Date: 2015-03-05
Type of information: Company acquisition
Acquired company: Targacept (USA - NC)
Acquiring company: Catalyst Biosciences (USA - CA)
Amount:
Terms: * On August 18, 2015, Targacept announced that its stockholders have voted to approve the adoption of the agreement and plan of merger, dated March 5, 2015, as amended May 6, 2015, and May 13, 2015, providing for the merger of a wholly-owned subsidiary of the company with Catalyst Biosciences, Inc., at its 2015 annual stockholders meeting. Prior to the closing of the merger, Targacept will pay a dividend consisting of an aggregate cash amount of $19,500,000, which is approximately $0.5692 per share, and non-interest bearing, redeemable convertible notes with an aggregate principal amount of $37,000,000, which is approximately $1.080 per share. The dividend will be paid on August 19, 2015 to Targacept’s stockholders of record as of the close of business on August 14, 2015. * On May 14, 2015, Targacept and Catalyst Biosciences jointly announced that they have entered into an amendment to the definitive agreement to merge the two companies. Targacept and Catalyst previously announced entering into the definitive merger agreement on March 5, 2015. On April 6, 2015, Targacept disclosed the termination, effective June 1, 2015, of the research and license agreement between Catalyst and Wyeth LLC (a wholly owned subsidiary of Pfizer), which governs the development and commercialization of Catalyst’s lead product candidate CB 813d/PF-05280602, an engineered Factor VIIa in development for severe hemophilia A and B. The amended agreement between Targacept and Catalyst considers the effect on the combined company of the termination of Catalyst’s research and license agreement with Wyeth. The boards of directors of both companies have unanimously approved the amendment to the merger agreement, which is subject to customary closing conditions, including approval by the stockholders of each of Targacept and Catalyst. Shareholders representing approximately 41 percent of Targacept’s common stock and 82 percent of Catalyst’s voting stock have signed voting agreements supporting the transaction. The agreement has been amended to reflect the following revised terms: Targacept stockholders would retain common stock representing approximately 42 percent of the combined company, as compared to approximately 35 percent under the original agreement; * On March 5, 2015, Targacept and Catalyst Biosciences jointly announced that they have entered into a definitive agreement to merge the two companies. The combined entity, to be named Catalyst Biosciences, Inc., is expected to create a financially strong company to harness the catalytic power of engineered human proteases to develop next-generation biopharmaceuticals with improved efficacy and therapeutic index to treat major diseases. As part of the proposed transaction, the stockholders of Catalyst will initially own approximately 65 percent of the combined company, and the operations of both companies will be combined. Targacept cash remaining in the combined company will be $35 million, along with an anticipated $5 million of cash from Catalyst. In addition to retaining common stock representing approximately 35 percent of the combined company, current Targacept stockholders will receive a dividend of an aggregate of $37 million in non-interest bearing redeemable convertible notes and approximately $20 million in cash. The notes will be convertible into the combined company’s common stock at any time within two years after closing at the noteholders’ discretion. The conversion price of the notes is equal to $1.31, which represents 130 percent of the negotiated per-share value of Targacept’s assets following the anticipated distribution of the dividend of approximately $20 million in cash and $37 million principal amount of the notes. The conversion price is subject to adjustment in the event of a reverse stock split of the combined company’s common stock. The combined company will establish an escrow fund of cash sufficient for repayment of any notes that are not converted to stock during the two-year conversion period. If the redeemable convertible notes are fully converted, an additional $37 million held in escrow would be made available to the combined company within the first two years following closing, and on a pro-forma basis as of the anticipated closing date, the former Targacept stockholders would own approximately 49 percent of the outstanding capital of the combined company. The initial ownership percentages are subject to adjustment based on Catalyst’s cash balance at closing. Current Targacept stockholders will retain rights to any monetization of Targacept’s neuronal nicotinic receptor (NNR) assets for a period of two years following the closing, to the extent these assets are not sold or otherwise disposed of prior to the closing. Stifel, Nicolaus & Company, Incorporated is acting as exclusive financial advisor to Targacept and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. is serving as its legal counsel. Morrison & Foerster LLP is serving as legal counsel for Catalyst.
The parties expect to complete the merger on August 20, 2015, subject to the conditions set forth in the merger agreement. If the merger is completed, Targacept will be renamed “Catalyst Biosciences, Inc.” and expects to trade on the NASDAQ market under the symbol CBIO.
Targacept stockholders would own, on a pro-forma basis, approximately 57 percent of the outstanding capital of the combined company if the redeemable convertible notes to be issued to Targacept stockholders as a component of a pre-closing dividend are fully converted to common stock, as compared to 49 percent under the original agreement;
A 30-month period for Targacept stockholders to convert the $37 million of redeemable convertible notes into the combined company’s common stock or redeem them for cash, as compared to a 24-month period under the original agreement; and
Any NNR Therapeutics™ assets not sold or otherwise disposed of prior to the closing date will remain with the combined company, rather than being placed in a liquidating trust for the benefit of Targacept stockholders.
Details: The combined entity, to be named Catalyst Biosciences, will have: • a pipeline of protease therapeutics including PF-05280602 (formerly CB 813d), an engineered Factor VIIa (FVIIa) drug candidate that successfully completed a Phase 1 clinical trial and is being developed by Pfizer under license from Catalyst. PF-05280602 is designed to address an established approximately $1.5 billion hemophilia market by potentially enabling lower and fewer doses of an engineered Factor VIIa to control bleeding episodes and to potentially achieve effective prophylaxis in hemophilia inhibitor patients; • four additional promising drug candidates including: an improved Factor IX (FIX) for hemophilia B, an engineered Factor Xa (FXa) that can potentially be used for both hemophilia and the control of bleeding in non-hemophilia patients, and two novel proteases for the treatment of complement-mediated disorders; • news flow from drug development programs including Phase 1 data from the Pfizer-sponsored Factor VIIa program in severe hemophilia A & B and inhibitor patients; Catalyst’s CEO Nassim Usman, Ph.D., will become the President and CEO of the combined company and the other Catalyst executive officers will assume their respective positions in the combined company, with select Targacept executives remaining involved on a transitional basis. The seven-member Board of Directors of the combined company will be comprised of current Catalyst directors Dr. Harold E. Selick, Dr. Jeff Himawan, and Augustine Lawlor, as well as Dr. Usman, and current Targacept directors John P. Richard, Errol B. DeSouza, Ph.D. and Dr. Hill. Dr. Selick will serve as the new chairman of the board.
Related: Genetic diseases - Hematological diseases - Rare diseases
