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Feb 10, 2014

Mast Therapeutics to Acquire Aires Pharmaceuticals

  • Mast Therapeutics reported today that it will acquire Aires Pharmaceuticals, a privately held, clinical-stage company developing therapies to treat pulmonary vascular disorders such as pulmonary arterial hypertension and pulmonary hypertension due to heart failure. Aires was founded in 2006 and has exclusive licenses to technology from the National Institutes of Health and the University of Cincinnati.

    Aires' lead product, AIR001, is an intermittently nebulized formulation of nitrite that has orphan drug status with the U.S. FDA and EMA for the treatment of pulmonary arterial hypertension.

    "The acquisition of Aires will enhance our pipeline with a Phase II asset with more than 120 human subject exposures and which is a strategic complement to our lead program, MST-188. With total consideration of approximately 6% of Mast equity, it represents excellent value for our stockholders," Brian M. Culley, CEO of Mast, said in a statement.

    MST-188 is an anti-inflammatory and antithrombotic agent that reportedly has potential utility in diseases or conditions characterized by microcirculatory insufficiency (endothelial dysfunction and/or impaired blood flow). It is currently being evaluated in a Phase III study in sickle cell disease.

    Under the terms of the all-stock transaction, Aires would become a wholly-owned subsidiary of Mast Therapeutics in exchange for shares of Mast common stock representing approximately 6% of Mast's outstanding common stock, 80% of which would be subject to a six-month holdback for certain indemnification claims of Mast. There are no milestone obligations payable to Aires. The acquisition is expected to close this month.

    "Another highlight of this acquisition is its favorable economics. Aires had completed several venture financings, including a $20 million Series B round. We are paying significantly less than that to acquire the program and we currently estimate that our development costs for AIR001 for the first 12 months will be approximately $2 million. Our estimated costs for AIR001 will change as we refine our development strategy over the next few months, but Aires is expected to contribute approximately $3 million of net cash at the closing of the merger, so, as currently contemplated, our first year of development of AIR001 will not require additional capital investment by Mast," Mr. Culley concluded.

    This $3 million of net cash is no doubt welcome at Mast, which reported a net loss for the nine months ended September 30, 2013, of $15.8 million.

    Aires Pharmaceuticals’ $20 million Series B equity financing was completed in 2010. The firm also inked an agreement with Novartis International Pharmaceutical Limited that year, in which Novartis was granted an exclusive option to acquire Aires following the successful completion of a Phase II study of Aironite™ to treat pulmonary arterial hypertension. The agreement also included a right to an exclusive worldwide license under pre-agreed conditions.



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