- Daré Biosciences, a private developer of women's reproductive healthcare products, is acquiring a controlling stake in Cerulean Pharma just one month after the target announced it was exploring a potential sale.
- The combined company will keep Dare's name and focus but will be publicly listed on NASDAQ. Under the stock purchase agreement, Cerulean will issue new shares of common stock for Daré investors and take on any of the acquirer's outstanding options and convertible securities. As of March 20, Cerulean had 27.4 million shares of outstanding common stock, according to Bloomberg.
- In addition to that agreement, Cerulean is cutting more than half of its 19-member staff and conducting two asset sales. The Waltham, Mass.-based company is selling its pipeline, which consists of two cancer therapies, to BlueLink Pharmaceuticals for $1.5 million and its technology platform to Novartis for $6 million.
Cerulean's takeover has been about eight months in the making. The tiny pharma first ran into trouble last summer, when its lead candidate, CRLX101, failed a Phase 2 trial testing it in combination with Avastin (bevacizumab) as a therapy for advanced renal cell carcinoma. The announcement sent shares plummeting more than 55%, and was followed by a decision to reduce the company workforce by 48% to 23 employees.
Now, Cerulean is trimming its staff down to eight. The new company will have a five-member board of directors, with Cerulean getting to pick two seats and Daré deciding the other three. Daré's CEO Sabrina Martucci Johnson and Chief Financial Officer Lisa Walters-Hoffert will continue on as officers.
"Following the issuance of the shares, depending on the relative net cash positions of Cerulean and Daré Bioscience at the time of closing, it is expected that existing Cerulean stockholders will own between 30% and 49% of the combined company, and existing Daré Bioscience stockholders will own between 51% and 70% of the combined company," Cerulean said in a March 20 statement.
As for the asset sales, Cerulean believes the $7.5 million it's expected to generate will help pay off the debt it owes to Hercules Capital, Inc. Cerulean had $15.1 million outstanding on a loan agreement enacted with the specialty finance company as of Sept. 30, according to its most recent 10-K filing with the Securities and Exchange Commission.
Daré operations will be a departure for Cerulean, which focused solely on oncology. The combined company plans to continue advancing Ovaprene, a non-hormonal contraception ring, through clinical testing.
It's unclear how Daré ended up with the product, however. Daré did not respond to request for comment, while Cerulean declined to comment further. The companies plan to discuss the deal in further detail during a conference call slated for March 23.
What is known about Ovaprene is that a women's health company called Ovatech took it through Phase 2 testing in 2010.
Less than a year earlier, a pilot study published in the Journal of Reproductive Medicine concluded the device "is well tolerated and acceptable to sexually active women and their partners." The study cited Clemson University and Poly-Med Inc., an Anderson, S.C.-based biomedical polymer manufacturer, as the developers of the product. Poly-Med filed to trademark Ovaprene in 2004.
Poly-Med declined to comment.
"Based on Daré's current projections, with proceeds from the sale of Cerulean's assets, we believe the combined company will be well funded to advance Ovaprene through the completion of a postcoital proof of concept study that is expected to be a value inflection point and is expected to commence following closing of this transaction," Cerulean's CEO Christopher Guiffre said in the statement.
The companies expect the deal to close in the second quarter.