensation Payable in Connection with the Transaction

     70   

Accounting Treatment

     71   

Board of Directors and Management of the Combined Company Following the Transaction; Headquarters

     72   

Federal Securities Laws Consequences; Stock Transfer Restrictions

     75   

Material U.S. Federal Income Tax Consequences of the Transaction

     76   

Considerations by Nabi’s Board of Directors if the Transaction is Not Completed

     76   

NO APPRAISAL RIGHTS

     76   

REPURCHASE OF SHARES OF NABI COMMON STOCK; DIVIDENDS AND DISTRIBUTIONS

     77   

Issuer Tender Offer; Dividends and Distributions

     77   

Contingent Value Rights

     77   

 

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REGULATORY AND OTHER APPROVALS REQUIRED FOR THE TRANSACTION

     79   

Australian Regulatory Matters

     79   

Biota Stockholder Approval

     79   

NASDAQ Initial Listing

     80   

HSR Approval

     80   

INFORMATION ABOUT THE COMPANIES

     81   

Nabi Biopharmaceuticals

     81   

Biota Holdings Limited

     81   

Biota Management’s Discussion and Analysis of Financial Condition and Results of Operations

     98   

Biota Quantitative and Qualitative Disclosures About Financial, Credit and Liquidity Risk

     103   

THE TRANSACTION AGREEMENT

     106   

Form of the Transaction; Transaction Consideration

     106   

Potential Adjustment to Transaction Consideration

     107   

Status of Newly Issued Shares of Nabi Common Stock and Exemption from Registration

     107   

Nabi Closing Net Cash Balance

     107   

Conditions Precedent to the Transaction

     108   

Representations and Warranties

     110   

Conduct of Business and Related Covenants

     114   

Additional Obligations

     119   

Board Recommendation

     120   

Exclusivity; No-Solicitation

     122   

Termination

     123   

Break Fee

     124   

Costs and Expenses

     126   

Amendment; Waiver

     126   

PROPOSAL 1: AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED COMMON STOCK

     127   

PROPOSAL 2: AMENDMENT TO CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF NABI BIOPHARMACEUTICALS

     130   

PROPOSAL 3: AMENDMENT TO CERTIFICATE OF INCORPORATION TO EFFECTUATE REVERSE STOCK SPLIT

     131   

PROPOSAL 4: ISSUANCE OF NABI SHARES IN CONNECTION WITH THE TRANSACTION

     138   

PROPOSAL 5: ADVISORY VOTE ON EXECUTIVE COMPENSATION

     139   

PROPOSAL 6: ADJOURNMENT OF SPECIAL MEETING

     140   

FUTURE NABI STOCKHOLDER PROPOSALS AND NOMINATIONS

     141   

WHERE YOU CAN FIND MORE INFORMATION

     142   

Where Stockholders Can Find More Information About Nabi

     142   

Where Stockholders Can Find More Information About Biota

     143   

LIST OF ANNEXES

 

Annex A

  

Merger Implementation Agreement

  

Annex B

  

Biota Financial Statements

  

Annex C

  

Opinion of Financial Advisor to the Nabi Board of Directors

  

Annex D

  

Amendment No. 1 to Certificate of Incorporation

  

Annex E

  

Amendment No. 2 to Certificate of Incorporation

  

Annex F

  

Amendment No. 3 to Certificate of Incorporation

  

Annex G

  

Contingent Value Rights Agreement

  

 

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SUMMARY

This proxy statement is being furnished to the stockholders of Nabi Biopharmaceuticals (“Nabi”) in connection with the solicitation of proxies by our board of directors for use at a special meeting of stockholders to be held on [******], 2012 at [******] a.m. local time, and at any reconvened meeting following any adjournment or postponement thereof. The special meeting will be held at [*****]. The purpose of the special meeting is for our stockholders to consider and vote upon certain proposals in connection with the transaction contemplated by the Merger Implementation Agreement, dated as of April 22, 2012, as it may be amended or supplemented (the “Transaction Agreement”), by and among Nabi and Biota Holdings Limited, a Melbourne, Australia company (“Biota”), pursuant to which each outstanding ordinary share of Biota capital stock will be acquired by Nabi in exchange for newly issued shares of Nabi common stock pursuant to a scheme of arrangement under Australian corporate law, and Biota will become a wholly-owned subsidiary of Nabi (the “Transaction” or the “scheme of arrangement”).

The following summary highlights selected information in this proxy statement and may not contain all of the information that may be important to you. Accordingly, you are urged to read carefully this entire proxy statement, including the attached annexes, and the other documents to which this proxy statement refers you in order for you to fully understand the Transaction. See “Where You Can Find More Information” beginning on page 142 of this proxy statement. Each item in this summary refers to the page of this proxy statement on which that subject is discussed in more detail.

The functional currency of Nabi is the United States (“U.S.”) dollar. Unless otherwise specified, all references to “dollars,” “$,” or “U.S.$” shall mean U.S. dollars. Biota uses the Australian dollar (“A$”) as its functional currency.

The Companies

Nabi Biopharmaceuticals (see page 81)

Nabi Biopharmaceuticals, headquartered in Rockville, Maryland, is a biopharmaceutical company that has focused on the development of vaccines addressing unmet medical needs, including nicotine addiction. Its sole product currently in development is NicVAX® (Nicotine Conjugate Vaccine), an innovative and proprietary investigational vaccine for the treatment of nicotine addiction and prevention of smoking relapse based on patented technology.

The principal trading market for Nabi’s common stock (NASDAQ: NABI) is the NASDAQ Global Select Market (“NASDAQ”). Nabi’s principal executive offices are located at 12270 Wilkins Avenue, Rockville, MD 20852. Its telephone number is (301) 770-3099. Nabi’s website is located at www.nabi.com (the contents of which are not part of this proxy statement).

Biota Holdings Limited (see page 81)

Biota Holdings Limited, headquartered in Melbourne Australia, is an anti-infective drug discovery and development company with key expertise in respiratory diseases, particularly influenza. Biota’s first revenue-producing product, zanamivir, was developed and commercialized as the first-in-class neuraminidase inhibitor (“NI”) pursuant to a research and license agreement entered into with GlaxoSmithKline (“GSK”). GSK markets the product as Relenza™. Biota and Daiichi Sankyo co-own a range of second generation influenza NI antivirals, of which the lead product, laninamivir, is marketed in Japan by Daiichi Sankyo as Inavir®. Biota holds a contract from the U.S. Office of Biomedical Advanced Research and Development Authority (“BARDA”) for the late stage development of laninamivir.

 

 

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In addition, Biota has undertaken a Phase IIb study with its lead antiviral compound for human rhinovirus (“HRV”) infection in patients with asthma. Further Biota research achievements include a series of candidate drugs aimed at treatment of respiratory syncytial virus (“RSV”) infection and hepatitis C virus (“HCV”) infection.

The principal trading market for Biota’s ordinary shares (ASX: BTA) is the Australian Securities Exchange (“ASX”). Biota’s ordinary shares also are traded in the U.S. in the form of American Depositary Receipts (ADR Trading Symbol: BTAHY). Biota’s principal executive offices are located at 10/585 Blackburn Road, Notting Hill Victoria 3168, Australia. Its telephone number is +61 3 9915 3700. Biota’s website is located at www.biota.com.au (the contents of which are not part of this proxy statement).

Special Meeting of Nabi Stockholders

The Special Meeting (see page 45)

Nabi’s stockholders are being asked to consider and vote upon the following proposals in connection with the Transaction:

 

  1. to approve an amendment to the Nabi Restated Certificate of Incorporation (the “Nabi certificate of incorporation”) to increase the authorized shares of Nabi common stock from 125,000,000 shares to 200,000,000 shares;

 

  2. to approve an amendment to the Nabi certificate of incorporation to change the name of Nabi from “Nabi Biopharmaceuticals” to “Biota Pharmaceuticals, Inc.”;

 

  3. to approve an amendment to the Nabi certificate of incorporation to effect a reverse stock split of Nabi common stock at any time prior to December 31, 2012, at a ratio ranging from four-to-one to eight-to-one, as determined by Nabi’s board of directors in its sole discretion;

 

  4. to approve the issuance of shares of Nabi common stock to Biota stockholders contemplated by the Transaction Agreement;

 

  5. to approve, on an advisory (non-binding) basis, of the compensation payable to certain executive officers of Nabi under existing arrangements in connection with the Transaction; and

 

  6. to approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies if there are insufficient votes at the time of the special meeting to approve any of proposals 1 through 4.

Proposals 1, 2 and 3 are collectively referred to herein as the “Charter Amendment Proposals.” Proposals 1, 2 and 4 are collectively referred to herein as the “Transaction Proposals.”

The Nabi stockholder’s vote on such proposals will take place at a special meeting to be held at [*****] a.m. local time on [*****], 2012, at [*****].

Record Date for the Special Meeting (see page 45)

You can vote at the special meeting all of the shares of Nabi’s common stock you held of record as of the close of business on [*****], 2012, which is the record date for the special meeting. As of the close of business on the record date, there were [*****] shares of Nabi’s common stock outstanding.

Recommendation of the Nabi Board of Directors (see page 61)

Nabi’s board of directors unanimously recommends that you vote “FOR” each of the proposals to be considered and voted upon at the special meeting. In connection with its decision to recommend that you vote

 

 

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FOR” each of the proposals, Nabi’s board of directors has determined that it is advisable and in the best interests of Nabi and its stockholders to adopt each amendment to the Nabi certificate of incorporation and to issue the Nabi shares in connection with the Transaction. See “The Transaction—Nabi Reasons for the Transaction” beginning on page 57 of this proxy statement and “The Transaction—Recommendation of the Nabi Board of Directors” beginning on page 61 of this proxy statement for more information about the factors considered by Nabi’s board of directors.

Required Vote (see page 48)

Each share of Nabi’s common stock is entitled to one vote at the special meeting. The holders of issued and outstanding shares of Nabi’s common stock which represent a majority of the votes entitled to be cast at the special meeting, present in person or represented by proxy, will constitute a quorum for the transaction of business at the special meeting. Abstentions will be counted for purposes of determining the presence of a quorum at the special meeting. Banks, brokers and other nominees that hold their customers’ shares in street name may not vote their customers’ shares on “non-routine” matters without instructions from their customers. As each of the proposals to be voted upon at the special meeting is considered “non-routine,” such organizations do not have discretion to vote on any proposal for which they do not receive instructions from their customers (this is referred to in this context as a “broker non-vote”). As a result, if you fail to provide your broker, bank or other nominee with any instructions regarding how to vote your shares, your shares will not be considered present at the special meeting, will not be counted for purposes of determining the presence of a quorum and will not be voted on any of the proposals. If you provide instructions to your broker, bank or other nominee which indicate how to vote your shares with respect to certain proposals but not with respect to a particular proposal, your shares will be considered present at the special meeting and be counted for purposes of determining the presence of a quorum but will not be voted with respect to that particular proposal.

Approval of the proposals presented at the special meeting will require the following:

 

   

Approval of each of the Charter Amendment Proposals requires the affirmative vote of the holders of a majority of the shares of Nabi’s common stock outstanding at the close of business on the record date. An abstention from voting or a broker non-vote on any of the Charter Amendment Proposals will have the same effect as a vote against the proposal.

 

   

Approval of the issuance of shares of Nabi common stock to Biota stockholders as contemplated by the Transaction Agreement will require the affirmative vote of the holders of a majority of the shares of Nabi’s common stock properly cast on the proposal at the special meeting. An abstention from voting or a broker non-vote on this proposal will have no effect on the outcome of the vote on this proposal.

 

   

Approval, on an advisory (non-binding) basis, of the compensation payable to certain executive officers of Nabi under existing arrangements in connection with the Transaction will require the affirmative vote of the holders of a majority of the shares of Nabi’s common stock properly cast on the proposal at the special meeting. An abstention from voting or a broker non-vote on this proposal will have no effect on the outcome of the vote on this proposal.

 

   

Approval of one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies if there are insufficient votes at the time of the special meeting to approve any of proposals 1 through 4, will require the affirmative vote of the holders of a majority of the shares of Nabi’s common stock properly cast on the proposal at the special meeting. An abstention from voting or a broker non-vote on this proposal will have no effect on the outcome of the vote on this proposal.

Security Ownership of Certain Beneficial Owners and Management of Nabi Stock (see page 47)

As of the close of business on May 15, 2012, the current directors and executive officers of Nabi were deemed to beneficially own 2,722,663 shares of Nabi’s common stock, which represented approximately 6.3% of

 

 

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the shares of Nabi’s common stock outstanding on that date. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (“SEC”), as described below under “The Special Meeting—Security Ownership of Certain Beneficial Owners and Management of Nabi Stock” beginning on page 47 of this proxy statement.

The Transaction

Structure of the Transaction (see page 53)

On April 22, 2012, Nabi and Biota entered into the Transaction Agreement, pursuant to which Nabi will acquire all of the outstanding ordinary shares of Biota in accordance with a scheme of arrangement under Australian corporate law and to be submitted for approval by the Supreme Court of Victoria, Australia. Subject to the terms and conditions of the Transaction Agreement, upon the completion of the Transaction, each ordinary share of Biota outstanding immediately prior to the completion of the Transaction will be transferred to Nabi in exchange for 0.669212231 newly issued shares of Nabi common stock (the “exchange ratio”), subject to certain adjustments as described below. Biota does not have any class or series of capital stock outstanding other than the ordinary shares. As a result of the Transaction, Biota will become a wholly-owned subsidiary of Nabi. A copy of the Transaction Agreement is attached as Annex A to this proxy statement. Nabi encourages you to read the Transaction Agreement carefully and in its entirety, as it is the principal legal document that governs the Transaction.

Consideration (see page 106)

Nabi stockholders.    Nabi stockholders will continue to own their existing shares of Nabi common stock after the Transaction. Nabi stockholders should not return their stock certificates with the enclosed proxy card.

