Targanta has been trading below $1 since December when the FDA sent a complete response letter covering its antibiotic.
FDA’s recent complete response letter to Targanta Therapeutics covering it antibacterial, oritavancin, has not curtailed The Medicines Company’s interest in the company. It is offering to take over Targanta for $42 million and to concentrate on getting oritavancin approved. The Medicines Company also said that it would pay up to $95.55 million in milestones related to the sanction and successful sale of the drug.
The Medicines Company reports that it has entered into agreements with Targanta shareholders representing approximately 36% of the voting shares.
On December 9, FDA said that to approve oritavancin for complicated skin and skin structure infections (cSSSI) it needed confirmation of its safety and efficacy as well as more data in the MRSA subgroup. The company lost 40% of its value that day to close at $1.34.
With stock dropping below $1, on December 18 Targanta reported that it would cut 75% of its employees to support these activities. Today’s news has doubled Targanta’s share price; it opened at $2.35.
The Medicines Company says that it will pay $2 in cash per Targanta common share. While it represents a 79% premium of the firm’s closing price yesterday of $1.12, it is lower than Targanta’s value the day before the FDA’s complete response letter.
Additional milestones include: $1.20 per share upon FDA approval of oritavancin for cSSSI using a single-dose infusion or $0.50 per share if approval does not include single-dose infusion labeling; $1.00 per share with EMEA sanction for oritavancin for cSSSI during 2009, $0.75 per share if it occurs prior to June 30, 2010, or $0.50 per share if still later; and $2.35 per share on achieving worldwide net sales of $400 million or more in aggregate over four consecutive quarters.
Following consummation of the transaction, The Medicines Company plans to consult with regulatory authorities with a view to initiating a confirmatory Phase III study in the U.S before the end of the year studying oritavancin given as a single-dose infusion.
“Oritavancin has the potential to provide important patient outcome and economic advantages for hospitals,” comments Clive Meanwell, M.D., chairman and CEO of The Medicines Company. “The growing hospital market for gram-positive infections in the U.S. alone reached $1.1 billion in 2007. We believe that oritavancin can become an important anti-infective for serious infections involving difficult-to-treat bacteria in difficult-to-treat hospitalized patients. Many of those critically ill patients are the same patients treated with our existing products.”