Posted on October 12, 2009 at 4:08 PM
Filed under: Acquisitions | Corporate Strategy
Tagged: BIO Investor Forum , CombinatoRx , JMP Securities , Neuromed Pharmaceuticals

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Nov. 22 is a key date for CombinatoRx Inc. (NYSE:CRXX), which is merging with Neuromed Pharmaceuticals Inc. in an all-stock transaction worth about $30 million. Among other staples in an S-4 filing with the SEC from Oct. 9, Cambridge, Mass.-based CombinatoRx shows the background of the merger (starts on page 70) and certain risk factors of the deal.

One of those risks is regulatory approval for a new drug application for its pain medication Exalgo, which officials will decide about on Nov. 22. Exalgo is a once-daily tablet to treat moderate to severe pain in opioid tolerant patients. Exalgo was developed by Alza Corp., which sold the U.S. marketing rights to Neuromed in April 2007. A Covidien plc (NYSE:COV) subsidiary bought the licensing rights for about $100 million, according to The Deal Pipeline (subscription required).

On the background of the merger, Vancouver, British Columbia's Neuromed hired JMP Securities Inc. in May 2008 to explore opportunities to raise funds to support drug development programs.

On Oct. 6, 2008, CombinatoRx started thinking strategic alternatives when its stock tanked after a Phase 2 clinical trial of its drug Synavive did not demonstrate sufficient statistical significance when compared to both a placebo or the lower dose steroid component of Synavive alone, making the trial a failure.

On Oct. 29, the company's crossed paths at the BIO Investor Forum in San Francisco and talked merger. After many meetings, both personal and virtual, the deal was announced on July 2. It is expected to close this quarter.

Shares of CombinatoRx have risen since the deal was announced, and the company got a much needed boost last week after Sanofi-Aventis SA (NYSE:SNY) acquired eye specialist Fovea Pharmaceuticals SA for €370 million ($541 million). CombinatoRx and Fovea are co-developing the drug candidate, which is slated for Phase 2b clinical trials later this year.

CombinatoRx said the deal reinforces its business strategy. It has a unique approach. Traditional drug discovery has focused on drugs that target a single biological pathway to treat disease, while CombinatoRx creates "synergistic combination drug candidates" that simultaneously attack disease on multiple fronts. - Baz Hiralal



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