Merger combines Catalyst’s protease therapeutics pipeline and the
financial resources of both companies
Creates a well-funded company to develop important new treatment
options for patients with bleeding disorders and complement-mediated
diseases
Conference Call on Friday, March 6th, at 8:30 a.m. Eastern Standard
Time
WINSTON-SALEM, N.C. & SOUTH SAN FRANCISCO, Calif. -- (Business Wire)
Targacept, Inc. (NASDAQ: TRGT) and Catalyst Biosciences, Inc., a
privately held biopharmaceutical company, jointly announced today 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.
The combined company, with an anticipated NASDAQ listing with the symbol
CBIO, will have:
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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 Inc. 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;
-
Immediate committed capital to the combined entity expected to include
cash and cash equivalents of approximately $40 million at the closing
of the transaction; and
-
For existing Targacept shareholders, a special dividend prior to
closing of approximately $20 million in cash and redeemable
convertible notes with an aggregate principal amount of $37 million,
which provides the potential for future capital investment in the
company.
“This merger establishes a well-capitalized public company with
resources to advance our unique protease-based product candidates
through multiple future value inflection points,” said Nassim Usman,
Ph.D., Chief Executive Officer of Catalyst. “In addition to our Factor
VIIa program we will also have sufficient resources to initiate and
complete a planned proof-of-concept study of CB 2679d, a next-generation
Factor IX for hemophilia B patients, as well as further develop of our
novel Factor Xa variant and our anti-complement programs.”
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.
“This transaction with Catalyst reflects the continued commitment of
Targacept’s Board of Directors and management team to deliver value to
Targacept stockholders, and make a difference in patients’ lives,” said
Dr. Stephen A. Hill, President and Chief Executive Officer of Targacept.
“The proposed transaction employs an innovative structure that is
designed to optimize stockholder value for both Catalyst and Targacept.
Substantial capital is committed to the combined entity, potential
additional capital is earmarked for future investment into the combined
company if the notes are converted, and a special dividend is provided
for existing Targacept stockholders at the closing.”
The boards of directors of both companies have unanimously approved the
proposed merger, which is subject to customary closing conditions,
including approval by the stockholders of each of Targacept and
Catalyst. Voting agreements supporting the transaction have been signed
by shareholders representing approximately 43 percent of Targacept’s
common stock and 84 percent of Catalyst’s voting stock.
About the Combined Company
If the merger is consummated, Targacept’s name will be changed to
Catalyst Biosciences, Inc., and Targacept will apply to change its
ticker symbol on the NASDAQ Global Select Market to “CBIO”. 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.
Additional Information About the Transaction
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.
About Hemophilia & Hemostasis
Hemophilia is a rare and serious bleeding disorder that results from a
genetic or an acquired deficiency of a protein required for normal blood
coagulation, such as Factor VIII (hemophilia A) or Factor IX (hemophilia
B). The worldwide prevalence of hemophilia is estimated at approximately
300,000 patients and, according to the National Hemophilia Foundation,
approximately 75 percent of patients receive inadequate treatment of
their disorder. Hemophilia patients suffer from spontaneous bleeding
episodes that often occur repeatedly in “target joints”, especially the
knees, ankles and elbows. This internal bleeding may, in some cases,
become life threatening and frequently damages joints, organs, and
tissues over time.
Hemophilia A: A significant number of
hemophilia A patients develop neutralizing antibodies (“inhibitors”)
against factor VIII and become refractory to standard factor replacement
treatment. One of the treatment options for these patients is Factor
VIIa, a protease that can both initiate blood clotting and, at high
doses, “bypass” the factor VIII-dependent step in coagulation.
Hemophilia A is four times as common as Hemophilia B.
Hemophilia B: Hemophilia B patients can
also develop neutralizing antibodies and become refractory to factor
replacement therapy. Factor VIIa treatment is also effective in treating
these patients.
Currently, Factor VIIa therapy can, in some patients, require multiple
injections to treat a bleeding episode due to Factor VIIa's limited
potency as a “bypass” agent and short half-life. Current worldwide sales
of Factor VIIa are approximately $1.5 billion annually. Catalyst has
created a FVIIa with pre-clinical properties that suggest increased
potency and duration than currently approved FVIIa, NovoSeven®.
Similarly, Catalyst’s other coagulation factors, FIX and FXa have also
been engineered to be more potent, longer acting, and safer than other
approved factors or those in clinical trials.
About Anti-Complement
Like blood coagulation, the human complement system is a complex series
of biological processes and cascades that are regulated naturally by
proteases. Disruption of the complement system, either by genetic
mutations or inappropriate activation, as occurs in certain transplant
and myocardial surgeries and ocular diseases such as age-related macular
degeneration (AMD), can produce substantial inflammatory tissue damage,
that causes significant pathology. Catalyst's lead complement programs
are directed at complement factor C3, an attractive pharmaceutical
intervention point as C3 is at the nexus of the complement system and
common to all three pathways of activation.
Conference Call Information
Dr. Hill and Dr. Usman will host a conference call and webcast to
discuss the proposed merger on March 6, 2015, at 8:30 a.m. Eastern Time
(5:30 a.m. Pacific Time).
To access the live conference call, please dial +1(800) 299-8538 from
the U.S. and Canada or +1(617) 786-2902 internationally, and use the
passcode 88076227.
