Pernix Therapeutics Holdings, Inc., a specialty pharmaceutical company,  and Somaxon Pharmaceuticals, Inc. have entered into a definitive merger agreement under which Pernix will acquire Somaxon in a stock-for-stock transaction with a total equity value of $25 million.

Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Somaxon stockholders will receive aggregate consideration equal to $25 million in Pernix common stock. The number of shares of Pernix common stock to be issued to the stockholders of Somaxon will be based on the volume-weighted average price of Pernix's common stock over the 30 day period ending on the day immediately prior to the closing of the proposed merger, subject to limitations on the maximum and minimum number of shares of Pernix common stock issuable in the transaction based on a price range of $6.00 to $9.00 per share.

Cooper Collins, president and CEO of Pernix, said, "The acquisition of Somaxon is another important step in the growth strategy of Pernix, which is expected to continue to expand our product portfolio, in addition to our recently announced agreements to acquire Cypress Pharmaceuticals and Hawthorn Pharmaceuticals. Somaxon's product Silenor, which is a non-seasonal product, broadens our branded product line and may also have potential as an OTC product in the future."

Silenor (doxepin) is approved for the treatment of insomnia characterised by difficulty with sleep maintenance and is not a controlled substance. In clinical trials, Silenor demonstrated maintenance of sleep, including into the seventh and eighth hours of the night, with no meaningful evidence of next day residual effects and an overall adverse events profile that was comparable to placebo.

On a trailing 12-month basis as of September 30, 2012, Somaxon had net sales related to Silenor of approximately $11.7 million. Pernix expects net sales from Silenor on an annualized basis to be in the range of approximately $10 million to $15 million and earnings before interest, taxes, depreciation and amortization (EBITDA) resulting from such Silenor net sales in the range of approximately $5 million to $10 million.

Richard W Pascoe, Somaxon's President and Chief Executive Officer, said, "We believe this acquisition will provide the opportunity to more fully capitalize on the Silenor brand. Moreover, with Pernix's recently announced acquisition of Cypress and Hawthorn, we believe that the combined entity, with its broad platform of branded, generic and OTC products, represents long-term value for the benefit of all of our stockholders. We look forward to working with the Pernix management team as we integrate Somaxon with Pernix."

The acquisition is subject to the approval of Somaxon's shareholders and the satisfaction of other terms and conditions. Stifel Nicolaus Weisel is acting as financial advisor to Somaxon in the transaction.

Because sleep disturbances may be caused by underlying physical and/or psychiatric disorders, symptomatic treatment of insomnia should be initiated only after a careful evaluation of the patient. The failure of insomnia to remit after seven-10 days of treatment may indicate the presence of a primary psychiatric and/or medical illness that should be evaluated.

Patients should only take Silenor when they are prepared to get a full night's sleep. Silenor should be taken within 30 minutes of bedtime, and patients should confine their activities after ingestion to those necessary to prepare for bed. Patients should not consume alcohol or take other drugs that cause drowsiness with Silenor. Co-administration of monoamine oxidase inhibitors (MAOIs) with Silenor has not been studied and is not recommended. Patients should not take Silenor if they have untreated narrow angle glaucoma, severe urinary retention, severe sleep apnea or hypersensitivity to any of the ingredients in Silenor. Patients should avoid engaging in hazardous activities such as operating a motor vehicle or heavy machinery at night after taking Silenor, and patients should be cautioned about potential impairment in the performance of such activities that may occur during the day following ingestion. Before taking Silenor, patients should tell their doctors if they have a history of depression, mental illness or suicidal thoughts.

Hypnotics have been associated with complex behaviors such as sleep driving, preparing and eating food, making phone calls, or having sex. Drowsiness, upper respiratory tract infections and nausea were the most common adverse events observed in Silenor clinical trials.

Pernix Therapeutics is primarily focused on the sales, marketing, manufacturing and development of branded, generic and OTC pharmaceutical products.

Somaxon Pharmaceuticals, Inc. is a specialty pharmaceutical company focused on the in-licensing, development and commercialization of proprietary branded products and product candidates to treat important medical conditions where there is an unmet medical need and/or high-level of patient dissatisfaction, currently in the central nervous system therapeutic area.