Cellceutix said today it won approval from the U.S. Bankruptcy Court for the District of Delaware to acquire substantially all assets of PolyMedix for just under $5 million, five months after the small molecule drug developer filed for liquidation of assets under Chapter 7 bankruptcy code.
Cellceutix agreed to pay $2.1 million cash plus 1.4 million shares of its stock, in a deal approved by the court on Sept. 4. That day, shares of Cellceutix closed at $1.93 a share, bringing the value of the stock component based on that day’s price to $2.702 million.
Among assets Cellceutix agreed to acquire were PolyMedix’ pipeline of nine compounds, and equipment at PolyMedix’ 25,000-square-foot headquarters and laboratory in Radnor, PA. The nine compounds include PolyMedix’ flagship drug candidate Brilacidin, a first-in-class defensin-mimetic antibiotic that has completed a Phase IIa clinical trial comparing the experimental drug to the Cubist Pharmaceuticals treatment Cubicin. The trial demonstrated safety, tolerability, and efficacy of Brilacidin in patients with acute bacterial skin and skin structure infections (ABSSSIs) caused by Staphylococcus aureus, according to Cellceutix.
“This is a transformational development for our company and shareholders; adding the assets of PolyMedix for a tiny fraction of what we believe the company is truly worth,” Cellceutix CEO Leo Ehrlich said in a statement. “We are very excited about instantly having a strong antibiotic franchise to complement our already robust pipeline that now contains 18 compounds.”
He said Cellceutix intends to quickly advance Brilacidin into a Phase IIb clinical trial, adding his company envisions the drug as a competitor to treatments in the category of Pfizer’s Zyvox, which generated $1.35 billion in sales in 2012.
Cellceutix has also shifted its development strategy with its experimental antipsoriasis drug Prurisol by foregoing a planned proof-of-concept trial overseas, instead preparing the regulatory paperwork for the FDA to initiate a larger-scale, Phase II/III multi-center trial. “The adjustment will save us hundreds of thousands of dollars and months of time that will now be better served to position us to potentially have up to five clinical trials ongoing in 2014,” Ehrlich said.
PolyMedix filed for Chapter 7 bankruptcy in April, after defaulting on a $6.8 million payment due to creditor MidCap Financial. At the time, Edward F. Smith resigned as the company’s acting president, CEO, and CFO. A year earlier, Polymedix could boast of 28 employees and a market capitalization of $227.4 million.
“This acquisition dovetails very nicely in our goals to continue to build shareholder value and uplist to a senior exchange in the near future,” Ehrlich added.