Biota stockholders.    Nabi has agreed to issue 0.669212231 shares of Nabi common stock for each ordinary share of Biota outstanding immediately prior to the completion of the Transaction, subject to certain adjustments as described below. Immediately after the completion of the Transaction, Nabi’s existing stockholders collectively will own approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders collectively will own approximately 74% of the outstanding common stock of the combined company. In the event that Nabi conducts an issuer tender offer to purchase shares of Nabi common stock or implements the reverse stock split described in the proxy statement before the completion of the Transaction, the number of shares of Nabi common stock to be issued in exchange for each ordinary share of Biota will be adjusted in accordance with the Transaction Agreement in order to preserve the respective percentage of shares of the outstanding common stock of the combined company to be held immediately after the completion of the Transaction by Biota’s former stockholders on the one hand (collectively being approximately 74%) and Nabi’s existing stockholders on the other hand (collectively being approximately 26%).

Treatment of Equity-Based Awards (see page 106)

Biota has represented in the Transaction Agreement that, immediately prior to the completion of the Transaction, there will be no outstanding rights to acquire any ordinary shares of Biota under Biota’s equity incentive arrangements.

Opinion of Financial Advisor to the Nabi Board of Directors (see page 61)

On April 20, 2012, Houlihan Lokey Financial Advisors, Inc., which we refer to as Houlihan Lokey, rendered its written opinion to Nabi’s board of directors as to the fairness to Nabi from a financial point of view as of such date of the exchange ratio provided for in the Transaction pursuant to the Transaction Agreement.

 

 

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Houlihan Lokey’s opinion was directed to Nabi’s board of directors (in its capacity as such) and only addressed the fairness to Nabi, from a financial point of view, of the exchange ratio provided for in the Transaction pursuant to the Transaction Agreement and did not address any other aspect or implication of the Transaction. The summary of Houlihan Lokey’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex C to this proxy statement and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to any Nabi stockholder as to how such stockholder should act or vote with respect to any matter relating to the Transaction.

Interests of Nabi’s Executive Officers and Directors in the Transaction (see page 67)

In considering the recommendation of Nabi’s board of directors to vote in favor of each of the proposals to be considered and voted upon at the special meeting, you should be aware that Nabi’s executive officers and directors have interests in the Transaction that may be different from, or in addition to, the interests of Nabi’s stockholders generally. Nabi’s board of directors was aware of these interests and considered them, among other matters, when it approved the Transaction Agreement and the Transaction. See “The Transaction—Interests of Nabi Executive Officers and Directors in the Transaction” beginning on page 67 of this proxy statement for more information.

Accounting Treatment (see page 71)

Under accounting principles generally accepted in the U.S. (“U.S. GAAP”), the Transaction will be accounted for as a “reverse acquisition” pursuant to which Biota will be considered the acquiring entity for accounting purposes. As such, Biota will allocate the total purchase consideration to Nabi’s tangible and identifiable intangible assets and liabilities based on their relative fair values at the date of the completion of the Transaction. Biota’s historical results of operations will replace Nabi’s historical results of operations for all periods prior to the Transaction; after completion of the Transaction, the results of operations of both companies will be included in Nabi’s consolidated financial statements.

Directors and Executive Officers Following the Transaction (see page 72)

The parties have reached certain agreements regarding the governance of the combined company following the completion of the Transaction, including the following:

 

   

Board of Directors.    The board of directors of the combined company will initially consist of eight directors, six of whom will be former directors of Biota and two of whom will be former directors of Nabi. It is currently expected that a certain number of directors of the combined company who were former directors of Biota will not stand for election at the first stockholders’ meeting of the combined company following the Transaction. Thereafter, it is currently expected that the board of directors of the combined company will consist of fewer members with a majority of the directors being based in the U.S.

 

   

Executive Officers.    Biota’s current chief executive officer, Peter Cook, and Biota’s current chief financial officer, Damian Lismore, will fill those roles within the combined company for an appropriate transition period until U.S. based executives are appointed and assume responsibility. It is anticipated that senior management positions in the combined company will be filled principally from current members of the Biota management team.

 

   

Headquarters.    It is the current intention of Biota and Nabi that the combined company’s corporate headquarters will initially be located in Rockville, Maryland.

 

 

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Material U.S. Federal Income Tax Consequences of the Transaction (see page 76)

There are no material U.S. federal income tax consequences to Nabi’s existing stockholders that will result from the issuance of Nabi shares in the Transaction. See “Proposal 3: Amendment to Certificate of Incorporation to Effectuate Reverse Stock Split—Certain U.S. Federal Income Tax Consequences of the Reverse Stock Split” beginning on page 136 of this proxy statement for a discussion of certain U.S. federal income tax consequences of the proposed reverse stock split described in this proxy statement.

Regulatory and Other Approvals (see page 79)

Australian Regulatory Matters

Under the Corporations Act of 2001 (Cth) (“Corporations Act”), the Transaction must be approved by Biota stockholders and a Supreme or Federal Court of Australia (expected to be the Supreme Court of Victoria, Australia) to become effective. The Corporations Act expressly prevents a court from granting approval unless:

 

   

the Australian Securities and Investments Commission (“ASIC”) provides the court with a statement that it has no objection to the Transaction; or

 

   

the court is satisfied that the Transaction has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6 of the Corporations Act (which relates to takeovers).

Biota intends to apply to the Supreme Court of Victoria, Australia at a first court hearing (the “first court hearing”) for (1) an order that meetings for each applicable class of Biota stockholders be convened and (2) an approval of the distribution of the explanatory memorandum about the Transaction to Biota stockholders. Biota must give ASIC at least 14 days’ notice before the first court hearing and must allow ASIC a reasonable opportunity to review the explanatory memorandum and to make submissions to the court with respect to it. Biota also intends to apply to ASIC for ASIC to provide to the court a written statement that it has no objection to the Transaction. Provided that ASIC is satisfied with the terms of the Transaction documents (including the Transaction Agreement) and the explanatory memorandum to be provided to Biota stockholders, Biota expects that ASIC will provide to the court at the first court hearing a letter stating that ASIC intends to issue a no-objection statement at the second court hearing (described below).

Pursuant to the orders made by the court at the first court hearing, Biota will convene a meeting of Biota stockholders to vote on a resolution to approve the Transaction. The Transaction requires the approval of a majority in number of Biota stockholders that are present and voting in person or by proxy at the meeting, as well as at least 75% of the votes cast on the resolution in person or by proxy by Biota stockholders at the meeting. The Biota stockholders meeting is expected to occur on or about [****], 2012.

If the Transaction is approved at the Biota stockholders meeting and all other conditions to the Transaction are satisfied, Biota will seek to obtain court approval of the Transaction at the second court hearing (the “second court hearing”). The second court hearing is expected to occur on or about [****], 2012. If the court approves the Transaction, a copy of the court order will be filed with ASIC and the Transaction will become binding on all applicable classes of Biota stockholders, including those who voted against the Transaction (the “effective date of the scheme of arrangement”).

Trading in ordinary shares of Biota on the ASX will be suspended from the close of trading on the effective date of the scheme of arrangement, which is anticipated to be shortly after the date of court approval. A record date (which will be the fifth business day following the effective date of the arrangement) will be set to determine the Biota stockholders entitled to receive shares of Nabi common stock as consideration in the Transaction. The Transaction consideration will be provided to Biota stockholders three business days after such

 

 

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record date and the Transaction will be deemed to have been completed or implemented on that date (the “implementation date”).

Biota Stockholder Approval

Biota will hold a special meeting of its stockholders on or about [****], 2012 to consider and vote upon a resolution to approve the Transaction. The Transaction must be approved by the requisite majorities of the Biota stockholders under Section 411(4)(a)(ii) of the Corporations Act (a majority in number of Biota stockholders that are present and voting in person or by proxy at the meeting, as well as at least 75% of the votes cast on the resolution in person or by proxy by Biota stockholders at the meeting).

HSR Approval

The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the implementing regulations thereunder (the “HSR Act”) require the parties to certain acquisitions and other transactions that meet specified minimum size requirements to file notifications with the Antitrust Division of the U.S. Department of Justice and the U.S. Federal Trade Commission and observe a waiting period before closing, unless an exemption applies. Nabi and Biota believe that the Transaction is exempt from the notification requirements based on the fair market value of Biota’s non-exempt assets, namely its assets in the U.S. Accordingly, neither Nabi nor Biota is expected to make a notification under the HSR Act with respect to the Transaction. If such exemption does not apply, the Transaction would not be able to be consummated until notification and report forms have been filed with the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission by Nabi and Biota, and the applicable waiting period has expired or been terminated.

Other than as described above, neither Nabi nor Biota is aware of any regulatory approvals required to be obtained, or waiting periods required to expire, to complete the Transaction. If Nabi and Biota discover that other approvals or waiting periods are necessary, Nabi and Biota intend to seek to obtain or comply with them in accordance with the Transaction Agreement.

Listing of Nabi Common Stock (see page 80)

Nabi has agreed to obtain listing approval from the NASDAQ for the Nabi shares that will be issued in the Transaction.

No Appraisal Rights (see page 76)

Under Delaware law, holders of shares of Nabi common stock are not entitled to appraisal rights in connection with the Transaction or any of the matters to be acted on at the special meeting.

Conditions to Completion of the Transaction (see page 108)

As more fully described in this proxy statement and in the Transaction Agreement, the completion of the Transaction is conditioned on the satisfaction or, where legally permissible, waiver of a number of conditions, including among others:

 

   

Biota stockholder approval of the Transaction;

 

   

Nabi stockholder approval of the Transaction Proposals;

 

   

approval of the Transaction by the Supreme Court of Victoria, Australia;

 

   

approval by the NASDAQ of the listing of the Nabi shares that will be issued in the Transaction;

 

   

Nabi having a closing net cash balance of no less than $54 million after satisfying outstanding liabilities; and

 

 

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expiration or early termination of any applicable waiting period under the HSR Act and certain other competition laws.

Each party’s obligation to complete the Transaction is subject to certain other conditions, including the absence of any injunction, restraint or governmental restriction prohibiting the Transaction, the accuracy of the other party’s representations and warranties contained in the Transaction Agreement, material compliance by the other party with its obligations under the Transaction Agreement, and the absence of a material adverse effect related to the other party. Nabi cannot be certain when, or if, the conditions to the Transaction will be satisfied or waived, or that the Transaction will be completed. Approval, on an advisory (non-binding) basis, of the compensation payable under existing arrangements to certain executive officers of Nabi and approval of the proposed amendment to the Nabi certificate of incorporation to effect a reverse stock split are not conditions to completion of the Transaction.

Non-Solicitation of Other Offers (see page 122)

The Transaction Agreement obliges each party to abide by certain restrictions on such party’s ability to solicit competing proposals from third parties and to provide non-public information to and enter into discussions or negotiations with third parties regarding competing proposals. Notwithstanding this obligation, each party may under certain circumstances furnish information to and engage in discussions or negotiations with third parties with respect to unsolicited competing proposals if such company’s board of directors determines in good faith that the competing proposal is, or may reasonably be expected to lead to, a superior proposal, as defined in the Transaction Agreement, and that not taking such action would, or would be likely to, involve a breach of the fiduciary or statutory duties owed by a director.

Termination of the Transaction Agreement (see page 123)

The Transaction Agreement may be terminated and the Transaction abandoned at any time before the effective time of the Transaction upon the mutual agreement of Nabi and Biota. In addition, either Nabi or Biota may terminate the Transaction Agreement if:

 

   

there is a breach or non-fulfillment of a condition to closing described under “—Conditions to Completion of the Transaction” above that is not waived;

 

   

a condition to closing becomes incapable of being satisfied, and the parties are unable to reach an agreement to resolve the matter within 15 business days after a notice is given by the non-breaching party to the breaching party;

 

   

before the approval of the Transaction by the Supreme Court of Victoria, Australia, if the other party is in material breach of any clause of the Transaction Agreement and the breach continues to exist for 15 business days after a notice is given by the non-breaching party to the breaching party; or

 

   

the Transaction has not become effective on or before October 31, 2012.

Nabi may terminate the Transaction Agreement if Biota’s board of directors publicly changes (including by attaching qualifications) or withdraws its recommendation in favor of the Transaction or publicly recommends, promotes or otherwise endorses a superior proposal. Similarly, the Transaction Agreement may be terminated by Biota if (1) Nabi’s board of directors publicly changes (including by attaching qualifications) or withdraws its recommendation in favor of the Transaction Proposals or publicly recommends, promotes or otherwise endorses a superior proposal or (2) if Nabi does not comply with its obligations, after the Transaction is approved by the Supreme Court of Victoria, Australia, to provide the Nabi closing net cash balance certificate to Biota on the implementation date showing a Nabi closing net cash balance of no less than $54 million.

 

 

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Expenses and Break Fees (see page 124)

In certain circumstances described under “The Transaction Agreement—Break Fee” beginning on page 124 of this proxy statement, Nabi may be obligated to pay Biota a break fee of A$2.0 million or Biota may be obligated to pay Nabi a break fee of A$2.0 million. The Transaction Agreement generally provides that each party will bear its own costs and expenses, except as described under “The Transaction Agreement—Costs and Expenses” beginning on page 126 of this proxy statement.

Repurchase of Shares of Nabi Common Stock; Dividends and Distributions (see page 77)

Nabi plans to return to its stockholders, before the completion of the Transaction, its remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction after satisfying outstanding liabilities. Such distribution is expected to take the form of a repurchase of certain of the outstanding shares of Nabi common stock through an issuer tender offer and, for any remaining amounts, through a dividend or return of capital, and currently is expected to be in the range of approximately $25 million to $30 million in the aggregate. Nabi plans to commence an issuer tender offer to repurchase certain of the outstanding shares of Nabi common stock after filing a preliminary form of this proxy statement with the SEC and to complete such issuer tender offer before mailing a definitive form of this proxy statement to Nabi stockholders. After the completion of the issuer tender offer but prior to the completion of the Transaction, Nabi plans to declare a dividend or effect a return of capital, as applicable, to distribute any remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction that is not required to satisfy any outstanding liabilities.

