Aegerion Pharmaceuticals, Inc. and QLT Inc. have entered into a definitive merger agreement under which Aegerion will be merged with a wholly owned indirect subsidiary of QLT. Upon completion of the proposed merger, each outstanding share of Aegerion common stock will be exchanged for 1.0256 shares of QLT common stock. QLT plans to change its name upon the closing of the proposed transaction to Novelion Therapeutics Inc. (Novelion) and its common shares will trade on the NASDAQ Global Select Market and the Toronto Stock Exchange.
A broad-based investor syndicate comprised of both new investors and existing shareholders of both companies (collectively, the "Investors") has committed to invest approximately $22 million in QLT and to vote in favour of the proposed transaction. This investment would be funded immediately prior to the transaction close and is expected to provide Novelion with additional capital to support future operations and the potential opportunity for targeted business development initiatives. Assuming completion of the proposed merger by the end of the third quarter of 2016, Novelion is expected to have an unrestricted cash balance of over $100 million.
The proposed transaction, which has been approved by the Boards of Directors of both companies, is expected to close late in the third quarter or during the fourth quarter of 2016, subject to approval by shareholders representing a majority of the outstanding common stock of each of QLT and Aegerion as well as other closing conditions.
The proposed merger is expected to create a strong, rare disease-focused global biopharmaceutical company with a diversified portfolio consisting of Aegerion's two commercially branded products, Juxtapid (lomitapide) capsules and Myalept (metreleptin), and QLT's QLT091001 ("Zuretinol Acetate" or "Zuretinol"), a phase 3-ready Ultra-Orphan Fast Track and Orphan Drug designated asset being developed for the treatment of Inherited Retinal Disease caused by underlying mutations in RPE65 or LRAT genes ("IRD"), which indication comprises Leber Congenital Amaurosis ("LCA") and Retinitis Pigmentosa ("RP").
Aegerion's chief executive officer, Mary Szela, who will serve as Chief Executive Officer of Novelion following the close of the transaction, said: "We believe QLT's clinical development team, and meaningful cash position, and Aegerion's commercialization expertise will help unlock significant value in QLT's Zuretinol asset and enable Novelion to pursue important milestones across a commercial and late-stage portfolio, including potential regulatory approval in Japan for Juxtapid and potential regulatory filings in Europe for Myalept. I believe that this proposed merger represents a fresh start and an opportunity to create significant value, and I look forward to driving our programs forward."
Dr Geoffrey F. Cox, Ph.D., QLT's interim chief executive officer, said: "Given the resource requirements for QLT to build out a global commercial infrastructure designed to most effectively maximize the value of our promising ultra-orphan Zuretinol asset, the QLT board determined that it would be advantageous to join forces with a strategic partner possessing the relevant orphan product infrastructure. We believe Aegerion and QLT are ideal complements, and we are confident that this transaction achieves virtually all of the principal goals and objectives of our strategic review process. In addition, QLT is expected to benefit from greater scale and diversification, as well as from a more liquid stock."
QLT is developing a synthetic retinoid product candidate (Zuretinol acetate) for the potential treatment of Inherited Retinal Disease caused by underlying mutations in RPE65 or LRAT genes (IRD) that prevent adequate functioning of the retinoid cycle, which indication comprises LCA and RP. LCA and RP are two forms of severe IRD resulting in progressive vision loss starting in childhood and leading to inevitable blindness.
There are currently no US Food and Drug Administration (FDA) or European Medicines Agency (EMA) approved pharmacologic treatments for either LCA or RP, underscoring the significant unmet medical need. Zuretinol acetate is expected to advance to Phase 3 clinical trials in the third quarter of 2016 and has Orphan Drug designation from both FDA and EMA, as well as FDA Fast Track designation. As an oral product, Zuretinol acetate is being studied for its potential to treat the retinas of both eyes simultaneously. If approved, QLT believes it is possible to achieve first-line positioning in the treatment of IRD.
In combination with the proposed merger transaction, a broad-based investor syndicate will subscribe to purchase approximately $22 million in shares of QLT common stock for a purchase price of $1.76 per share is subject to the satisfaction or waiver of the conditions to closing the merger. These commitments would be funded immediately prior to merger closing to provide Novelion additional capital to support future operations and the potential opportunity for targeted business development initiatives.
The investor syndicate includes new investors, including Deerfield, and a broad group of existing Aegerion and QLT shareholders, including Armistice Capital, Broadfin Capital, Healthcare Value Capital, JW Asset Management, K2 & Associates Investment Management, Sarissa Capital, Tiger Legatus Capital Management, and others.
The subscription by the Investors to purchase shares of QLT common stock is subject to the satisfaction or waiver of the conditions to closing the merger. Each of the Investors has also agreed to vote its shares in QLT and Aegerion in favor of the transaction.
Following the close of the transaction, Novelion is expected to have its principal headquarters in Vancouver, British Columbia, where QLT is currently located, with business operations in Cambridge, Massachusetts.
The Board of Directors of Novelion will be comprised of ten members, including four QLT designees, four Aegerion designees and two shareholder representatives, one from Broadfin Capital and the other from Sarissa Capital. For a period of time that expires shortly after Novelion's 2017 annual shareholder meeting, Sarissa Capital also has the right to designate an additional director to the Novelion Board.
Under the terms of the merger agreement, Aegerion will become a wholly-owned indirect subsidiary of QLT, and each existing share of Aegerion common stock will be converted into the right to receive 1.0256 common shares of Novelion. As a result of the structure of this transaction, a repayment obligation with respect to Aegerion's outstanding convertible notes will not be triggered.
Greenhill & Co., LLC is acting as the exclusive financial advisor to QLT and Weil, Gotshal & Manges LLP is serving as QLT's legal counsel. J.P. Morgan is acting as the exclusive financial advisor to Aegerion and Ropes & Gray LLP is serving as Aegerion's legal counsel.
Aegerion Pharmaceuticals is a biopharmaceutical company dedicated to the development and commercialization of innovative therapies for patients with debilitating rare diseases.
QLT is a biotechnology company dedicated to the development and commercialization of innovative ocular products that address the unmet medical needs of patients and clinicians worldwide.