Mast Therapeutics, Savara to merge
Mast Therapeutics and Savara, a privately held emerging specialty pharmaceutical company focused on the treatment of rare respiratory diseases, have entered into a definitive merger agreement under which the stockholders of Savara would become the majority owners of Mast, and the operations of Mast and Savara would be combined. Subject to stockholder approval, the combined company will advance a pipeline of novel inhalation therapies for the treatment of diseases with significant unmet medical needs, featuring three product candidates, each in advanced clinical development.
The combined company pipeline will include:
- AeroVanc, an inhaled dry-powder vancomycin to treat chronic methicillin-resistant Staphylococcus aureus (MRSA) pulmonary infection in cystic fibrosis (CF) in preparation for a pivotal phase III study
- Molgradex, an inhaled nebulized GM-CSF to treat pulmonary alveolar proteinosis (PAP) currently in phase II/III development
- AIR001, an inhaled nebulized sodium nitrite solution to treat heart failure with preserved ejection fraction (HFpEF) currently in phase II development
"Following an extensive review of strategic alternatives and a thorough process, the Mast Board of Directors chose to combine with Savara because we believe the proposed merger provides an attractive opportunity for our shareholders to obtain value appreciation from a diversified pipeline and positions the company for more rapid short- and long-term growth via a triad of late-stage clinical assets with important forthcoming milestones," stated Brian M. Culley, current chief executive officer and director of Mast Therapeutics. "We are excited for the prospects of the combined company and believe that Savara's management team is well equipped to advance the pipeline toward regulatory approvals and commercialization in the U.S. and EU."
Rob Neville, chairman and CEO of Savara added, "This merger is transformative for Savara and marks our second transaction in a year, each expanding Savara's pipeline of inhaled therapies for serious and life-threatening diseases. AeroVanc and Molgradex are orphan-designated product candidates in late-stage development, and we see Mast's AIR001 program potentially adding significant value to our pipeline with a modest capital outlay in 2017. We believe the favorable risk profile of our product candidates combined with their market potential provides a unique opportunity for Savara to become the next breakout company in orphan pulmonary diseases."
Select Anticipated Upcoming Development Milestones
- Initiate a pivotal phase III study of AeroVanc for the treatment of MRSA in CF patients in Q3/2017.
- Announce top-line results from a registration-enabling phase II/III study of Molgradex for the treatment of PAP currently ongoing for Europe and Japan in Q1/2018.
- Complete negotiations with the FDA on the requirements for a pivotal clinical study of Molgradex in the U.S. in Q3/2017.
- Announce results from an ongoing 100-patient phase II study of AIR001 for the treatment of HFpEF being conducted by the Heart Failure Clinical Research Network in Q1/2018.
About the Proposed Merger
Under the terms of the merger agreement, pending stockholder approval of the transaction, Savara stockholders will receive newly issued shares of Mast common stock in exchange for their Savara stock. The exchange ratio was determined using a pre-transaction valuation of $115 million for Savara's business, based on its latest priced investment round and an acquisition of assets of Serendex Pharmaceuticals, and $36.5 million for Mast's business, a premium to the 20-day volume weighted average share price of Mast. As a result, current Mast stockholders will collectively own approximately 24%, and Savara stockholders will collectively own approximately 76%, of the combined company on a pro-forma basis, subject to adjustment based on Mast's net cash balance and Mast's and Savara's capitalization at closing.
The combined company, led by Savara's current management team, is expected to be named Savara Inc. and be headquartered in Austin, Texas. Prior to closing, Mast will seek stockholder approval to conduct a reverse split of its outstanding shares to satisfy listing requirements of the NYSE MKT. The combined company is expected to trade on the NYSE MKT under a new ticker symbol. At closing, the combined company's board of directors is expected to consist of seven members, including five members of Savara's current board and two members of Mast's current board. The merger agreement has been unanimously approved by the board of directors of each company. The transaction is expected to close by the second quarter of 2017, subject to approvals by the stockholders of Mast and Savara, and other customary closing conditions.