Contingent Value Rights (see page 77)

Nabi plans to issue contingent value rights (each, a “CVR” and collectively, the “CVRs”) to existing Nabi stockholders before the completion of the Transaction. Nabi expects that one CVR will be issued for each share of Nabi common stock outstanding as of a record date to be set at a date prior to the completion of the Transaction. However, the CVRs will not be attached to the shares of Nabi common stock. A CVR will be a non-transferrable (subject to certain limited exceptions) right to potentially receive certain cash payments in connection with a NicVAX Transaction (as defined in the CVR Agreement) upon the terms and subject to the conditions set forth in a Contingent Value Rights Agreement to be entered into between Nabi and a rights agent (the “CVR Agreement”). The form of the CVR Agreement is attached to this proxy statement as Annex G.

See “Repurchase of Shares of Nabi Common Stock; Dividends and Distributions—Contingent Value Rights” beginning on page 77 of this proxy statement for more information regarding the CVRs, the CVR Agreement and the NicVAX Transaction.

Questions

If you have additional questions about the Transaction or other matters discussed in this proxy statement after reading this proxy statement, you should contact Morrow & Co., LLC, Nabi’s proxy solicitation agent. The address of Morrow & Co., LLC is 470 West Avenue, Stamford, CT 06902. You can call Morrow & Co., LLC at (203) 658-9400 or toll-free at (800) 662-5200.

 

 

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Selected Historical Consolidated Financial Data of Nabi

The following table sets forth selected consolidated financial data for Nabi. The data should be read in conjunction with Nabi’s audited consolidated historical financial statements and related notes included in Nabi’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and Nabi’s unaudited condensed consolidated historical financial statements and related notes included in Nabi’s Quarterly Report on Form 10-Q for the three months ended March 31, 2012. See “Where You Can Find More Information” beginning on page 142 of this proxy statement for information regarding how you can view Nabi’s periodic reports filed with the SEC. The summary financial data for the three months ended March 31, 2012 and March 26, 2011 are unaudited, but in the opinion of Nabi’s management reflect all adjustments of a normal recurring nature necessary for a fair statement of Nabi’s financial position and results of operations at the dates and for the periods indicated. The results for the three months ended March 31, 2012 are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year.

Nabi’s historical financial data may not be indicative of the results of operations or financial position to be expected in the future.

 

(in thousands, except per share
amounts)

   Three Months Ended      Year ended  
   March 31,
2012
    March 26,
2011
     December 31,
2011
    December 25,
2010
    December 26,
2009
    December 27,
2008
    December 29,
2007
 

Statement of Operations Data:

               

Revenue:

               

Revenue

   $ 632      $ 9,173       $ 14,838      $ 35,005      $ 10,489        —          —     

Operating expenses:

               

Cost of services

     —          625         1,463        3,951        1,988        —          —     

Research and development expense

     1,518        5,335         17,765        26,078        16,490        12,556        18,841   

General and administrative expense

     1,277        1,342         5,372        6,174        9,987        12,415        26,090   

Total operating expenses

     2,795        7,302         24,600       36,203        28,465        24,971        44,931   

Operating income (loss)

     (2,163     1,871         (9,762 )     (1,198     (17,976     (24,971     (44,931

Interest income

     32        72         194       230        368        4,579        6,026   

Interest expense

     —          —           —          (210     (1,071     (3,902     (9,007

Other income (expense), net

     33        37         37       291        (48     (1,454     446   

Income (loss) from continuing operations before income taxes

     (2,098     1,980         (9,531 )     (877     (18,727     (25,748     (47,466

Benefit from income taxes

     671        —           2,018       1,765        —          2,765        14,265   

Net income (loss) from continuing operations

     (1,427     1,980         (7,513 )     878        (18,727     (22,983     (33,201

Net income from discontinued operations

     991        —           2,982       —          —          4,245        71,587   

Net income (loss)

   $ (436   $ 1,980       $ (4,531 )   $ 878      $ (18,727   $ (18,738   $ 38,386   

Basic income (loss) per share:

               

Continuing operations

   $ (0.03   $ 0.05       $ (0.18 )   $ 0.02      $ (0.37   $ (0.44   $ (0.55

Discontinued operations

     0.02        —           0.07       —          —        $ 0.08      $ 1.19   

Basic income (loss) per share

     (0.01   $ 0.05       $ (0.11 )   $ 0.02      $ (0.37   $ (0.36   $ 0.64   

Diluted income (loss) per share:

               

Continuing operations

   $ (0.03   $ 0.05       $ (0.18 )   $ 0.02      $ (0.37   $ (0.44   $ (0.55

Discontinued operations

     0.02        —         $ 0.07        —          —        $ 0.08      $ 1.19   

Diluted income (loss) per share

   $ (0.01   $ 0.05       $ (0.11 )   $ 0.02      $ (0.37   $ (0.36   $ 0.64   

Balance Sheet Data:

               

Cash, cash equivalents and marketable securities

   $ 94,875      $ 100,525       $ 96,389     $ 110,667      $ 118,999      $ 130,338      $ 219,206   

Working capital

     91,604        95,072         91,629       92,093        95,783        134,540        205,893   

Total assets

     95,236        110,947         97,965     $ 113,871        131,317        144,221        239,236   

Convertible senior notes, non-current

     —          —           —          —          —          15,202        64,450   

Total stockholders equity

   $ 59,410      $ 63,418       $ 58,871     $ 60,570     $ 97,407      $ 121,382     $ 154,486   

 

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Selected Historical Consolidated Financial Information of Biota

The following tables set forth the selected historical consolidated financial and operating data for Biota. The selected consolidated statement of income data for the fiscal years ended June 30, 2011, 2010 and 2009, and the selected balance sheet data as of June 30, 2011, 2010 and 2009 are derived from Biota’s audited consolidated financial statements included in Annex B to this proxy statement. The selected consolidated statement of income data for the fiscal years ended June 30, 2008 and 2007, and the selected balance sheet data as of June 30, 2008 and 2007 are derived from Biota’s consolidated financial statements included in its annual reports to stockholders for the fiscal years ended June 30, 2009 and 2008, which are not included in this proxy statement. See “Where You Can Find More Information” beginning on page 142 of this proxy statement for information regarding how you can view Biota’s annual reports to stockholders. The summary financial data for the nine months ended March 31, 2012 and 2011 have been derived from Biota’s unaudited consolidated interim financial statements included in Annex B to this proxy statement. Biota’s unaudited consolidated interim financial data, in the opinion of Biota’s management, reflect all adjustments of a normal recurring nature necessary for a fair statement of Biota’s financial position and results of operations at the dates and for the periods indicated. The results for the nine months ended March 31, 2012 are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year. All financial information is presented in Australian dollars and is prepared under U.S. GAAP.

Biota’s historical financial data may not be indicative of the results of operations or financial position to be expected in the future.

You should read this selected historical consolidated financial data of Biota in conjunction with the section entitled “Information About the Companies—Biota Holdings Limited—Biota Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with Biota’s consolidated financial statements and the related notes to those financial statements included in Annex B to this proxy statement.

 

(in thousands, except per share
amounts)
   Nine Months Ended     Year ended  
   March 31,
2012
(Unaudited)
    March 31,
2011
(Unaudited)
    June 30,
2011
    June 30,
2010
    June 30,
2009
    June 30,
2008
(Unaudited)
    June 30,
2007
(Unaudited)
 

Statement of Operations Data:

              

CONSOLIDATED STATEMENT OF INCOME DATA:

              

Total revenues and other income

   A$ 12,823      A$ 8,746      A$ 12,657      A$ 68,952      A$ 80,399      A$ 41,787      A$ 54,794   

Total costs and expenses

     28,437        33,021        43,510        54,201        41,731        54,119        39,418   

Operating income (loss)

     (15,614     (24,275     (30,853     14,751        38,668        (12,332     15,376   

Interest revenue

     2,467        3,476        4,414        2,513        2,935        3,201        2,507   

Profit (loss) before tax

     (13,147     (20,799     (26,439     17,264        41,603        (9,131     17,883   

Provision for income taxes

     485        466        772        (3,747     (3,636     2,820        (2,349
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Biota

     (12,662     (20,333     (25,667     13,518        37,967        (6,311     20,231   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share attributable to Biota common stockholders—basic

   A$ (0.07   A$ (0.11   A$ (0.14   A$ 0.08      A$ 0.02      A$ (0.04   A$ 0.11   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in per share calculation—basic

     181,664,389        180,346,145        180,610,151        177,506,986        176,218,530        182,925,866        180,216,862   

Net income (loss) per share attributable to Biota common stockholders—diluted

   A$ (0.07   A$ (0.11   A$ (0.14   A$ 0.08      A$ 0.02      A$ (0.04   A$ 0.11   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in per share calculation—diluted

     181,664,389        180,346,145        180,610,151        178,630,811        176,456,253        182,925,866        183,195,879   

 

      March  31,
2012

(Unaudited)
     June 30,
2011
     June 30,
2010
     June 30,
2009
     June  30,
2008

(Unaudited)
     June  30,
2007

(Unaudited)
 

Balance Sheet Data:

                 

Cash, cash equivalents and marketable securities

   A$ 51,361         70,011         104,867         86,703         60,164         62,156   

Total assets

     69,651         83,561         119,391         111,790         89,373         92,454   

Current liabilities

     4,608         6,385         17,132         12,454         19,204         13,558   

Non-current liabilities

     424         320         138         2,304         6,869         7,361   

Total liabilities and stockholders’ equity

     69,651         83,561         119,391         111,790         89,373         92,454   

 

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial data is intended to show how the Transaction might have affected historical financial statements if the Transaction had been completed on January 1, 2011 for the purpose of the statement of operations and March 31, 2012 for the purposes of the balance sheet, and was prepared based on the historical financial results reported by Nabi and Biota. The information has been prepared in accordance with U.S. GAAP. It has been derived from and should be read in conjunction with the audited and unaudited historical financial statements of each of Nabi and Biota and the notes thereto, as well as the disclosures contained in each company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations. For more information about Nabi, see “Where You Can Find More Information” beginning on page 142 of this proxy statement for information regarding how you can view Nabi’s periodic reports filed with the SEC. For more information about Biota, see “Information About the Companies—Biota Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 98 of this proxy statement and the consolidated financial statements of Biota and the related notes to those financial statements included in Annex B to this proxy statement. The fiscal year end of the combined company is expected to be December 31.

The Transaction will be accounted for as a reverse acquisition under the acquisition method of accounting. Under the acquisition method of accounting, Biota will be treated as the accounting acquirer and Nabi will be treated as the “acquired” company for financial reporting purposes because, immediately upon completion of the Transaction, Biota’s stockholders prior to the Transaction will hold a majority of the voting interest of the combined company. In addition, the eight member board of directors of the combined company will be comprised of six of the current members of the Biota board of directors and therefore Biota’s current board of directors will possess majority control of the board of directors of the combined company. Members of the current management of Biota will be responsible for the management of the combined company and the majority of the combined company’s activities will be activities related to Biota’s current business.

The unaudited pro forma combined financial statements were prepared in accordance with the regulations of the SEC. The pro forma adjustments reflecting the completion of the Transaction are based upon the acquisition method of accounting in accordance with U.S. GAAP, and upon the assumptions set forth in the notes to the unaudited pro forma combined financial statements.

The unaudited pro forma combined balance sheet as of March 31, 2012 combines the historical balance sheets of Nabi and Biota as of March 31, 2012 and gives pro forma effect to the Transaction as if it had been completed on March 31, 2012.

The unaudited pro forma combined statements of operations for the three months ended March 31, 2012 combine the unaudited historical statements of operations of Nabi and Biota for their respective three-month periods ended March 31, 2012 and gives pro forma effect to the Transaction as if it had been completed on January 1, 2011. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2011 combine the historical statements of operations of Nabi and Biota for their respective twelve months ended December 31, 2011 and gives pro forma effect to the Transaction as if it had been completed on January 1, 2011. Statements of operations information is presented for the continuing operations of Nabi for all periods.

Unaudited Pro Forma Condensed Consolidated Financial Information

The tables presented below reflect the unaudited pro forma adjustments mentioned above to Nabi’s statement of operations for the year ended December 31, 2011 and the three-month period ended March 31, 2012 and to Nabi’s balance sheet as of March 31, 2012.

 

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Unaudited Pro Forma Condensed Consolidated Statement of Operations

The accompanying notes on the following page are an integral part of, and should be read together in connection with, these financial statements.

 

      Year ended December 31, 2011  
     Nabi (A)
U.S.$’000
    Biota (B)
U.S.$’000
    Pro Forma
Adjustments
U.S.$’000
     Note      Pro Forma
Combined
U.S.$’000
 

Revenue

            

Revenues from trading operations, net

     14,838        11,867              26,705   

Grant income

     0        1,691              1,691   

Expenses

            

Cost of services

     (1,463     (5,758           (7,221

Research and development

     0        (18,977           (18,977

Product development

     (17,765     (10,097           (27,862

Business development

     0        (2,194           (2,194

General, selling and administrative expenses

     (5,372     (5,260           (10,632
  

 

 

   

 

 

         

 

 

 

Operating (loss)/income

     (9,762     (28,728           (38,490

Interest income/(expense)

     194        3,819              4,013   

Other income/(expense)

     37        0              37   
  

 

 

   

 

 

         

 

 

 

(Loss)/profit before tax

     (9,531     (24,909           (34,440

Income tax credit

     2,018        961              2,979   
  

 

 

   

 

 

         

 

 

 

Net (loss)/income from continuing operations

     (7,513     (23,949           (31,462
  

 

 

   

 

 

         

 

 

 

Basic and diluted net loss per share

     (0.18          C         (0.19

Weighted average shares used in basic and diluted per share computations

     42,336          125,413         D         167,749   

 

      Three months ended March 31, 2012  
     Nabi (E)
U.S.$’000
    Biota (F)
U.S.$’000
    Pro Forma
Adjustments
U.S.$’000
     Note      Pro Forma
Combined
U.S.$’000
 

Revenue

            

Revenues from trading operations, net

     632        7,047              7,679   

Grant income

     0        100              100   

Expenses

            

Cost of services

     0        (1,782           (1,782

Research and development

     0        (3,835           (3,835

Product development

     (1,518     (1,788           (3,306

Business development

     0        (712           (712

General, selling and administrative expenses

     (1,277     (1,470           (2,747
  

 

 

   

 

 

         

 

 

 

Operating (loss)/income

     (2,163     (2,440           (4,603

Interest income/(expense)

     32        736              768   

Other income/(expense)

     33        0              33   
  

 

 

   

 

 

         

 

 

 

(Loss)/profit before tax

     (2,098     (1,704           (3,802

Income tax credit/(expense)

     671        (153           518   
  

 

 

   

 

 

         

 

 

 

Net (loss)/income from continuing operations

     (1,427     (1,856           (3,283
  

 

 

   

 

 

         

 

 

 

Basic and diluted net loss per share

     (0.03          C         (0.02

Weighted average shares used in basic and diluted per share computations

     42,949          125,413         D         168,362   

 

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Unaudited Pro Forma Condensed Consolidated Balance Sheet

The accompanying notes on the following pages are an integral part of, and should be read together in connection with, these financial statements.

