Idera Pharma and BioCryst Pharma Get a Divorce Before the Wedding

Broken Deal

Idera Pharmaceuticals and BioCryst Pharmaceuticals originally planned on January 22, 2018, to merge the two companies. Now the two companies announced the deal has been terminated.

The deal was ended after a special meeting of BioCryst stockholders held July 10, and the BioCryst stockholders voted against the proposed mergers. As part of the final agreement not to merge, BioCryst will reimburse Idera $6 million.

“The board and shareholders of Idera overwhelmingly supported the proposed merger with BioCryst based on the strategic rationale, operating synergies and opportunity to create a stronger and more diversified rare-disease, focused organization,” said Vincent Milano, Idera’s chief executive officer, in a statement. “Our tilsotolimod would have been one of the two centerpiece product opportunities of the combined company. As we move forward independently, we will remain focused on the development of tilsotolimod in anti-PD-1 refractory melanoma, a significant unmet need, as well as begin to explore the role of tilsotolimod in improving outcomes in patients suffering from additional solid tumor cancers. While we remain focused on the development of tilsotolimod, if an opportunity arises to further enhance shareholder value and build our company through business development, we will explore it.”

In a separate statement, Jon Stonehouse, BioCryst’s president and chief executive officer, said, “We respect and understand the views of our stockholders and are moving forward fully-focused on executing our business plan as a standalone company. The BioCryst board and management team remain confident in BCX-7353 and our ability to execute on our plan and advance our programs.”

With more than 80 million BioCryst shares represented in the vote, 50.6 million shares voted against the deal. Idera shareholders, on the other hand, voted overwhelmingly in favor of the vote, with 149,747,107 shares for, 1,993,978 against, and 589,602 abstaining.

Xconomy notes, “BioCryst and Idera reached their merger agreement in January. The companies framed the tie-up as a way to pool their resources behind their respective late-stage clinical programs. BioCryst’s lead drug, BCX-7353, is in Phase III studies testing the pill as a treatment for hereditary angioedema (HAE), an inherited disorder that causes sudden attacks of swelling and inflammation in the face. In some cases, an HAE attack can close off a patient’s airway. Meanwhile, Idera is in a Phase III study testing its drug IMO-2125 in melanoma patients who have not responded to earlier treatments. The companies boasted that joining forces would also give the combined entity a pipeline of nine rare disease programs.”

RA Capital, which holds more than seven percent of BioCryst shares, wrote a letter of opposition to the merger on April 2, saying the merger undervalued BioCryst’s BCX-7353.

In part, the letter stated, “We find BioCryst’s lead molecule, BCX-7353, to be a compelling late-stage drug candidate with a high likelihood of improving the standard of care for patients living with hereditary angioedema (HAE). If the ongoing Phase III trial of BCX-7353 is successful, we believe it can generate enormous value for shareholders when data are reported in the first half of 2019. It has the potential to be the most convenient treatment option in the vast and fast-growing HAE market.”

But it argued the merger wouldn’t improve the likelihood of the drug’s success in the trial or create long-term value for BioCryst shareholders. At least part of their argument was based on a statement by Idera’s chief executive officer earlier that the deal wasn’t designed to create clinical operating synergies and the two company’s programs would “continue to operate as is.” Nor, they noted, would it solve future financial issues.

“Given management’s desire to keep the companies’ respective research and development work streams separate and the lack of meaningful synergies over the next three years,” the letter stated, “we fail to understand what value would be created by the proposed transaction. We view this proposed merger with Idera as unnecessary and unjustified dilution of existing BioCryst shareholders just one year before a potentially major value inflection point.”

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