Ruthigen, a biopharmaceutical company based in Santa Rosa, Calif., and Pulmatrix, a Lexington, Mass.-based clinical stage biotech, have entered into a definitive merger agreement. Pulmatrix will become a wholly-owned subsidiary of Ruthigen and all of Pulmatrix's debt and equity securities outstanding prior to the consummation of the merger will be exchanged for shares of Ruthigen common stock that will represent approximately 81% of the outstanding common stock of Ruthigen.
In connection with the merger agreement, certain existing institutional investors in Pulmatrix entered into stock purchase agreements with Pulmatrix to invest an additional $10 million in Pulmatrix upon the closing of the merger. Pulmatrix also raised approximately $4.5 million in February in contemplation of the merger agreement.
Ruthigen will be renamed Pulmatrix. The combined company will focus its resources and efforts on the development of Pulmatrix's next-generation inhaled therapeutic products.
Dr. Robert Clarke, president and CEO of Pulmatrix, will be appointed president and CEO of the combined company, to be headquartered in Lexington, Mass. Prior to joining Pulmatrix in 2004, Clarke was a director of life sciences at Alkermes.
"We believe that a merger with Ruthigen provides a strong financial foundation with enhanced access to capital to further Pulmatrix's mission of innovative inhaled product development for patients with significant unmet needs in respiratory disease," Clarke said. "This transaction represents an excellent opportunity to advance our novel iSPERSE inhaled dry powder platform and lead CF candidate into clinical development and to meet our long-term growth objective of building a leading company around a robust pipeline for respiratory disease."
Terry McGuire, senior Pulmatrix board member and founding partner at Polaris Partners, Pulmatrix's largest shareholder, said, "This transaction provides significant momentum for Pulmatrix to achieve its goals in the next stage of its development." McGuire co-founded several companies including Inspire Pharmaceuticals, which was acquired by Merck in 2011, and Advanced Inhalation Research, acquired by Alkermes in 1999. He also represented Polaris on the board of numerous life science companies including Decode Genetics, which was acquired by Amgen; Transform Pharmaceuticals, which was acquired by Johnson & Johnson; and Cubist Pharmaceuticals, acquired by Merck.
Dr. Scott Rocklage, former chairman and CEO of Cubist Pharmaceuticals, also works on the board of Pulmatrix. He currently is a managing partner at 5AM Ventures, another lead investor in Pulmatrix. Rocklage said, "The Pulmatrix board sees significant opportunities for growth based on the company's novel product pipeline built upon the unique iSPERSE technology." 5AM Ventures was a founding investor in Pearl Therapeutics, which was acquired by AstraZeneca in 2013.
The merger, which has been approved by the boards of directors of both companies, is subject to certain closing conditions, including NASDAQ approval of an initial listing of the merged entity's common stock on NASDAQ on a post-merger basis and approval by stockholders of both companies.