 

     Nabi (A)
U.S.$’000
    Biota (B)
U.S.$’000
    Pro Forma
Adjustments
U.S.$’000
    Note      Pro
Forma
Combined
U.S.$’000
 

ASSETS

           

Current assets

           

Cash & Equivalents

     94,875        53,338        (40,875     C         107,338   

Accounts Receivable—Trade net

     128        8,673        (128     C         8,673   

Prepaid expense

     216        706        (216     C         706   

Deferred tax asset (a)

     0        535        0           535   

Other current assets

     0        659        0           659   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total Current Assets

     95,219        63,911        (41,219        117,911   
  

 

 

   

 

 

   

 

 

      

 

 

 

Non-current assets

           

Property, plant and equipment

     17        5,353        0           5,370   

Intangible assets

     0        1,995        0           1,995   

Deferred tax asset

     0        1,072        0           1,072   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total Non-current assets

     17        8,420        0           8,437   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total Assets

     95,236        72,332        (41,219        126,349   
  

 

 

   

 

 

   

 

 

      

 

 

 

LIABILITIES

           

Current liabilities

           

Accounts payable

     69        1,192        (69     C         1,192   

Accrued expenses

     1,020        1,094        980        C         3,094   

Customer Advances

     2,526        404        (2,526     C         404   

Other current liabilities—provisions

     0        2,096        0           2,096   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total Current liabilities

     3,615        4,785        (1,615        6,785   
  

 

 

   

 

 

   

 

 

      

 

 

 

Non-current liabilities

           

Customer Advances

     32,211        0        (32,211     C         0   

Other long term liabilities—provisions

     0        440        0           440   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total Non-current liabilities

     32,211        440        (32,211        440   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities

     35,826        5,226        (33,826        7,226   
  

 

 

   

 

 

   

 

 

      

 

 

 

EQUITY

           

Common Stock (b)

     6,357        100,196        42,558        C         149,111   

Treasury Stock—Common (b)

     (92,567     (968     92,567        C         (968

Additional paid in capital

     374,134        773        (374,134     C         773   

Retained Earnings

     (228,514     (60,612     231,616        C         (57,510

Foreign currency translation reserve

     0        27,716        0           27,716   

Stockholders’ equity

     59,410        67,106        (7,393        119,123   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities and stockholders’ equity

     95,236        72,332        (41,219        126,349   
  

 

 

   

 

 

   

 

 

      

 

 

 

 

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1. Basis of Presentation

The historical financial data has been adjusted to give pro forma effect to events that are (i) directly attributable to the Transaction, (ii) factually supportable, and (iii) with respect to the statements of operations, expected to have a continuing impact on the combined results. The pro forma adjustments are preliminary and based on Biota’s management’s estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the acquisition and certain other adjustments. The final purchase price allocation and a final determination of these fair values will reflect Biota’s management’s consideration of relevant information including discounted cash flows analysis and Biota’s management’s own estimates and taking into account significant changes, if any, in long term assumptions. This final purchase price allocation will be based on the actual net tangible and intangible assets that exist as of the closing date of the acquisition. Any final adjustment will change the allocation of purchase price, which could affect the fair value assigned to the assets and liabilities of Nabi and could result in a significant change to the unaudited pro forma condensed consolidated financial information, including goodwill.

The unaudited pro forma condensed combined financial data is presented for illustrative purposes only and is not necessarily indicative of the financial condition or results of operations of future periods or the financial condition or results of operations that actually would have been realized had the entities been combined during the periods presented. In addition, as explained in more detail in the accompanying notes to the unaudited pro forma condensed combined financial statements, the preliminary acquisition-date fair value of the identifiable assets acquired and liabilities assumed reflected in the unaudited pro forma condensed combined financial statements is subject to adjustment and may vary from the actual amounts that will be recorded upon completion of the Transaction.

 

2. Description of Transaction

On April 22, 2012, Nabi entered into the Transaction Agreement with Biota. Pursuant to the terms and subject to the conditions set forth in the Transaction Agreement, Biota will become a wholly owned subsidiary of Nabi.

On the completion of the Transaction, each outstanding share of Biota ordinary shares will be converted into the right to receive that number of shares of Nabi common stock as determined pursuant to the exchange ratio, as calculated pursuant to the terms of the Transaction Agreement. Immediately upon completion of the Transaction and regardless of the exact exchange ratio, Biota shareholders are expected to receive shares of Nabi common stock representing an aggregate of approximately 74% of the outstanding shares of common stock of the combined company. Nabi stockholders will continue to own their existing shares of Nabi common stock, which will not be affected by the Transaction, and will not receive any additional shares of Nabi common stock as a result of the Transaction. As a result, such shares will represent an aggregate of approximately 26% of the outstanding shares of common stock of the combined company.

Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed of Nabi will be recorded at the acquisition date fair values and added to those of Biota. The pro forma adjustments are preliminary and based on Biota’s management’s estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the acquisition. These estimates are based on the most recently available information. To the extent there are significant changes to the combined company’s business following the completion of the Transaction, the assumptions and estimates set forth in the unaudited pro forma condensed combined financial statements could change significantly. The allocation is dependent upon certain valuation and other studies that will not be completed until after the Transaction. Accordingly, the pro forma purchase price adjustments are subject to further adjustments as additional information becomes available and as additional analyses and final valuations are conducted following the completion of the Transaction. There can be no assurances that these additional analyses and final valuations will not result in significant changes to the estimates of fair value set forth below under Note 4.

 

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The unaudited pro forma condensed combined financial statements assume an exchange ratio of 0.669212231. Such ratio was calculated assuming that Nabi does not complete an issuer tender offer prior to the transaction and does not implement the reverse stock split described in the proxy statement. Should Nabi conduct an issuer tender offer or implement the reverse stock split described in the proxy statement prior to the closing of the transaction, the exchange ratio will be adjusted such that Biota shareholders receive approximately 74% of the outstanding shares of the combined company.

 

3. Calculation of estimated consideration transferred

The purchase consideration in a reverse acquisition is determined with reference to the value of equity that the accounting acquirer (in this case Biota, the legal subsidiary) would have had to issue to the owners of the accounting acquiree (Nabi, the legal parent) to give them the same percentage interest in the combined entity. A preliminary estimate of the purchase price is as follows:

 

Number of Biota shares deemed issued

     65,980,514   

Value per share

   $ 0.74  

Estimated purchase price (in thousands)

   $ 48,915   

For pro forma purposes, the fair value of the Biota common stock used in determining the purchase price was $0.74 per share based on the closing price of Biota ordinary shares June 7, 2012 and the U.S.$/A$ exchange rate on that day. The final purchase consideration could differ from the amounts presented in the unaudited pro forma condensed combined financial statements due to movements in Biota’s share price and the U.S.$/A$ exchange rate between June 7, 2012, and the closing date of the transaction. For example, if the Biota share price and U.S.$/A$ exchange rate on April 22, 2012 (the date of the Transaction Agreement) were used, the value per share would have been $0.98 and the estimated purchase price calculated would be $62,506,000.

The impact of possible movements in the Biota share price and the U.S.$/A$ exchange rate from those applied above is as follows:

 

Impact on estimated purchase price (in thousands)

  

Share price fluctuations of +/- A$0.10

   $ 6,447  

Exchange rate fluctuation of +/- U.S.$0.10

   $ 5,015   

 

4. Preliminary allocation of consideration transferred to net assets acquired

The estimated acquired tangible and intangible assets and liabilities assumed based on their estimated fair values as of March 31, 2012 comprises (table in thousands):

 

     $’000  

Cash and cash equivalents

     54,000   

Property, plant and equipment

     17   
  

 

 

 
     54,017   

Excess of fair value of assets over purchase price

     (5,102
  

 

 

 

Total estimated purchase price based on value of Biota shares

     48,915   

The allocation of the purchase price is preliminary. The final determination of the purchase price allocation will be based on the fair values of assets acquired, other identifiable intangibles and the fair values of liabilities assumed as of the date that the Transaction is completed. Any excess of the purchase price over the fair value of assets and liabilities acquired is allocated to goodwill. Any excess of the fair value of assets and liabilities over the purchase price is recognised as a gain in profit or loss on the acquisition date by the acquirer. The preliminary valuation analysis conducted by Nabi and Biota determined that the fair value of identifiable assets acquired less the fair value of identifiable liabilities assumed by the combined company were greater than the estimated

 

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purchase price, resulting in a gain in profit or loss. In accordance with the regulations of the SEC, this gain has not been included in the pro forma statements of operations but has been included in the pro forma balance sheet adjustments. As noted in 3 above, the determination of the purchase price is preliminary as of the date of this filing. If the Biota share price and U.S.$/A$ exchange rate on April 22, 2012 (the date of the Transaction Agreement) were used, the estimated purchase price calculated would be $62,506,000. Applying this estimated purchase price to the fair value of assets and liabilities indicated above would lead to an allocation to goodwill of $8,489,000.

The estimates of assets acquired and assumed liabilities will remain preliminary until the combined company completes a valuation of identifiable intangible assets acquired and determines the fair values of other assets and liabilities acquired. The final determination of the fair values is expected to be completed as soon as practicable after the completion of the Transaction. The final amounts could differ from the amounts presented in the unaudited pro forma condensed combined financial statements, because the amounts allocated will not be determined until the date of the Transaction.

No amounts have been allocated to identifiable intangible assets. Nabi’s remaining assets include:

 

   

The residual value of NicVAX®, which was licensed to GSK in 2010, subject to the right of holders of CVRs to potentially receive certain cash payments in connection with a NicVAX Transaction (as defined in the CVR Agreement) upon the terms and subject to the conditions set forth in the CVR Agreement, as more fully described under “Repurchase of Shares of Nabi Common Stock; Dividends and Distributions—Contingent Value Rights” beginning on page 77 of this proxy statement; and

 

   

the potential royalty of Phoslyra which was sold to third party in 2006.

Given the significant uncertainty associated with future cash flows from these assets, no value has been ascribed to them in the preliminary allocation of the purchase price.

Cash and cash equivalents

Nabi will return to its existing shareholders cash in excess of the $54 million required to be held by Nabi under the terms of the Transaction Agreement, potentially through undertaking an issuer tender offer to be completed prior to the completion of the Transaction. The cash balance presented as part of the pro forma adjustments reflects the cash balance expected to remain in Nabi after the return of capital and settlement of Nabi’s obligations including the severance obligations discussed below.

Nabi Severance Obligations

All of Nabi’s employees are eligible for severance payments upon termination of employment under certain circumstances, including following a merger. Following the completion of the Transaction, the majority of Nabi’s employees will not continue to be employed by the combined company. However, these terminations did not form part of the negotiations in advance of the signing of the Transaction Agreement, and the Transaction is not conditioned on any such arrangements. The accounting guidance for business combinations (ASC805-10-55) requires severance obligations that are incurred by the acquiree for the benefit of the acquirer to be recognized as an expense in the post-combination period. Because the terminations were determined by the Nabi Board in advance of the Transaction, are not at the option of Biota and were a consequence of changes to Nabi’s operations prior to the completion of the Transaction rather than a consequence of the Transaction, the severance obligations have been deemed to be for the benefit of Nabi prior to the acquisition. For purposes of preparing the unaudited pro forma condensed combined financial statements, Nabi has assumed that all severance payouts will be made prior to the closing date of the Transaction. No provision was recognized in the Nabi historical balance sheet. The payments have been included in the determination of the cash balance expected within Nabi on acquisition date.

 

5. Notes to the Unaudited Pro Forma Condensed Consolidated Statement of Operations

 

(A) Represents Nabi’s historical financial information in 2011 under U.S. GAAP.

 

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(B) The information is derived from the historical consolidated financial statements of Biota for its fiscal year ended June 30, 2011 under U.S. GAAP adjusted for the following to derive a comparable reporting period with Nabi:

 

   

information for the six month period ended December 31, 2011 is included in the pro forma financial information for Biota; and

 

   

information for the six month period ended December 31, 2010 has not been included in the pro forma financial information for Biota.

The information for Biota and the pro forma adjustments above were originally denominated in Australian dollars and have been converted to U.S. dollars based on the average exchange rate of U.S.$1.0000 = A$0.9681 for the year ended December 31, 2011.

The historical financial statements of Biota for the six month periods ended December 31, 2011 and 2010 under U.S. GAAP from which the above information is derived are unaudited.

 

(C) Represents the loss per share, taking into consideration the adjusted number of common shares described in note 3 above.

 

(D) Represents the number of common shares, in thousands, adjusted by 125,412,618 common shares anticipated to be issued in connection with the Transaction. The weighted average number of pro forma shares has been adjusted as if the shares had been issued on January 1, 2011.

 

(E) Represents Nabi’s unaudited historical financial information in the three-month period ended March 31, 2012 under U.S. GAAP.

 

(F) Represents Biota’s unaudited historical financial information in the three-month period ended March 31, 2012 under U.S. GAAP.

The information for Biota and the pro forma adjustments above were originally denominated in Australian dollars and have been converted to U.S. dollars based on the average exchange rate of U.S.$1.0000 = A$0.9480 for the three month period ended March 31, 2012.

 

6. Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet

 

(A) Represents Nabi’s unaudited historical financial information as of March 31, 2012 under U.S. GAAP.

