By Sian Lazell
February 10, 2017
Jaguar Animal Health has signed a binding agreement to merge with Napo Pharmaceuticals.
The merger was approved by a unanimous vote amongst members of the board of directors at each firm. Napo will operate as a wholly-owned subsidiary of Jaguar, focused on human health.
The binding financial terms of the merger include a 3-to-1 Napo-to-Jaguar value ratio to calculate the relative ownership of the combined entity. As of January 31, 2017, Napo owned approximately 19% of Jaguar’s outstanding shares of common stock. California-based Jaguar previously signed a non-binding letter of intent to merge with Napo in October.
The financial terms of the merger and conditions to closing include provisions that: Napo's secured convertible debt shall not exceed $10 million and its unsecured debt shall not exceed $3m; and a third party will invest $3m in Jaguar for approximately four million shares of newly issued common stock of Jaguar with the investment proceeds loaned to Napo immediately prior to consummation of the merger.
The merger will give Jaguar access to a prescription revenue stream from sales of Mytesi, formerly known as Fulyzaq. Mytesi is a human US FDA-approved drug for the symptomatic relief of non-infectious diarrhea in adults with HIV/AIDS on antiretroviral therapy, that was launched in October 2016.
Napo and Jaguar project the potential market for Mytesi in the US to be around $100m in gross annual sales. Napo will focus on direct sales efforts to promote Mytesi in Q2 2017. Both firms predict the product will achieve approximately $7m in net sales over the year.
The active pharmaceutical ingredient (API) in Mytesi is crofelemer, the same API in Canalevia, Jaguar's lead prescription drug product candidate for pets. Canalevia is being evaluated for treatment of acute diarrhea and chemotherapy-induced diarrhea (CID) in dogs. Jaguar recently signed a global development collaboration with Elanco for the product.
Jaguar explained because Mytesi and Canalevia have the same formulation, risks related to the chemistry, manufacturing, and controls sections of Jaguar's New Animal Drug Applications for Canalevia for the acute diarrhea and CID indications and commercial supply chain readiness are mitigated.
Lisa Conte, Jaguar's president and chief executive – as well as Napo's interim chief executive – said: "The board members of both Jaguar and Napo believe this is an opportune time to combine the two companies and that this binding agreement is in the best interests of both Jaguar and Napo as well as their respective equity holders.
"Upon the consummation of the merger, Jaguar and Napo together are poised to realize a number of synergistic, value-adding benefits – most importantly a prescription product revenue stream – and an expanded pipeline of important follow-on indications for Mytesi upon which to forge global partnerships.
"We are confident that this merger will enable both companies, through a joint management team, to access efficiencies and enhance potential value creation. It will allow the combined entity to benefit from the economies of scale of combined manufacturing for various human and animal indications."
Reprinted with permission of Animal Pharm News