Arcion Therapeutics, a Baltimore-based biotech company focused on alleviating pain associated with diabetic neuropathy, has agreed to go public via a reverse merger with Anesiva Inc. (Nasdaq: ANSV). Simultaneously, the combined company plans to raise $20 million in new equity. Following the transaction, Arcion shareholders will hold a 64% stake. Arcion has raised over $17 million in VC funding from firms like CMEA Capital and InterWest Partners.
Anesiva, Inc. (NASDAQ: ANSV) and Arcion Therapeutics, Inc., a privately held company, announced today the signing of a definitive merger agreement. The merger will result in a public company with a portfolio of late-stage targeted pain therapeutics. The merger transaction, approved by both companies’ Boards of Directors, will combine the companies under the name of Arcion Therapeutics, and is expected to close in the third quarter of 2009. Upon closing of the merger, Arcion and Anesiva shareholders will own approximately 64% and 36%, respectively, of the outstanding shares of the combined company. Closing of the merger is contingent upon, among other conditions, a vote of approval by Anesiva’s current shareholders.
The proposed merger of Anesiva and Arcion creates a highly synergistic company with a pipeline comprised of late-stage programs that address large markets with unmet needs, such as neuropathic pain, moderate-to-severe osteoarthritis and post-operative pain. Anesiva’s Adlea(TM) (capsaicin) for post-operative pain completed two Phase 3 trials last year, and Arcion’s ARC-4558 (0.1% topical clonidine gel) is currently in Phase 2b for painful diabetic neuropathy (PDN). Other development programs include Arcion’s ARC-2022, a topical drug for post-herpetic neuralgia, which is currently in late-stage preclinical development.
“This merger and the synergies that it offers present an exciting new opportunity for Anesiva investors. The combined company will have the financial resources, pipeline of products and the management team to maximize shareholder value going forward,” said Michael Kranda, Chief Executive Officer of Anesiva. “Because of the focus of our product portfolio and the strength of the combined team of executives and advisors, we believe that we can operate under a virtual, cost-efficient business model that will create many value-driving milestones.”
“There is a tremendous need to create drugs that treat pain where the pain signal originates and we believe that our targeted treatments will address the shortcomings of current therapies, including addiction, systemic side-effects, insufficient efficacy, and frequent or inconvenient dosing,” said James Campbell, M.D., Chief Executive Officer of Arcion. “Merging with Anesiva creates a portfolio of late-stage product candidates with extensive safety and efficacy databases that could fulfill many unmet needs in the U.S. prescription pain market. ”
Details on the Proposed Transaction
Upon closing of the merger, Anesiva will issue shares of Anesiva common stock to Arcion stockholders such that Arcion stockholders will own approximately 64% of the outstanding shares of the combined company and Anesiva stockholders will own approximately 36% of the outstanding shares of the combined company. The transaction contemplates a reverse stock split ranging from one-for-30 to one-for-50, subject to approval from Anesiva’s shareholders. The transaction also contemplates that Anesiva will repay holders (the “January 2009 Holders”) approximately $6.3 million of principal amount outstanding of its securities issued pursuant to a securities purchase agreement, dated January 20, 2009, at 100% of the principal plus interest. Subject to consummation of the merger, the January 2009 Holders have agreed to reinvest all of the principal and interest they receive in Anesiva common stock at a price of .30 per share. The combined company also intends to raise at least $20 million in an equity financing, to close simultaneously with the merger. The merger agreement has been approved by both Boards of Directors and Arcion shareholders, and requires approval by Anesiva’s shareholders. Anesiva expects to file a proxy statement with the U.S. Securities and Exchange Commission shortly, as well as any other necessary regulatory filings. The companies currently expect the merger to close in the third quarter of 2009.
Management and Organization
Executive management for the combined company will include the following individuals:
Michael L. Kranda: Chief Executive Officer; current Chief Executive Officer of Anesiva
James N. Campbell. M.D.: Chief Medical Officer; current Chief Executive Officer of Arcion
John H. Tran: Vice President, Finance and Chief Accounting Officer; current Vice President, Finance and Chief Accounting Officer of Anesiva
Kerrie L. Brady, M.B.A.: Chief Business Officer; current Chief Operating Officer of Arcion
The combined company’s Board of Directors will consist of Michael L. Kranda, current CEO of Anesiva; John F. Hamilton, Independent Director; Arnold L. Oronsky, Ph.D., General Partner, InterWest Partners; James N. Campbell, M.D., current CEO of Arcion; and David J. Collier, M.D., Managing Director, CMEA Capital, who will also serve as Chairman of the Board.
Conference Call Information
A joint conference call will be held on Wednesday, August 5th at 8:30 AM EDT to discuss the merger agreement and the combined business and strategic overview of the merged companies. The conference call webcast may be accessed by visiting www.Anesiva.com. Following the filing of the conference call transcript with the SEC, the webcast will be available for one year and telephone replay will be available for two weeks.
Callers may also access the call with the following dial-in information:
For U.S. callers: 877-440-5796
For international callers: 719-325-4851
Callers may access the replay with the following dial-in information:
For U.S. callers: 888-203-1112
For international callers: 719-457-0820
Arcion’s lead clinical program, ARC-4558, is a 0.1% gel formulation of clonidine hydrochloride for topical administration. ARC-4558 targets peripheral a2 adrenoreceptors to relieve pain caused by damaged nerves in the skin. ARC-4558 is currently in a Phase 2b clinical trial for the treatment of painful diabetic neuropathy. Arcion expects data from a Phase 2b clinical trial in the first half of 2010. Arcion recently presented data at the American Pain Society from a Phase 2 study with ARC-4558 showing that the 0.1% formulation of clonidine reduced pain, from baseline, equal to currently approved oral drugs.
Anesiva’s lead product candidate, Adlea, is a novel small molecule formulation of capsaicin that is currently in development for the management of acute pain following orthopedic surgeries. Adlea has been shown in clinical trials to provide extended pain relief after only a single administration in multiple indications for site-specific, acute and chronic, moderate-to-severe pain.
In December 2008, Anesiva announced that a Phase 3 clinical trial of Adlea achieved its primary efficacy endpoint of reduced post-surgical pain versus placebo (p=0.03) following total knee arthroplasty (TKA) at four to 48 hours after surgery. The trial also met its key secondary endpoint with Adlea demonstrating a highly significant reduction in opioid medication consumption compared to placebo (p=0.005). The Phase 3 TKA trial, known as ACTIVE-2, also showed that Adlea’s safety profile of adverse events, wound healing, and wound sensory function were similar to placebo over the study duration.
About Anesiva, Inc.
Anesiva seeks to be a leader in the development and commercialization of novel pharmaceutical products for pain management. The company’s lead product candidate is Adlea, a novel small molecule formulation of capsaicin that is currently in development for the management of acute pain following orthopedic surgeries. Adlea has been shown in clinical trials to provide extended pain relief after only a single administration in multiple indications for site-specific, acute and chronic, moderate-to-severe pain. www.Anesiva.com
About Arcion Therapeutics
Arcion Therapeutics applies breakthroughs in neuroscience to advance the treatment of chronic pain. The company focuses on innovative topical treatments to provide pain relief with convenient application and reduced systemic side effects. Arcion’s product pipeline comprises multiple candidates to treat neuropathic pain. www.Arciontherapeutics.com