 

(B) Represents the unaudited historical financial information of Biota as of March 31, 2012 under U.S. GAAP. The information for Biota and the pro forma adjustments above were originally denominated in Australian dollars and have been converted to U.S. dollars based on the period end rate of U.S.$1.0000 = A$0.9629.

 

(C) Reflects the acquisition method of accounting based on an appraisal of the assets and liabilities of Nabi as discussed in notes 3 and 4 above. This includes the elimination of Nabi’s historical stockholder’s equity accounts as Nabi is not considered the accounting acquiror. It also incorporates an accrual for acquisition costs contingent on the Transaction.

 

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Table of Contents

COMPARATIVE PER SHARE DATA

The following table sets forth selected historical share information of Nabi and Biota and unaudited pro forma share information after giving effect to the Transaction, assuming that 0.669212231 shares of Nabi common stock had been issued in exchange for each outstanding share of Biota common stock.

This assumption is based on an estimate of the exchange ratio assuming that Nabi does not complete an issuer tender offer prior to the Transaction and does not implement a reverse stock split described in the proxy statement. The pro forma equivalent information of Biota was derived using the historical share information assuming that 0.669212231 shares of Nabi common stock had been issued in exchange for each outstanding share of Biota common stock. You should read this information in conjunction with the selected historical financial information, the unaudited pro forma condensed combined financial information and the separate historical financial statements of Nabi and Biota and the notes thereto included elsewhere in or incorporated by reference in this proxy statement. The historical share information as of and for the three-month period ended March 31, 2012 is derived from unaudited consolidated financial statements of Nabi and Biota as of and for the three-months ended March 31, 2012. The historical share information as of and for the year ended December 31, 2011 is derived from audited financial statements of Nabi for the year ended December 31, 2011. Given that Biota’s fiscal year ends June 30, 2011, Biota’s results represents the sum of unaudited historical financial information in the six-month period ended June 30, 2011 and in the six-month period ended December 31, 2011. The amounts set forth below are in thousands, except per share amounts. The unaudited pro forma condensed combined financial statements and the pro forma share information are not necessarily indicative of the operating results or financial position that would have been achieved had the Transaction been consummated at the beginning of the period presented and should not be construed as representative of future operations. Biota’s results as reported in Australian dollars have been converted into U.S. dollars using the average and period end exchange rates set out in notes 5 and 6 under “Unaudited Pro Forma Condensed Consolidated Financial Information” beginning on page 12 of this proxy statement.

 

      Year Ended December 31, 2011  
     Nabi     Biota  
     Historical     Pro Forma     Historical     Pro Forma
Equivalent
of One
Nabi
Share (1)
 

Basic and diluted net (loss) income per common share

   $ (0.18   $ (0.04   $ (0.18   $ (0.13
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in calculating basic and diluted net (loss) income per share

     42,336        167,749        181,627        121,545   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

      Three Months Ended March 31, 2012  
     Nabi     Biota  
     Historical     Pro Forma     Historical     Pro Forma
Equivalent
of One
Nabi
Share (1)
 

Basic and diluted net (loss) income per common share

   $ (0.03   $ (0.01   $ (0.01   $ (0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in calculating basic and diluted net (loss) income per share

     42,949        168,362        181,738        121,619   
  

 

 

   

 

 

   

 

 

   

 

 

 

Book value per share (2)

   $ 1.38      $ 0.35      $ 0.37      $ 0.55   

 

(1) These amounts were calculated by applying an assumed exchange ratio of 0.669212231 to the historical Biota shares.

 

(2) The historical book value per common share is computed by dividing total stockholders’ equity by the number of shares of common stock outstanding at the end of the period. The pro forma book value per share is computed by dividing pro forma stockholders’ equity by the pro forma number of shares of common stock as of each of the periods presented.

 

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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

Shares of Nabi common stock are currently listed and principally traded on the NASDAQ under the symbol “NABI.” Ordinary shares of Biota are currently listed and principally traded on the ASX under the symbol “BTA.” The following table sets forth, for the periods indicated, the high and low sales prices per share of Nabi common stock and Biota ordinary shares as reported on the NASDAQ and the ASX, respectively. Price per share information for Biota ordinary shares is presented in Australian dollars.

Nabi:

 

Fiscal Year Ending December 31, 2012

   High      Low  

Second Quarter (through June 7)

   $ 1.95       $ 1.54   

First Quarter

     2.03         1.74   

 

Fiscal Year Ended December 31, 2011

   High      Low  

Fourth Quarter

   $ 2.07       $ 1.50   

Third Quarter

     5.82         1.55   

Second Quarter

     5.88         4.64   

First Quarter

     5.98         5.30   

 

Fiscal Year Ended December 25, 2010

   High      Low  

Fourth Quarter

   $ 5.75       $ 4.75   

Third Quarter

     5.85         4.68   

Second Quarter

     5.98         4.40   

First Quarter

     6.42         4.70   

Biota:

 

Fiscal Year Ending June 30, 2012

   High      Low  

Fourth Quarter (through June 7)

   A$ 1.07       A$ 0.70   

Third Quarter

     1.04         0.76   

Second Quarter

     0.88         0.69   

First Quarter

     1.07         0.80   

 

Fiscal Year Ended June 30, 2011

   High      Low  

Fourth Quarter

   A$ 1.66       A$ 0.90   

Third Quarter

     1.54         0.89   

Second Quarter

     1.06         0.90   

First Quarter

     1.11         0.85   

 

Fiscal Year Ended June 30, 2010

   High      Low  

Fourth Quarter

   A$ 2.34       A$ 1.01   

Third Quarter

     2.42         2.00   

Second Quarter

     3.47         2.30   

First Quarter

     2.73         1.25   

The table below sets forth the closing sale prices of Nabi common stock and Biota ordinary shares as reported on the NASDAQ and ASX, each on April 20, 2012, the last trading day prior to the public announcement of the transaction. The table also shows the implied value of one ordinary share of Biota, which was calculated by multiplying the closing price of Nabi common stock on that date by the exchange ratio of 0.669212231. The market prices of Nabi common stock and Biota ordinary shares likely will fluctuate between the date of this proxy statement and the time of the special meetings and the completion of the Transaction. No assurance can be given concerning the market prices of Nabi common stock or Biota ordinary shares before the completion of the Transaction or the market price of Nabi common stock after the completion of the Transaction.

 

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The Transaction consideration is fixed in the Transaction Agreement and will not be adjusted for changes in the market value of the Nabi common stock or Biota ordinary shares, except that it will be adjusted in the event that Nabi conducts an issuer tender offer to purchase shares of Nabi common stock or implements the reverse stock split described in the proxy statement prior to the completion of the Transaction in order to preserve the respective percentage of shares of the outstanding common stock of the combined company to be held immediately after the completion of the Transaction by Biota’s former stockholders on the one hand (collectively being approximately 74%) and Nabi’s existing stockholders on the other hand (collectively being approximately 26%). As a result, the market value of the Nabi common stock that Biota stockholders will receive in the Transaction may vary significantly from the prices shown in the table below.

 

     Biota
Ordinary Share
   Nabi
Common Stock
   Implied Value
of Biota
Ordinary Share

April 20, 2012

       A$0.94          $1.85      $1.24

Nabi stockholders should obtain current market prices for shares of Nabi common stock and Biota ordinary shares in deciding whether to vote for the approval of the Transaction Proposals.

Dividends

Nabi has never declared or paid cash dividends on its capital stock. In connection with the Transaction, Nabi may pay cash dividends or return capital to its stockholders.

Biota has never declared nor paid cash dividends on its capital stock and does not expect to pay any cash dividends in the foreseeable future.

 

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING PROPOSALS

The following are some questions that you, as a stockholder of Nabi, may have regarding the Transaction and the other matters being considered at the special meeting of Nabi stockholders, as well as answers to those questions. Nabi urges you to read this proxy statement carefully and in its entirety because the information in this section does not provide all of the information that might be important to you with respect to the Transaction and the other matters being considered at the special meeting. Additional important information is also contained in the annexes to, and the documents incorporated by reference into, this proxy statement.

Q:    Why am I receiving this proxy statement?

A:    Nabi and Biota are proposing to combine the two companies in the Transaction pursuant to the terms and conditions of the Transaction Agreement that is described in this proxy statement. In the Transaction, Nabi will acquire all of the outstanding ordinary shares of Biota in exchange for shares of Nabi common stock pursuant to a scheme of arrangement under Australian corporate law, and Biota will become a wholly-owned subsidiary of Nabi. Upon the completion of the Transaction, shares of Nabi common stock representing approximately 74% of the outstanding common stock of the combined company will be issued to former Biota stockholders, and the shares of common stock held by existing Nabi stockholders will represent approximately 26% of the outstanding common stock of the combined company immediately after the completion of the Transaction. The combined company will be named “Biota Pharmaceuticals, Inc.” A copy of the Transaction Agreement is attached to this proxy statement as Annex A.

In order to complete the Transaction, Nabi stockholders must approve an amendment to the Nabi certificate of incorporation to increase the number of authorized shares of Nabi common stock, an amendment to the Nabi certificate of incorporation to change the name of the company to “Biota Pharmaceuticals, Inc.,” and the issuance of shares of Nabi common stock to Biota stockholders in the Transaction. In addition, Biota stockholders must approve the Transaction, and all other conditions to the Transaction must be satisfied or waived.

The amendment to the Nabi certificate of incorporation to increase the number of authorized shares of Nabi common stock, the amendment to the Nabi certificate of incorporation to change the name of the company, and the issuance of Nabi common stock in Transaction will not occur unless all of these proposals are approved by Nabi’s stockholders. Nabi will hold a special meeting of its stockholders to obtain the required approvals of its stockholders, and Biota will hold a separate special meeting of its stockholders to obtain the required approval of the Biota stockholders.

At the Nabi special meeting, Nabi’s stockholders also will be asked to consider and vote upon certain other proposals in connection with the Transaction as described below and under “The Special Meeting” beginning on page 45 of this proxy statement.

Q:    What will I receive in the Transaction?

A:    Nabi stockholders will continue to own their existing shares of Nabi common stock after the Transaction. Immediately after the completion of the Transaction, Nabi’s existing stockholders will own collectively approximately 26% of the outstanding common stock of the combined company, and Biota’s former stockholders will own collectively approximately 74% of the outstanding common stock of the combined company.

Q:    Will Nabi distribute any cash on hand or other assets to the existing Nabi stockholders?

A:    Nabi plans to return to its stockholders, before the completion of the Transaction, its remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction after satisfying outstanding liabilities. Such distribution is expected to take the form of a repurchase of certain of the outstanding shares of Nabi common stock through an issuer tender offer and, for any remaining amounts, through a dividend

 

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and return of capital, and currently is expected to be in the range of approximately $25 million to $30 million in the aggregate. Nabi plans to commence an issuer tender offer to repurchase certain of the outstanding shares of Nabi common stock after filing a preliminary form of this proxy statement with the SEC and to complete such issuer tender offer before mailing a definitive form of this proxy statement to Nabi stockholders. After the completion of the issuer tender offer but prior to the completion of the Transaction, Nabi plans to declare a dividend and effect return of capital, if applicable, to distribute any remaining cash in excess of the $54 million required to be held by Nabi at the completion of the Transaction that is not required to satisfy any outstanding liabilities.

In addition, Nabi plans to issue CVRs to existing Nabi stockholders before the completion of the Transaction. Nabi expects that one CVR will be issued for each share of Nabi common stock outstanding as of a record date to be set at a date prior to the completion of the Transaction. However, the CVRs will not be attached to the shares of Nabi common stock. A CVR will be a non-transferrable (subject to certain limited exceptions) right to potentially receive certain cash payments in connection with a NicVAX Transaction upon the terms and subject to the conditions set forth in the CVR Agreement to be entered into between Nabi and a rights agent. The form of the CVR Agreement is attached to this proxy statement as Annex G. See “Repurchase of Shares of Nabi Common Stock; Dividends and Distributions—Contingent Value Rights” beginning on page 77 of this proxy statement for more information regarding the CVRs, the CVR Agreement and the NicVAX Transaction.

Q:    Is the Transaction expected to be taxable to stockholders?

A:    Nabi’s existing stockholders will simply retain their shares of Nabi common stock in the Transaction, and accordingly will be no material U.S. federal income tax consequences to Nabi’s existing stockholders resulting from the issuance of Nabi shares in the Transaction. See “Proposal 3: Amendment to Certificate of Incorporation to Effectuate Reverse Stock Split—Certain U.S. Federal Income Tax Consequences of the Reverse Stock Split” beginning on page 136 of this proxy statement for a discussion of certain U.S. federal income tax consequences of the proposed reverse stock split described in this proxy statement.

Q:    When and where will Nabi hold its special meeting?

A:    The special meeting will be held at [*****] a.m. local time on [*****], 2012, at [*****], to consider and vote on each of the proposals described below.

Q:    What will the Nabi stockholders be asked to vote upon at the special meeting?

A:    At the special meeting, Nabi’s stockholders will be asked to consider and vote upon the following proposals:

 

  1. to approve an amendment to the Nabi certificate of incorporation to increase the authorized shares of Nabi common stock from 125,000,000 shares to 200,000,000 shares;

 

  2. to approve an amendment to the Nabi certificate of incorporation to change the name of Nabi from “Nabi Biopharmaceuticals” to “Biota Pharmaceuticals, Inc.”;

 

  3. to approve an amendment to the Nabi certificate of incorporation to effect a reverse stock split of Nabi common stock at any time prior to December 31, 2012 at a ratio ranging from four-to-one to eight-to-one, as determined by Nabi’s board of directors in its sole discretion;

 

  4. to approve the issuance of shares of Nabi common stock to Biota stockholders contemplated by the Transaction Agreement;

 

  5. to approve, on an advisory (non-binding) basis, the compensation payable to certain executive officers of Nabi under existing arrangements in connection with the Transaction; and

 

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  6. to approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies if there are insufficient votes at the time of the special meeting to approve any of proposals 1 through 4.

Proposals 1, 2 and 3 are collectively referred to herein as the Charter Amendment Proposals. Proposals 1, 2 and 4 are collectively referred to herein as the Transaction Proposals.

Q:    What will the Biota stockholders be asked to vote upon?

