Axonyx Inc. and TorreyPines Therapeutics, Inc., a private company, announced that they have entered into a definitive merger agreement.
The merger would create a NASDAQ listed biopharmaceutical company that discovers and develops treatments for central nervous system (CNS) disorders. The resulting company will be named TorreyPines Therapeutics, Inc. and be headquartered in San Diego, California.
Under terms of the agreement, unanimously approved by both boards of directors, Axonyx would issue, and TorreyPines stockholders would receive, in a tax-free transaction, shares of Axonyx common stock such that TorreyPines stockholders would own approximately 58 per cent of the combined company and Axonyx stockholders would own approximately 42 per cent. These relative percentages will be adjusted if either party out licenses one or more product candidates prior to closing.
In addition, TorreyPines preferred shareholders will receive warrants to purchase combined company shares that, if fully exercised at closing, would give TorreyPines shareholders approximately 62 per cent of the combined company. The transaction is subject to Axonyx maintaining certain minimum cash levels, as well as certain other customary conditions, including obtaining approval of each company's stockholders.
The transaction is expected to close during the fourth quarter of this year. Upon closing, the company is expected to trade on the NASDAQ Stock Market for which the company has reserved the symbol "TPTX." The combined company will have a deep, robust and diversified CNS pipeline focused on novel therapeutics for neurological diseases and disorders. At March 31, 2006, the pro forma combined company had more than $80 million in cash.
The combined company's initial focus will be on migraine, chronic pain and Alzheimer's disease (AD). The pipeline at closing will include eight product candidates, with two candidates for pain and six for AD.
The companies anticipate several key milestones related to their product candidates during the next 12 months. Among these include the following: TorreyPines' lead product candidate for chronic pain, tezampanel, is expected to enter into a phase IIb clinical trial for the treatment of migraine; TorreyPines expects to file an Investigational New Drug (IND) application with the US Food and Drug Administration (FDA) and initiate a phase I trial for NGX426, an oral pro drug of tezampanel, and a follow-on compound for migraine and chronic pain; Axonyx will complete its ongoing phase I trials with Posiphen in development for the treatment of AD progression; Data will become available from TorreyPines' Phase I single dose study evaluating the company's lead AD product candidate, NGX267, a muscarinic or M1 receptor agonist, in healthy elderly volunteers. In addition, the company anticipates initiating a Phase I multiple dose trial with the compound; Axonyx to begin a phase I clinical trial with BNC, its highly selective butyrylcholinesterase inhibitor for the treatment of severe AD.
The combined pipeline also includes Phenserine, Axonyx's lead compound for AD, which is in phase III clinical development. The combined company plans to make Phenserine available to third parties for licensing.
"This merger will create a premier biopharmaceutical company with development and discovery capabilities across the CNS spectrum," said Neil Kurtz, M.D., president and chief executive officer of TorreyPines. "This joining of two exciting and complementary pipelines under one roof, with substantial financial assets to support continued efforts toward commercialization, should be a 'win-win' situation for the shareholders of both companies. This transaction truly brings together all of the necessary ingredients for a successful biopharmaceutical company: a notable pipeline of multiple product opportunities; proven clinical development and discovery capabilities to fuel ongoing product development; and strong financial resources. We plan to review all development opportunities with the goal of prioritizing the best opportunities while maintaining a reasonable burn rate."
"This transaction meets one of Axonyx's key strategic business objectives: to grow and strengthen our company in the area of CNS," said Gosse B. Bruinsma, M.D., president and chief executive officer of Axonyx. "By combining with TorreyPines, our shareholders will benefit from a stronger company that remains wholly dedicated to becoming a leading biopharmaceutical company in the area of CNS. The merger with TorreyPines brings with it a broad pipeline that currently has multiple and complementary clinical programs underway in AD, as well as programs in migraine and chronic pain. TorreyPines' management team has significant drug development expertise and their experience and infrastructure will, in my opinion, provide an excellent opportunity to continue to move our product candidates toward potential approval."
Following the closing of the transaction, Dr. Neil Kurtz, president and chief executive officer of TorreyPines will become president and chief executive officer of the combined company. Evelyn Graham, currently vice president, corporate development of TorreyPines will become the company's chief operating officer; and Craig Johnson, currently chief financial officer, Dr. Michael Murphy, currently Chief Medical Officer and Dr. Steven Wagner, currently Chief Scientific Officer of TorreyPines will retain their respective positions in the combined entity. The combined company's Board of Directors is expected to consist of a total of five current TorreyPines directors and three current Axonyx directors.