Transcept Pharmaceuticals of Point Richmond, Calif., and Boston-based Paratek Pharmaceuticals, a privately held biopharmaceutical company, have agreed to merge, with Paratek stockholders becoming the majority owners of Transcept. The operations of the two companies will be combined and the new entity will be named Paratek Pharmaceuticals.
Glenn Oclassen, CEO and chairman of the Transcept board, said, "Under the proposed transaction, Transcept's stockholders will maintain a meaningful equity ownership stake in Transcept, which will refocus its operations as a late-stage therapeutics company with product candidates we believe possess significant commercial potential. The transaction also provides for our stockholders an additional special cash dividend and the opportunity to realize any upside potential from our INTERMEZZO and TO-2070 assets."
"Antibiotic resistance continues to be a growing public health concern worldwide,” said Michael Bigham, CEO and chairman of the Paratek board. “This transaction provides the financial support necessary for the phase III development of our lead product candidate, Omadacycline, which is an important new once daily, oral and intravenous, broad-spectrum antibiotic for serious community-acquired infections. Omadacycline was designed specifically to address the mechanisms by which bacteria develop resistance to existing antibiotics. The combined organization will have the resources to initiate and complete our planned phase III registration program."
New investors, certain Transcept stockholders and certain Paratek stockholders will invest approximately $93 million in the combined organization.
Transcept will issue approximately 167.5 million new shares of its common stock to Paratek stockholders under the exchange ratio formula defined in the merger agreement. Upon closing, existing Paratek equity holders are expected to own 37.9% of Transcept, those investing in Paratek as of immediately prior to the closing are expected to own 51.7% and existing Transcept equity holders are expected to own 10.4%.
The executive officers of Transcept will resign from their positions upon closing, and the executive officers of Paratek will assume their respective positions in Transcept. Michael F. Bigham, partner at Abingworth, has been appointed chairman of the board of directors and CEO. Dr. Evan Loh, Chief Medical Officer at Paratek, has been promoted to president and CMO and will continue to serve on the board of directors.
Following the closing, the Transcept board is expected to consist of seven members: two to be designated by Transcept prior to the closing and five to be designated by Paratek.
The boards of directors of both Transcept and Paratek have unanimously approved the proposed transaction, which is expected to close during the second half of 2014.