A:    Biota stockholders will not be asked to vote on any of the proposals to be considered and voted upon at the Nabi special meeting. Rather, Biota will hold a separate special meeting of its stockholders, pursuant to Australian corporate law, at which Biota’s stockholders will be asked to consider and vote upon a resolution to approve the Transaction.

Q:    Who is eligible to vote at the special meeting?

A:    Holders of Nabi common stock as of the close of business on [******], 2012, the record date for the special meeting, are eligible to vote.

Q:    How many votes do Nabi’s stockholders have?

A:    Holders of Nabi’s common stock are entitled to cast one vote on each motion properly brought before the special meeting for each share of Nabi common stock that such holder owned at the close of business on the record date.

Q:    What constitutes a quorum for the special meeting?

A:    A majority of the outstanding shares of Nabi common stock entitled to vote being present in person or represented by proxy constitutes a quorum for the special meeting. Abstentions will be counted for purposes of determining the presence of a quorum at the special meeting. Banks, brokers and other nominees that hold their customers’ shares in street name may not vote their customers’ shares on “non-routine” matters without instructions from their customers. As each of the proposals to be voted upon at the special meeting is considered “non-routine,” such organizations do not have discretion to vote on any proposal for which they do not receive instructions from their customers (this is referred to in this context as a “broker non-vote”). As a result, if you fail to provide your broker, bank or other nominee with any instructions regarding how to vote your shares, your shares will not be considered present at the special meeting, will not be counted for purposes of determining the presence of a quorum and will not be voted on any of the proposals. If you provide instructions to your broker, bank or other nominee which indicate how to vote your shares with respect to certain proposals but not with respect to a particular proposal, your shares will be considered present at the special meeting and be counted for purposes of determining the presence of a quorum but will not be voted with respect to that particular proposal.

If a quorum is not present at the meeting, the chairman of the meeting may adjourn the meeting to continue to solicit proxies.

Q:    What vote by the Nabi stockholders is required to approve the Charter Amendment Proposals and the proposal to approve the issuance of Nabi common stock to Biota stockholders in the Transaction?

A:    Approval of each of the Charter Amendment Proposals requires the affirmative vote of a majority of the shares of Nabi’s common stock outstanding at the close of business on the record date. Approval of the issuance of shares of Nabi common stock to Biota stockholders as contemplated by the Transaction Agreement will require the affirmative vote of a majority of the holders of Nabi’s common stock properly cast on the proposal at the special meeting.

 

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Q:    Why is my vote important? What happens if I don’t vote?

A:    In order to complete the Transaction, Nabi stockholders must approve each of the Transaction Proposals. If you abstain from voting, fail to vote (either in person or by proxy), or fail to provide your broker, bank or other nominee with instructions on how to vote your shares in connection with any Charter Amendment Proposal, it will have the same effect as a vote against that proposal.

Q:    Why am I being asked to cast an advisory (non-binding) vote to approve the executive compensation payable in connection with the Transaction?

A:    The SEC adopted rules that require some public companies to seek an advisory (non-binding) vote with respect to certain payments that will be made in transactions such as the Transaction. These rules require us to seek such an advisory vote regarding certain payments to Nabi’s named executive officers under existing arrangements in connection with the Transaction.

Q:    What will happen if the Nabi stockholders do not approve the executive compensation payable in connection with the Transaction?

A:    Approval, on an advisory (non-binding) basis, of the compensation payable to certain of Nabi’s executive officers under existing arrangements in connection with the Transaction is not a condition to completion of the Transaction. The vote with respect to such compensation is an advisory vote and will not be binding on Transaction. Nabi is contractually obligated to pay such compensation. Therefore, if the Transaction Proposals are adopted by the stockholders and the Transaction is completed, the compensation payable to Nabi’s named executive officers will still be paid regardless of the outcome of this advisory vote.

Q:    Why am I being asked to consider and vote upon a proposal to amend the Nabi certificate of incorporation to effect a reverse stock split of the Nabi common stock?

A:    The primary intent of the reverse stock split is to make the price of Nabi common stock more attractive to a broader range of institutional and other investors and to ensure Nabi’s stock price remains in compliance with NASDAQ listing requirements. However, approval of the amendment to the Nabi certificate of incorporation to effect such a reverse stock split is not a condition to completion of the Transaction.

Q:    Why am I being asked to consider and vote upon a proposal to approve the issuance of shares of Nabi common stock to Biota stockholders contemplated by the Transaction Agreement?

A:    Because Nabi common stock is listed for trading on NASDAQ, issuances of Nabi common stock are subject to the NASDAQ Stock Market Listing Rules. NASDAQ Stock Market Listing Rule 5635 requires stockholder approval for the issuance of Nabi common stock (1) in connection with the acquisition of the stock or assets of another company if the issuance would result in an increase of 20% or more of the total number of shares of Nabi common stock outstanding before any such proposed issuance, or (2) that constitutes a change of control of Nabi. Because both of these events will occur if the Transaction is completed, we are asking you to approve the issuance of Nabi common stock in the Transaction.

Q:    How does Nabi’s board of directors recommend that I vote?

A;    Nabi’s board of directors unanimously recommends that you vote “FOR” each of the proposals to be considered and voted upon at the special meeting.

 

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Q:    What do I need to do now?

A:    Please read this proxy statement carefully, including its annexes, to consider how the Transaction affects you. After you read this proxy statement, you should complete, sign and date your proxy card and mail it in the enclosed return envelope or submit your proxy over the telephone or over the Internet as soon as possible so that your shares can be voted at the special meeting. If you sign, date and mail your proxy card without indicating how you wish to vote, your vote will be counted as a vote “FOR” each of the proposals being considered and voted upon at the special meeting.

Q:    How do I vote?

A:    If you are a stockholder of record, you may vote in any of the following ways:

 

   

To vote in person, come to the special meeting and you will be able to vote by ballot. To ensure that your shares are voted at the special meeting, Nabi’s board of directors recommends that you submit a proxy even if you plan to attend the special meeting.

 

   

To vote using the enclosed proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the enclosed return envelope. If you return your signed proxy card to Nabi before the special meeting, Nabi will vote your shares as you direct.

 

   

To vote by telephone, dial the toll-free telephone number located on the enclosed proxy card using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the enclosed proxy card. Your vote must be received by 11:59 p.m., Eastern Time, on [*****], 2012 to be counted.

 

   

To vote over the Internet, go to the web address located on the enclosed proxy card to complete an electronic proxy card. You will be asked to provide the company number and control number from the enclosed proxy card. Your vote must be received by 11:59 p.m., Eastern Time, on [*****], 2012 to be counted.

If your shares of common stock are held in “street name” by your broker, bank or other nominee, you should have received a voting instruction form with these proxy materials from that organization rather than from Nabi. Your broker, bank or other nominee will vote your shares only if you provide instructions to that organization on how to vote. You should provide your broker, bank or other nominee with instructions regarding how to vote your shares by following the enclosed procedures provided by that organization. Your shares will not be voted with respect to any proposal for which you fail to provide instructions, which will have the same effect as voting against the Charter Amendment Proposals, but which will have no effect on approval of the other proposals.

A control number, located on your proxy card or voting instruction form, is designed to verify your identity and allow you to vote your shares of Nabi common stock, and to confirm that your voting instructions have been properly recorded when voting over the Internet or by telephone.

Q:    What does it mean if I receive more than one set of materials?

A:    This means you own shares of Nabi common stock that are registered under different names. For example, you may own some shares directly as a stockholder of record and other shares through a broker or you may own shares through more than one broker, bank or other nominee. In these situations, you will receive multiple sets of proxy materials. You must complete, sign, date and return each of the proxy cards and voting instruction forms that you receive, or vote all of your shares over the telephone or over the Internet in accordance with the instructions above in order to vote all of the shares you own. Each proxy card you receive comes with its own prepaid return envelope and control number(s). If you vote by mail, make sure you return each proxy card in the return envelope that accompanies that proxy card or voting instruction form, and if you vote by telephone or via the Internet, please follow the enclosed instructions and use your control number(s).

 

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Q:    What happens if I sell my shares of common stock before the special meeting?

A:    The record date for stockholders entitled to vote at the special meeting is earlier than the date of the special meeting. If you transfer your shares of Nabi common stock after the record date but before the date of the special meeting, you will retain your right to vote at the special meeting unless special arrangements are made between you and the person to whom you transfer your shares.

Q:    May I vote in person?

A:    If you are the stockholder of record of shares of common stock, you have the right to vote in person at the special meeting with respect to those shares. If you are the beneficial owner of shares of Nabi common stock, you are invited to attend the special meeting but, since you are not the stockholder of record, you may not vote these shares in person at the special meeting, unless you obtain a document called a “legal proxy” from your broker, bank or other nominee giving you the right to vote the shares at the special meeting. Even if you plan to attend the special meeting as a stockholder of record, we recommend that you also submit your proxy card or voting instructions as described above under “How do I vote?” so that your vote will be counted if you later decide not to attend the special meeting.

Q:    How can I change or revoke my vote?

A:    You have the right to revoke a proxy, delivered by mail, by telephone, or over the Internet, at any time before it is exercised, by voting again at a later date through any of the methods available to you, by delivering written notice of revocation to our Corporate Secretary by the time the special meeting begins, or by attending the special meeting and voting in person.

Q:    Am I entitled to appraisal rights?

A:    No. Under Delaware law, holders of shares of Nabi common stock are not entitled to appraisal rights in connection with the Transaction or any of the matters to be acted on at the special meeting.

Q:    Is completion of the Transaction subject to any conditions?

A:     Yes. Nabi and Biota are not required to complete the Transaction unless a number of conditions are satisfied or waived, including receipt of the required approvals from the Nabi stockholders and Biota stockholders. See “The Transaction Agreement—Conditions Precedent to the Transaction” beginning on page 108 of this proxy statement for a more complete summary of the conditions that must be satisfied or waived prior to completion of the Transaction.

Q:    Who can help answer my questions?

A:    The information provided above in the question-and-answer format is for your convenience only and is merely a summary of some of the information in this proxy statement. You should carefully read the entire proxy statement, including its annexes. If you would like additional copies of this proxy statement, without charge, or if you have questions about the Transaction, including the procedures for voting your shares, you should contact Morrow & Co., LLC, Nabi’s proxy solicitation agent. The address of Morrow & Co., LLC is 470 West Avenue, Stamford, CT 06902 You can call Morrow & Co., LLC at (203) 658-9400 or toll-free at (800) 662-5200.

You may also wish to consult your legal, tax and/or financial advisors with respect to any aspect of the Transaction, the Transaction Agreement or other matters discussed in this proxy statement.g

 

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RISK FACTORS

You should carefully consider the following risk factors related to the Transaction and the anticipated business of the combined company after the closing of the Transaction, as well as the other information contained in this proxy statement, including the attached annexes, in evaluating whether to approve the Transaction Proposals. If any of the risks described below, or elsewhere in this proxy statement, actually occurs, the business, financial results, financial condition, operating results or stock price of the combined company could be materially adversely affected.

Risks Related to the Transaction

Nabi stockholders will suffer immediate and substantial dilution to their equity and voting interests as a result of the issuance of Nabi common stock to Biota stockholders.

In connection with the Transaction, Nabi will issue approximately 126.0 million shares of common stock, which number will be adjusted depending on the number of shares of Nabi common stock that remain outstanding after completion of the issuer tender offer described under “Repurchase of Shares of Nabi Common Stock; Dividends and Distributions” beginning on page 77 of this proxy statement and the reverse stock split described under “Proposal 3: Amendment to Certificate of Incorporation to Effectuate Reverse Stock Split” beginning on page 131 of this proxy statement. Immediately following the completion of the Transaction, former Biota stockholders will own collectively approximately 74% of the total number of shares of the combined company’s outstanding common stock and existing stockholders of Nabi will own approximately 26% of the outstanding common stock of the combined company. Accordingly, the issuance of Nabi common stock to Biota stockholders will have the effect of reducing the percentage of equity and voting interest held by each of Nabi’s existing stockholders. Consequently, Nabi stockholders as a group will have significantly less influence over the management and policies of the combined company after the Transaction than they currently exercise.

The integration of Biota with Nabi will subject the combined company to liabilities that may exist at Biota.

The integration of Biota with Nabi may pose special risks, including one-time write-offs or restructuring charges, unanticipated costs, and the loss of key employees. There can be no assurance that integration of Nabi and Biota will be accomplished effectively or in a timely manner. In addition, the integration of Biota will subject the combined company to liabilities that may exist at Biota, some of which may be unknown. While Nabi and its advisors have conducted due diligence on the operations of Biota, there can be no guarantee that Nabi is aware of any and all liabilities of Biota. These liabilities, and any additional risks and uncertainties related to the Transaction not currently known to Nabi or that Nabi may currently deem immaterial, could negatively impact the combined company’s future business, financial condition and results of operations.

The price of the combined company’s common stock and the combined company’s results of operations after the Transaction will likely be affected by factors different from those currently affecting the price of Nabi common stock and Nabi’s results of operations.

Biota’s business is different in certain ways from that of Nabi, and the combined company’s results of operations, as well as the price of the combined company’s common stock after the Transaction, may be affected by factors different from those currently affecting Nabi’s results of operations and the price of Nabi common stock. The price of the combined company’s common stock may fluctuate significantly following the Transaction, including as a result of factors over which Nabi and Biota have no control. See “—Risks Related to Biota and the Combined Company” beginning on page 33 of this proxy statement for a discussion of Biota’s business and certain factors to consider in connection with such business, including risk factors for Biota.

Some Biota and Nabi stockholders may not intend to hold shares of the combined company’s common stock received in the Transaction. If a significant number of Biota or Nabi stockholders seek to sell their shares of the combined company’s common stock, this may adversely affect the trading price of the combined company’s common stock following the completion of the Transaction.

 

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Nabi will incur significant transaction and combination-related costs in connection with the Transaction.

