MDRNA is taking over Cequent Pharmaceuticals in an all stock transaction valued at approximately $46 million. Cequent’s focus on RNAi-based drug delivery methods will complement MDRNA’s RNAi therapeutic development efforts.
In addition, MDRNA gains a candidate for familial adenomatous polyposis (FAP), a genetic disorder that is a precursor to colon cancer. It is reportedly poised to begin Phase I testing in the second half of this year.
The transaction will include certain loan provisions that will fund MDRNA operations through the anticipated closing of the merger in early July. In addition, Cequent will have certain cash amounts on hand at the close of the acquisition that are expected to fund combined operations into December.
The new company will work on advancing MDRNA's UsiRNA construct and DiLA2 delivery technologies as well as Cequent's TransKingdom RNAi technology. These utilize two distinct and proprietary delivery technologies for systemic, local, and oral delivery.
Besides the FAP candidate, the firm anticipates three additional INDs by the second quarter of 2011 in bladder cancer, inflammatory bowel disease (IBD), and liver cancer. MDRNA has a pre-IND program in IBD under option with Novartis. The company’s early collaborative efforts includes a partnership with AstraZeneca in hepatocellular carcinoma.
The new entity also believes that its intellectual property (IP) portfolio positions it well to establish additional alliances. Its IP estate covers novel chemistries, RNAi constructs, various delivery platforms, as well as gene targets. In total the company has 21 issued or allowed patents, 38 pending U.S. patent applications, 129 pending foreign patent applications, and eight PCT applications.
Under the terms of the agreement, each outstanding share of Cequent common stock will be exchanged for MDRNA common stock at an exchange ratio that implies a purchase price for Cequent shareholders of approximately $44 million plus an additional value of $2 million to warrant and option holders.
This represents an approximate 56% equity ownership for MDRNA shareholders and a 44% equity ownership for Cequent shareholders. The combined company will be headquartered in Bothell, WA, with offices in Cambridge, MA. RNAi drug discovery, research, and biology will continue to be conducted at MDRNA's facility in Bothell, while clinical operations will reside in Cambridge.
“We anticipate that this transaction will accelerate the development of the most promising products of both companies,” comments Bruce Thaw, chairman of MDRNA’s board. “We believe that the combined company will be in a strong position to advance multiple RNAi drug discovery platforms, establish premier R&D partnerships with large pharmaceutical and biotechnology companies, and accelerate RNAi-based therapeutics to patients in need.”