Targacept, a biopharma company based in Winston-Salem, N.C., and Catalyst Biosciences, a privately held biopharma company based in South San Francisco, Calif., have agreed to merge. The combined entity, to be named Catalyst Biosciences, is expected to create a financially strong company to harness the catalytic power of engineered human proteases to develop next-generation biopharmaceuticals with improved efficacy and therapeutic index to treat major diseases.

The combined company will have:

• A pipeline of protease therapeutics including PF-05280602 (formerly CB 813d), an engineered Factor VIIa (FVIIa) drug candidate that successfully completed a phase I clinical trial and is being developed by Pfizer under license from Catalyst. It addresses a $1.5 billion hemophilia market by potentially enabling lower and fewer doses of an engineered Factor VIIa to control bleeding episodes and to potentially achieve effective prophylaxis in hemophilia inhibitor patients.
• Four additional promising drug candidates: an improved Factor IX (FIX) for hemophilia B, an engineered Factor Xa (FXa) potentially for both hemophilia and the control of bleeding in non-hemophilia patients and two novel proteases for complement-mediated disorders.
• News flow from drug development programs including phase I data from the Pfizer-sponsored Factor VIIa program in severe hemophilia A & B and inhibitor patients.

Immediate committed capital to the combined entity is expected to include cash and cash equivalents of $40 million. Targacept cash remaining in the combined company will be $35 million, with $5 million in cash from Catalyst.

"This merger establishes a well-capitalized public company with resources to advance our unique protease-based product candidates through multiple future value inflection points," said Nassim Usman, Ph.D., CEO of Catalyst. "In addition to our Factor VIIa program, we also will have sufficient resources to initiate and complete a planned proof-of-concept study of CB 2679d, a next-generation Factor IX for hemophilia B patients, as well as further develop of our novel Factor Xa variant and our anti-complement programs."

Stockholders of Catalyst will initially own approximately 65% of the combined company, and the operations of both companies will be combined.

The boards of directors of both companies have unanimously approved the proposed merger. Stockholders of both Targacept and Catalyst must approve.

Catalyst's CEO Nassim Usman, Ph.D., will become president and CEO of the combined company and the other Catalyst executive officers will assume their respective positions in the combined company, with select Targacept executives remaining involved on a transitional basis.

Current Targacept stockholders will retain rights to any monetization of Targacept's neuronal nicotinic receptor (NNR) assets for two years after closing, to the extent these assets are not sold or otherwise disposed of prior to the closing.