Nabi and Biota expect to incur significant costs associated with the Transaction and combining the operations of the two companies. Nabi’s fees and expenses related to the Transaction include financial advisors’ fees, filing fees, legal and accounting fees, soliciting fees, regulatory fees and mailing costs, some of which will be paid regardless of whether the Transaction is completed. Such fees and expenses will reduce Nabi’s cash on hand and the amount of cash that Nabi may be able to distribute to Nabi stockholders in a form of dividend or return of capital. Furthermore, following the completion of the Transaction, the combined company will incur costs associated with combining the operations of the two companies. However, it is difficult to predict the amount of these costs before the combined company begins the integration process. The combined company may incur additional unanticipated costs as a consequence of difficulties arising from efforts to integrate the companies.

The market price of Nabi common stock may decline as a result of the Transaction.

The market price of the combined company’s common stock may decline as a result of the Transaction if the integration of Biota’s business is unsuccessful, the perceived benefits of the Transaction are not achieved as rapidly or to the extent anticipated by financial analysts or investors, or the effect of the Transaction on the combined company’s financial results after the completion of the Transaction is not consistent with the expectations of financial analysts or investors.

The Transaction Agreement limits Nabi’s ability to pursue alternatives to the Transaction, and in certain instances requires payment of a break fee, which could deter a third party from proposing an alternative transaction to the Transaction.

While the Transaction Agreement is in effect, subject to certain limited exceptions, Nabi is prohibited from soliciting, initiating, encouraging or entering into certain transactions, such as a merger, sale of assets or other business combination, with any third party. See “The Transaction Agreement—Exclusivity; No-Solicitation” beginning on page 122 of this proxy statement for a description of the foregoing limitations. As a result of these limitations, Nabi may lose opportunities to enter into a more favorable transaction than the Transaction.

Moreover, under specified circumstances, Nabi could be required to pay Biota a break fee of A$2 million in connection with the termination of the Transaction Agreement. See “The Transaction Agreement—Break Fee” beginning on page 124 of this proxy statement for a description of Nabi’s obligations in these circumstances. The break fee could deter a third party from proposing an alternative to the Transaction.

The Transaction is subject to conditions to closing that could result in the Transaction being delayed or not completed and the Transaction Agreement can be terminated in certain circumstances, each of which could negatively impact the price of Nabi common stock and its future business and operations.

The Transaction is subject to conditions to closing as set forth in the Transaction Agreement. See “The Transaction Agreement—Conditions Precedent to the Transaction” beginning on page 108 of this proxy statement. In addition, each of Nabi and Biota has the right, in certain circumstances, to terminate the Transaction Agreement. See “The Transaction Agreement—Termination” beginning on page 123 of this proxy statement. If the Transaction Agreement is terminated or any of the conditions to closing are not satisfied and, where permissible, not waived, the Transaction will not be completed. Failure to complete the Transaction or any delay in the completion of the Transaction or any uncertainty about the completion of the Transaction may adversely affect the price of Nabi common stock or have an adverse impact on Nabi’s future business and operations.

If the Transaction is not completed, Nabi’s ongoing business may be adversely affected and, without realizing any of the benefits of having completed the Transaction, Nabi would be subject to a number of risks, including the following:

 

   

negative reactions from the financial markets and from persons who have or may be considering business dealings with Nabi;

 

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incurring and paying significant expenses in connection with the Transaction, such as financial advisors’ fees, filing fees, legal and accounting fees, soliciting fees, regulatory fees, mailing costs and other related expenses; and

 

   

paying a break fee of A$2 million if the Transaction Agreement is terminated in certain circumstances or the Transaction is not completed for certain reasons. See “The Transaction Agreement—Break Fee” beginning on page 124 of this proxy statement for further information regarding break fees.

In addition, Nabi could be subject to litigation related to any failure to complete the Transaction or seeking to require Nabi to perform its obligations under the Transaction Agreement.

Certain directors and executive officers of Nabi may have potential conflicts of interest in connection with the Transaction.

The interests of certain of the directors and executive officers of Nabi are different from those of Nabi stockholders generally, and such directors and executive officers of Nabi participate in arrangements that are different from, or in addition to, those of Nabi stockholders. See “The Transaction—Interests of Nabi Executive Officers and Directors in the Transaction” beginning on page 67 of this proxy statement for more information. Nabi stockholders should consider whether these interests may have influenced those directors and executive officers with respect to the Transaction.

As of May 15, 2012, Nabi directors and executive officers collectively beneficially owned approximately 2,722,663 or 6.3% of the shares of Nabi common stock then outstanding.

The application of the purchase method of accounting may adversely affect the market value of Nabi common stock following the Transaction.

In accordance with U.S. GAAP, the Transaction will be accounted for as a “reverse merger” pursuant to which Biota will be considered the acquiror of Nabi. The combined company will account for the Transaction using the purchase method of accounting, which may result in charges to the combined company’s earnings that could adversely affect the market value of the combined company’s common stock following the completion of the Transaction.

Under the purchase method of accounting, the combined company will allocate the total estimated purchase price to the assets acquired and liabilities assumed from Nabi based on their fair values as of the completion date of the Transaction, and record any excess of the purchase price over those fair values as goodwill. For certain tangible and identifiable intangible assets (excluding goodwill), recording their fair values as of the completion date of the Transaction may result in the combined company incurring significant additional depreciation and/or amortization expense that exceed the amounts recorded by Nabi prior to the Transaction. This increased expense will be recorded by the combined company over the useful lives of the underlying assets. In addition, to the extent the value of goodwill or identifiable intangible assets were to become impaired, the combined company may be required to incur charges relating to the impairment of those assets.

If the fair value of assets acquired and liabilities assumed from Nabi exceed the estimated purchase price at the completion date, instead of recording goodwill, the combined company will recognize a gain for such excess on the completion date of the Transaction.

The pro forma financial information is presented for illustrative purposes only and may not be an indication of the combined company’s financial condition or results of operations following the Transaction.

The unaudited condensed pro forma financial information contained in this proxy statement are presented for illustrative purposes only and may not be an indication of the combined company’s financial condition or results of operations following the Transaction for several reasons. For example, the unaudited condensed pro

 

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forma financial information has been derived from the historical financial statements of Nabi and Biota and certain adjustments and assumptions have been made regarding the combined company after giving effect to the Transaction. 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. Moreover, the unaudited condensed pro forma financial information does not reflect all costs that are expected to be incurred by the combined company in connection with the Transaction. For example, the impact of any incremental costs incurred in integrating Nabi and Biota is not reflected in the unaudited condensed pro forma financial information. As a result, the actual financial condition and results of operations of the combined company following the Transaction may not be consistent with, or evident from, the unaudited condensed pro forma financial information. Additionally, the purchase price used in preparing the pro forma financial information is based on the closing price of Biota’s shares as of June 7, 2012, which may be materially different from the closing price of Biota’s shares on the completion date of the Transaction. The assumptions used in preparing the unaudited condensed pro forma financial information may not prove to be accurate, and other factors may affect the combined company’s financial condition or results of operations following the Transaction. The combined company’s stock price may be adversely affected if the actual results of the combined company fall short of the historical results reflected in the unaudited condensed pro forma financial information contained in this proxy statement. See “Unaudited Pro Forma Condensed Consolidated Financial Information” beginning on page 12 of this proxy statement.

Biota’s public filings are subject to Australian disclosure standards, which differ from SEC requirements.

Biota is an Australian issuer that is required to prepare and file its periodic and other filings in accordance with Australian securities laws. As a result, certain of the information about Biota, including any management’s discussion and analysis, that is contained in this proxy statement was prepared in conjunction with Biota’s financial statements that were prepared in accordance with International Financial Reporting Standards (“IFRS”) or Australian GAAP and other Australian disclosure regulations, rather than the requirements that would apply in the U.S. Because Australian disclosure requirements are different from SEC requirements, the information about Biota contained in this proxy statement may not be comparable to similar information available about Nabi or other U.S. issuers.

Following the Transaction, the combined company’s exposure to foreign currency risk will be increased.

Following the completion of the Transaction, the combined company will hold assets, incur liabilities, earn revenues and pay expenses for its Australian operations in Australian dollars. Because the combined company’s financial statements will continue to be presented in U.S. dollars, the combined company will be required to translate assets, liabilities, income and expenses that relate to the combined company’s Australian operations and that are denominated in Australian dollars into U.S. dollars at the then-applicable exchange rates. Consequently, increases and decreases in the value of the U.S. dollar versus the Australian dollar will affect the value of these items in the combined company’s financial statements, even if their underlying value has not changed, and as a result, the combined company’s financial results could be more volatile as a result of the Transaction. Although the combined company may enter into transactions to hedge portions of this foreign currency translation exposure, the combined company may not be able to eliminate this exposure.

Nabi cannot assure you whether, when or in what amounts the combined company will be able to use Nabi’s net operating losses following the Transaction.

Based on current U.S. tax law, as of December 31, 2011, Nabi had approximately $167.2 million of net operating losses (“NOLs”) for U.S. federal income tax purposes. After entering into the Transaction Agreement, the combined company’s ability to utilize these tax attributes to offset future taxable income became subject to significant limitations under Sections 382 and 383 and other provisions of the Internal Revenue Code of 1986, as amended (the “IRC”). Moreover, issuances or sales of the combined company’s common stock following the Transaction (including certain transactions outside of Nabi’s control) could result in an ownership change further limiting the combined company’s ability to utilize the NOLs. Determining whether an ownership change has occurred and the limitations applicable to the NOLs is technical and highly complex. For these and other reasons, Nabi cannot assure you that the combined company will be able to use Nabi’s NOLs after the Transaction in the amounts it projects.

 

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If the number of Nabi’s authorized shares of common stock is increased as we are proposing and the proposed reverse stock split is implemented, the combined company may be able to issue a significant number of additional shares of common stock in the future. Additional issuances of common stock by the combined company would dilute the combined company stockholders’ ownership interest in the combined company, could reduce some or all of the combined company’s financial measures on a per share basis and could reduce the trading price of the combined company’s common stock.

The combined company may issue equity in the future following the completion of the Transaction in connection with acquisitions, strategic transactions or for other purposes. To the extent the combined company issues additional equity securities, the combined company stockholders’ ownership interest in the company would be diluted. Furthermore, some or all of the combined company’s financial measures on a per share basis could be reduced. In addition, the shares of the combined company’s common stock that the combined company issues may not be subject to resale restrictions and may be freely tradable in the U.S. The market price of the combined company’s common stock could decline if certain large holders of the combined company’s common stock, or recipients of the combined company’s common stock, sell all or a significant portion of their shares of the combined company’s common stock or are perceived by the market as intending to sell these shares other than in an orderly manner.

If the shares of Nabi common stock to be issued in the Transaction are not exempt from the registration requirements of the Securities Act, Nabi must use its best endeavors to register such shares with the SEC, which will cause Nabi to incur significant additional costs and delay the completion of the Transaction.

The shares of Nabi common stock to be issued in the Transaction have not been, and are not expected to be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or the securities laws of any other jurisdiction. The shares of Nabi common stock to be issued in the Transaction will be issued pursuant to an exemption from the registration requirements provided by Section 3(a)(10) of the Securities Act based on the approval of the Transaction by the Supreme Court of Victoria, Australia. See “The Transaction—Federal Securities Law Consequences; Stock Transfer Restrictions” beginning on page 75 of this proxy statement for more information on the exemption from the registration requirements provided by Section 3(a)(10) of the Securities Act.

In the event that the exemption from the registration requirements provided by Section 3(a)(10) of the Securities Act is not available for any reason, Nabi has agreed in the Transaction Agreement to use its best endeavors (as such term is qualified in the Transaction Agreement) to file a Registration Statement on Form S-4 (or on such other form that may be available to Nabi) in order to register the shares of Nabi common stock to be issued in the Transaction and to use its best endeavors to cause such registration statement to become effective prior to the completion of the Transaction. Preparing, filing and causing effectiveness of such registration statement will result in significant additional costs for Nabi, consisting of additional filing fees, legal and accounting fees, mailing costs and other related expenses, and will delay the completion of the Transaction.

Nabi may not issue CVRs and, even if issued, CVRs may not result in any cash payments to its holders.

Although Nabi currently plans to enter into the CVR Agreement and issue CVRs to Nabi stockholders, there is no assurance that the CVRs will be issued at all or based on the terms currently set forth in the form of the CVR Agreement. See “Repurchase of Shares of Nabi Common Stock; Dividends and Distributions—Contingent Value Rights” on page 77 of this proxy statement for more information on the terms of the CVR Agreement. Nabi currently has not entered into the CVR Agreement and Nabi’s board of directors may determine in its sole discretion not to issue the CVRs based on, among other things, the progress of the remaining investigator-initiated combination clinical trial in the Netherlands for NicVAX® with Pfizer Inc.’s varenicline (Chantix/Champix). Furthermore, if Nabi and Biota agree, the terms of the CVR Agreement as currently contemplated may be changed prior to Nabi entering into the CVR Agreement.

 

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Even if CVRs are issued, they may not result in any cash payments to its holders. Under the CVR Agreement, the combined company will not have any obligation whatsoever to pursue, engage in, negotiate, enter into or consummate an actual or potential NicVAX Transaction (as such term is defined in the CVR Agreement) or to research, develop or commercialize NicVAX (Nicotine Conjugate Vaccine) or any other product that would trigger a payment to CVR holders. Even if the combined company enters into a NicVAX transaction, holders of CVRs will not receive any cash payments unless certain threshold amount requirements are met.

Risks Related to Biota and the Combined Company

Biota and Nabi each have a history of net losses, and following the Transaction, the combined company may never achieve or maintain profitability.

Biota and Nabi each have a history of significant net losses. Biota’s net losses from continuing operations were approximately A$1.8 million for the three months ended March 31, 2012, A$28.1 million for the twelve months ended June 30, 2011, a profit of A$16.2 million in 2010 and a profit of A$38.2 million in 2009. Nabi’s net income/losses from continuing operations were approximately $1.4 million in net losses for the three months ended March 31, 2012, $7.5 million in net losses for the twelve months ended December 31, 2011, $0.9 million in net income for the twelve months ended December 25, 2010, and $18.7 million in net losses for the twelve months ended December 26, 2009.

Following the Transaction, the combined company may continue to incur significant expenses for the foreseeable future for research and development and regulatory activities and maintaining existing and obtaining additional intellectual property rights. Following the Transaction, the combined company cannot provide you any assurance that it will ever achieve profitability and, even if the combined company achieves profitability, that it will be able to sustain or increase profitability on a quarterly or annual basis.