To access the live and subsequently archived webcast of the conference
call, go to the Investor Relations section of Targacept’s website at
website at www.targacept.com.
A replay of the webcast will be available on the Company’s website until
close of business on April 3, 2015.
About Catalyst
Catalyst Biosciences is developing the next generation of
biopharmaceuticals by engineering proteases in the fields of hemostasis
and anti-complement. Catalyst is focusing its product development
efforts on drug candidates for hemophilia, age‐related macular
degeneration and inflammation. To date, Catalyst has established
multiple discovery research and product development agreements,
currently including Pfizer and ISU Abxis (Seoul, Korea). Catalyst is
privately held and backed by leading venture firms including Essex
Woodlands Health Ventures, HealthCare Ventures, Johnson & Johnson
Innovation – JJDC, Inc., Morgenthaler Ventures, Rosetta Capital and
Sofinnova Ventures. For more information, please visit www.catbio.com.
About Targacept
Targacept has historically focused on developing NNR Therapeutics™ to
treat patients suffering from serious nervous system and
gastrointestinal/genitourinary diseases and disorders. Targacept is
dedicated to building health and restoring independence for patients.
For more information, please visit www.targacept.com.
Safe Harbor
Additional Information about the Merger and Where to Find More
Information
In connection with the merger, Targacept and Catalyst intend to file
relevant materials with the Securities and Exchange Commission, or the
SEC, including a registration statement on Form S-4 that will contain a
prospectus and a proxy statement/information statement. Investors and
security holders of Targacept and Catalyst are urged to read these
materials when they become available because they will contain important
information about Targacept, Catalyst and the merger. The proxy
statement, information statement, prospectus and other relevant
materials (when they become available), and any other documents filed by
Targacept with the SEC, may be obtained free of charge at the SEC web
site at www.sec.gov. In addition, investors and security holders may
obtain free copies of the documents filed with the SEC by Targacept by
directing a written request to: Targacept, Inc., 100 North Main Street,
Winston-Salem, North Carolina 27101, Attention: Chief Financial Officer.
Investors and security holders are urged to read the proxy statement,
prospectus and other relevant materials when they become available
before making any voting or investment decision with respect to the
merger.
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to buy
any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any
such jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Participants in the Solicitation
Targacept and its directors and executive officers and Catalyst and its
directors and executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of Targacept in connection
with the proposed transaction. Information regarding the special
interests of these directors and executive officers in the merger will
be included in the proxy statement/ prospectus referred to above.
Additional information regarding the directors and executive officers of
Targacept is also included in Targacept’s definitive Proxy Statement in
connection with its 2014 Annual Meeting of Shareholders filed with the
SEC on April 18, 2014 and incorporated by reference in Targacept’s
Annual Report on Form 10-K for the year ended December 31, 2013, which
was filed with the SEC on March 14, 2014. These documents are available
free of charge at the SEC web site (www.sec.gov) and from the Chief
Financial Officer at Targacept at the address above.
Note Regarding Forward-Looking Statements
This press release contains forward-looking statements that involve
substantial risks and uncertainties. All statements, other than
statement of historical facts, included in this press release regarding
our strategy, future operations, future financial position, future
revenue, projected expense, prospects, plans and objectives of
management are forward-looking statements. Examples of such statements
include, but are not limited to, statements relating to the structure,
timing and completion of Targacept’s merger with Catalyst Biosciences,
including the proposed dividend in connection therewith; the potential
conversion of the convertible notes to be issued as part of the
transaction; the combined organization’s continued listing on NASDAQ
after the merger; our expectations regarding the capitalization,
resources and ownership structure of the combined organization; the
nature, strategy and focus of the combined organization; the
development, potential benefits and commercial potential of any product
candidates, including PF-05280602; the disposition, if any, of
Targacept’s NNR assets and any value that might be realized as a result;
the executive and board structure of the combined organization; and
expectations regarding voting by Targacept and Catalyst stockholders.
Targacept or Catalyst may not actually achieve the plans, carry out the
intentions or meet the expectations or projections disclosed in
Targacept’s forward-looking statements and you should not place undue
reliance on these forward-looking statements. Actual results or events
could differ materially from the plans, intentions expectations and
projections disclosed in the forward-looking statements. Various
important factors could cause actual results or events to differ
materially from the forward-looking statements that Targacept makes,
including the risks described in the “Risk Factors” section of
Targacept’s periodic reports filed with the SEC. Targacept does not
assume any obligation to update any forward-looking statements, except
as required by law.
Contacts:
Catalyst Contacts:
Investors:
Catalyst
Biosciences, Inc.
Nassim Usman, Ph.D., +1-650-266-8674
CEO
nusman@catbio.com
or
Media:
Red
House Consulting, LLC
Denise Powell, +1-510-703-9491
denise@redhousecomms.com
or
Targacept
Contacts:
Investors:
Targacept, Inc.
Stephen
A. Hill, +1-336-480-2100
CEO
stephen.hill@targacept.com
or
Media:
MacDougall
Biomedical Communications
Heather Savelle, +1-781-235-3060
hsavelle@macbiocom.com
Source: Targacept, Inc. and Catalyst Biosciences, Inc.
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