Dynogen shareholders will own about 56% of the newly formed public entity and will be entitled to $46 million in success-based fees.

Apex Bioventures Acquisition has agreed to acquire Dynogen Pharmaceuticals in a stock agreement valued at $98 million. Dynogen shareholders are eligible to receive two milestone-based fees each worth up to $23 million in Apex Bioventures stock.

Under the terms of the definitive merger agreement, Dynogen will merge with an Apex Bioventures subsidiary and become a public company. It is anticipated that the shares of the company will be traded on the American Stock Exchange. Dynogen’s current shareholders could own approximately 56% of the outstanding shares of the new entity.

“Dynogen is the most promising private pharmaceutical company of the almost 200 that Apex considered as possible merger partners,” says Apex Bioventures chairman, Darrell Elliott. Dynogen’s pipeline is focused on gastrointestinal and genitourinary disorders. Its lead candidate is in Phase IIb evaluation for treating IBS with constipation and nocturnal gastroesophageal reflux disease (NGERD). Its other mid-stage compound is being studied as a therapy for IBS with diarrhea. The company has three more molecules in Phase I testing in NGERD and overactive bladder.

The combined entity is expected to have up to $65 million in cash. “At the close, the merger is expected to bring us sufficient capital to carry the company through 2009 and, more importantly, the completion of multiple key, value-driving Phase IIb clinical trials for products which we believe have billion-dollar potential,” remarks Lee R. Brettman, M.D., president and CEO of Dynogen.

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