The continuation of the BARDA contract depends on the ability of the combined company to meet milestones previously agreed with BARDA, on results of certain key clinical trials relating to laninamivir and the combined company’s compliance with certain operating procedures and protocols. The termination or suspension of the BARDA contract could adversely affect the business of the combined company and its ability to further develop and commercialize laninamivir.

Biota was awarded a contract for the late stage development of laninamivir. Under this contract, Biota is entitled to up to $231 million in funding. Biota is relying on this funding to pay for development of laninamivir. BARDA might attempt to terminate or suspend this contract should laninamivir fail to achieve primary end points of key clinical trials or should the combined company otherwise fail to satisfy various objectives or milestones or fail to comply with normal operating procedures and processes approved by BARDA and its audit agency, Defense Contract Audit Agency. There can be no assurance that laninamivir will achieve these end points or that the combined company will comply with these procedures and protocols.

If the BARDA contract were terminated or suspended this would adversely affect the business of the combined company and its ability to further develop and commercialize laninamivir. The combined company may not have access to sufficient resources to continue to fund its development and commercialization of laninamivir.

The BARDA contract can be varied or terminated by the U.S. Federal Government prior to completion, which could result in revenue shortfalls and reduce profitability or cause losses on the BARDA contract.

The BARDA contract is with a U.S. Federal Government agency and contains provisions permitting BARDA to vary the contract or terminate it on short notice, with or without cause. Variation or unexpected termination of this contract could result in significant revenue shortfalls. If revenue shortfalls occur and are not offset by corresponding reductions in expenses, the combined company’s business could be adversely affected. Biota cannot anticipate if, when or to what extent BARDA might vary or terminate its contract with Biota.

 

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It is the current intention of Biota and Nabi that the combined company will rely upon third parties for all of the manufacturing and most of the distribution of its products.

It is the current intention of Biota and Nabi that the combined company will rely upon third parties to manufacture, distribute and market most of its products.

The combined company’s reliance on third parties for the manufacture of its products creates a dependency that could disrupt the combined company’s research and development, clinical testing, and sales and marketing of its products if the sources of such supply prove to be unreliable or unavailable. If the contracted manufacturing and/or distribution sources become unreliable or unavailable, the combined company and its licensees may not be able to manufacture or market the combined company’s products.

Biota’s collaboration and license agreement with Daiichi Sankyo does not fully address the respective rights and obligations of Biota and Daiichi Sankyo with respect to how laninamivir may be developed and marketed outside of Japan or how the proceeds from any direct sales of laninamivir outside of Japan would be shared. As a result, unless Biota and Daiichi Sankyo come to an agreement disputes between Biota and Daiichi Sankyo could result in litigation or arbitration and could adversely affect the business, results of operations or financial condition of the combined company.

The collaboration and license agreement between Biota and Daiichi Sankyo does not fully address the respective rights and obligations of Biota and Daiichi Sankyo with respect to how laninamivir may be developed and marketed outside of Japan or how the proceeds from any direct sales by Biota or Daiichi Sankyo of laninamivir outside of Japan would be shared. Also, the agreement includes a provision which restricts either Biota or Daiichi Sankyo from developing, commercializing or otherwise handling or dealing with laninamivir in any country (or enter into any license, collaboration or agreement with a third party to do any of the foregoing).

Unless Biota and Daiichi Sankyo come to an agreement with respect to the development and marketing of laninamivir outside of Japan, disputes between Biota and Daiichi Sankyo could result in litigation or arbitration, which can be expensive and time consuming. If any such dispute were to be resolved unfavorably to Biota, the amount of future revenue laninamivir generates could be reduced. This may have a material adverse effect on the business, results of operations or financial condition of the combined company.

If the combined company fails to attract and retain highly qualified personnel, it may be unable to successfully develop new product candidates, manage clinical trials or enter into strategic collaborations.

The combined company’s future success will depend in large part on its ability to attract and retain highly qualified scientific, technical and management personnel, as well as personnel with expertise in preclinical testing, clinical development, regulatory affairs, government relations and strategic partnering. The combined company will face competition for personnel from other companies, universities, public and private research institutions, government entities and other organizations. Competition for qualified personnel in the pharmaceutical field is intense, and there is a limited pool of qualified potential employees to recruit. The combined company may not be able to attract and retain quality personnel on acceptable terms. If the combined company is unsuccessful in its recruitment and retention efforts, its business may be harmed.

The combined company’s clinical trials may not be successful.

Following the Transaction, the combined company will only obtain marketing approval to commercialize a product candidate if it or its licensee can demonstrate to the satisfaction of the U.S. Food and Drug Administration (the “FDA”) or the applicable non-U.S. regulatory authority, in clinical trials, that the product candidate is safe and effective, and otherwise meets the appropriate standards required for approval for a particular indication. Clinical trials are lengthy, complex and extremely expensive processes with uncertain results. A failure of one or more of the combined company’s clinical trials may occur at any stage of testing and may preclude the ability of the combined company or its licensees to submit an application for marketing approval of its product candidate.

 

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It is the current intention of Biota and Nabi that the combined company will rely on third parties to conduct certain preclinical development activities and clinical trials and those third parties may not perform satisfactorily.

It is the current intention of Biota and Nabi that following the Transaction, the combined company will not conduct in its facilities certain preclinical development activities with respect to its product candidates, such as preclinical studies in animals, nor will it conduct clinical trials for its product candidates itself. It is the current intention of Biota and Nabi that the combined company will rely on, or work in conjunction with, third parties to perform these functions, such as contract research organizations, medical institutions and clinical investigators. The combined company’s reliance on these third parties for preclinical and clinical development studies may reduce its control over these activities. The combined company will remain responsible for ensuring that the preclinical development activities and clinical trials with respect to each of its product candidates is conducted in accordance with the applicable U.S. federal and state laws and foreign regulations, general investigational plans and protocols. However, other than contracts between these third parties and the combined company or its licensees, it has no direct control over these researchers or contractors, as they will not be employees of the combined company. Moreover, the regulatory authorities will require the combined company to comply with standards, commonly referred to as Good Laboratory Practices and Good Clinical Practices for conducting, recording and reporting the results of its preclinical development and clinical trials, respectively, to assure that data and reported results are credible and accurate and that the rights, safety and confidentiality of trial participants are protected. The combined company’s reliance on third parties that it will not control, including its licensees, will not relieve the combined company of these responsibilities and requirements. Furthermore, these third parties may have relationships with other entities, some of which may be the combined company’s competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct the combined company’s preclinical development activities or clinical trials in accordance with regulatory requirements or the stated protocols of the combined company or its licensees, the combined company or its licensees may not be able to obtain, or may be delayed in obtaining, marketing approvals for its product candidates and may not be able to, or may be delayed in its efforts to successfully commercialize its product candidates. These third parties may be warned, suspended or otherwise sanctioned by the FDA or other government or regulatory authorities for failing to meet the applicable requirements imposed on such third parties. As a result, the third parties may not be able to fulfill their contractual obligations, and the results obtained from the preclinical and clinical research using their services may not be accepted by the regulatory authorities to support the marketing approval of the combined company’s product candidates. If the third parties or their employees become debarred by the regulatory authorities, the combined company and its licensees will not be able to use the research data derived from their services to support the marketing approval of the combined company’s product candidates. Finally, these third parties may be bought by other entities, change their business plans or strategies or they may go out of business, thereby preventing them from meeting their contractual obligations to the combined company and its licensees.

It is the current intention of Biota and Nabi that the combined company will rely on pharmaceutical companies with whom they partner to pay the majority of the costs associated with obtaining regulatory approval for, and manufacturing and marketing of, most of its existing products and future product candidates. If the combined company is unable to obtain agreements with strategic partners to fund these costs, it will have to fund such costs itself or it may not be able to continue its development of these product candidates.

It is the current intention of Biota and Nabi that the combined company will continue to rely on significant collaborative relationships with major pharmaceutical companies for the advanced development, regulatory approval, sales and marketing of its products. There are existing relationships with GSK for Relenza™ and Daiichi Sankyo for laninamivir (marketed as Inavir® in Japan). As the combined company continues to advance its product candidates following the Transaction, Biota and Nabi currently intend that the combined company will either license product candidates to, or partner with, one or more major pharmaceutical companies at some point in their product development. If the combined company is able to do so, it is the current intention of Biota

 

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and Nabi for these licensees or partners to pay the majority of the costs associated with any remaining development work, regulatory submissions, clinical trials and the manufacturing and marketing of its product candidates. If the combined company is unable to license its future product candidates or otherwise partner with third parties, the combined company will have to fund the costs of its development itself.

Following the Transaction, the combined company’s dependence on collaborative arrangements with third parties would subject it to a number of risks. These collaborative arrangements may not be on terms favorable to the combined company. Agreements with collaborative partners typically allow partners significant discretion in electing whether or not to pursue any of the planned activities. The combined company will not be able to control the amount and timing of resources its collaborative partners may devote to products based on the collaboration, and the combined company’s partners may choose to pursue alternative products. The combined company’s partners may not perform their obligations as expected. Business combinations or significant changes in a collaborative partner’s business strategy may adversely affect a partner’s willingness or ability to complete its obligations under the arrangement. Moreover, the combined company could become involved in disputes with its partners, which could lead to delays or termination of the collaborations and time-consuming and expensive litigation or arbitration. Even if the combined company fulfills its obligations under a collaborative agreement, its partner may be able to terminate the agreement under certain circumstances. If any collaborative partner were to terminate or breach the combined company’s agreement with it, or otherwise fail to complete its obligations in a timely manner, the combined company’s chance of successfully commercializing its product candidates would be materially and adversely affected.

Preclinical results may not be indicative of clinical results. In addition, clinical results may not be sufficient to obtain marketing approvals necessary for marketing its product candidates, including approval by regulatory authorities.

The combined company has a number of product candidates that are at an early stage of development. The combined company may not be able to progress its product candidates that are undergoing preclinical testing into clinical trials. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful, and favorable initial results from a clinical trial do not necessarily predict outcomes in subsequent clinical trials. The indications of use for which the combined company will pursue development may have clinical effectiveness endpoints that have not previously been reviewed or validated by regulatory authorities, which may complicate or delay the combined company’s effort to ultimately obtain marketing approval. The combined company cannot therefore guarantee that the clinical trials of its product candidates will ultimately be successful.

The combined company and its licensees may not successfully design or implement clinical trials required for marketing approval of the combined company’s product candidates. The combined company might not be able to demonstrate that its product candidates meet the appropriate standards for marketing approval.

Regulatory authorities may impose requirements on the combined company’s clinical trials that are difficult to comply with, which could harm the business of the combined company.

The requirements that regulatory authorities may impose on clinical trials for product candidates of the combined company are uncertain. As a result, the combined company cannot guarantee that it or its licensees will be able to comply with such requirements. For example, regulatory authorities may require endpoints in the combined company’s late-stage clinical trials that are different from or in addition to the endpoints in its early-stage clinical trials or the endpoints which the combined company or its licensees may propose. The endpoints or other study elements, including sample size, required by regulatory authorities may make it less likely that the combined company’s Phase III clinical trials are successful or may delay or increase the cost of completing the clinical trials. If the combined company or its licensees are unable to comply with the requirements of regulatory authorities, the combined company and its licensees will not be able to obtain marketing approval for product candidates and the business of the combined company will suffer.

 

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If the combined company or its licensees are not able to conduct clinical trials properly and on schedule, marketing approval by regulatory authorities may be delayed or denied.

Clinical trials of the product candidates by the combined company or its licensees may be delayed or terminated for many reasons, including, but not limited to, if:

 

   

regulatory authorities do not grant permission to proceed or places the trial on clinical hold;

 

   

subjects do not enroll or remain in the clinical trials at the expected rate;

 

   

the incidence of infectious viruses targeted by the product candidate is low or fluctuates during the clinical trial;

 

   

a third party fails to manufacture the necessary amounts of product candidate;

 

   

a third party fails to manufacture product candidate in a timely manner;

 

   

a third party manufacturing facility is ordered by a government or regulatory authority to temporarily or permanently shut down due to violations of current GMP or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process;

 

   

subjects experience an unacceptable rate or severity of adverse side effects;

 

   

reports from preclinical or clinical testing on similar technologies and products raise safety and/or efficacy concerns;

 

   

third party clinical investigators lose their license or permits necessary to perform the clinical trials of the combined company or its licensee, do not perform clinical trials on the anticipated schedule or consistent with the clinical trial protocol, Good Clinical Practice and regulatory requirements, or other third parties do not perform data collection and analysis in a timely or accurate manner;

 

   

inspections of clinical trial sites by regulatory authorities or Institutional Review Boards (“IRBs”) find regulatory violations that require the combined company or its licensee to undertake corrective action, suspend or terminate one or more sites, or prohibit the combined company or its licensee from using some or all of the data in support of the marketing applications for such product candidate; and

 

   

third party contractors become debarred or suspended or otherwise penalized by regulatory or other government authorities for violations of regulatory requirements, in which case the combined company or its licensee may need to find a substitute contractor, and the combined company or its licensee may not be able to use some or any of the data produced by such contractors in support of the marketing applications for such product candidates; or one or more IRBs or the combined company’s Data Safety Monitoring Board (“DSMB”), refuses to approve, suspends or terminates the clinical trial at an investigational site, precludes enrollment of additional subjects, or withdraws its approval of the clinical trial.

If the combined company or its licensees are unable to conduct clinical trials in a proper or timely manner, the regulatory authorities may delay or deny marketing approval.

As the combined company loses patent protection on its marketed products, it may have a material adverse effect on the combined company’s business.

Following the Transaction, the combined company will rely on certain patents to provide it and its licensees with exclusive rights for certain of the combined company’s products. When all patents underlying a license expire, the combined company’s revenue from that license may cease, and there can be no assurance that the

 

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combined company will be able to replace it with revenue from new or existing licenses. The primary patents on Relenza™ will expire in December 2014 in the U.S., May 2015 in Australia and major countries of the European Union, and July 2019 in Japan.