Cellegy Pharmaceuticals Signs Agreement To Sell Assets To ProStrakan Group
Published: Sep 27, 2006
ProStrakan has agreed to pay to Cellegy $9 million dollars in cash. The transaction will be submitted to Cellegy's stockholders for approval at a special meeting of Cellegy stockholders. Cellegy anticipates preparing and filing preliminary proxy materials relating to the special meeting in the near future. No approval by ProStrakan's shareholders is required to complete the transaction. Cellegy anticipates that absent unforeseen developments, the transaction will be completed during the fourth quarter of 2006.
Under the asset purchase agreement, Cellegy has agreed to sell to ProStrakan certain assets, including: all U.S. and foreign patents, contracts and books and records that relate to the research, development and commercialization of Cellegy's nitroglycerin/nitric oxide and related pharmacological products for pain management applications, marketed under the name Rectogesic® and proposed to be marketed under the name Cellegesic®; Cellegy's testosterone gels for treatment of male hypogonadism, marketed under the name Tostrex(TM) and proposed to be marketed under the names Tostran(TM) or Fortigel(TM); and Cellegy's product candidate Tostrelle, a testosterone gel product candidate for women. ProStrakan would have rights to Tostrex and Tostrelle worldwide in countries where Cellegy has rights, and to Cellegesic and Rectogesic in all markets worldwide except in Australia, New Zealand, Singapore, South Africa and South Korea (where another third party acquired rights relating to sale of Rectogesic those countries from Cellegy earlier this year). Certain of Cellegy's distribution agreements relating to foreign markets will be assigned to ProStrakan as part of the transaction. Cellegy will retain its Biosyn business and other assets and intellectual property rights not being sold to ProStrakan.
The agreement contains a number of customary representations and warranties of the parties, covenants, conditions to closing, and Cellegy indemnification obligations. The agreement does not contain any financing contingencies on ProStrakan's obligation to close the transaction. The proceeds to be received by Cellegy at the closing are subject to reduction at the closing for certain transaction-related expenses of ProStrakan, and are subject to reduction after the closing for a period of time if ProStrakan successfully asserted indemnification claims based on breaches of Cellegy's representations, warranties and covenants made in the agreement.
ProStrakan has also loaned Cellegy $2 million pursuant to a secured promissory note. Amounts owed under the note will be repaid at the closing of the transaction out of the purchase price and are also payable at the maturity date of the note, which is November 30, 2006 (or, in certain circumstances, December 21, 2006).
In two other transactions, Cellegy has renegotiated its obligations to Neptune Pharmaceutical Corporation and PDI, Inc., effective upon the closing of the transaction with ProStrakan. As Cellegy has previously reported, Cellegy's previous agreements with Neptune including included certain product development milestone payment obligations relating to the products being sold to ProStrakan, and Cellegy is a party to two promissory notes and related agreements with PDI relating to the settlement of past litigation. The cash payments to be made to these two parties in connection with the signing and the closing of the transaction with ProStrakan total $3,250,000, in full satisfaction of obligations under the previous agreements. The obligations to the two parties, including the potential milestone payments, totaled in excess of $9.5 million prior to the renegotiation.
Cellegy Pharmaceuticals is a specialty biopharmaceutical company that develops and commercializes prescription drugs for the treatment of women's health care conditions, including sexual dysfunction, HIV prevention; and, gastrointestinal disorders. Savvy® (C31G vaginal gel), a novel microbicide gel product for contraception and the reduction in transmission of HIV in women, is currently undergoing Phase 3 clinical studies in the United States.
ProStrakan Group plc is an international specialty pharmaceutical company engaged in the research, development and commercialization of prescription medicines for the treatment of unmet therapeutic needs in major markets.
Forward Looking Statements
This press release contains forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should," or "will," or the negative thereof or other variations thereon or comparable terminology. Cellegy has based these forward-looking statements on the current expectations, assumptions, estimates and projections. While Cellegy believes its expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. Such risks and uncertainties relate to, among other factors: the risk that the transaction may not be completed or that the closing of the transaction may be delayed; the risk of a material adverse event affecting Cellegy or the assets proposed to be sold; and risks relating to our continued operations and funding requirements following the closing of the sale to ProStrakan. You should also review our discussion of risk factors and other disclosures in Cellegy's Annual Report on Form 10-K for the year ended December 31, 2005 and other filings with the Securities and Exchange Commission.
Where to find additional information about the Transaction
Cellegy intends to file a proxy statement in connection with the proposed transaction. Investors and stockholders are urged to read the proxy statement when it becomes available because it will contain important information about the transaction. Additional information is also available in a Report on Form 8-K filed by Cellegy relating to the transactions described in this press release. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, CELLEGY'S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTION CAREFULLY AND IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and stockholders may obtain free copies of the proxy statement and other relevant documents (when they become available) and other documents filed with the Securities and Exchange Commission at the Securities and Exchange Commission's web site at: www.sec.gov. In addition, investors and stockholders may obtain free copies of the documents filed with the Securities and Exchange Commission by Cellegy by contacting the persons identified below. Cellegy's directors and executive officers may be deemed to be participants in the solicitation of proxies from its stockholders in connection with the proposed transaction. Information regarding the interests of directors and executive officers in the transaction will be included in the proxy statement of the company. Additional information regarding directors and executive officers of Cellegy is also included in the company's annual report on Form 10-K for the year ended December 31, 2005, filed with the Securities and Exchange Commission, which is available as described above.
Source: Cellegy Pharmaceuticals, Inc.