Mast Therapeutics (NYSE:MSTX) and privately-held Savara Inc. said today that the 2 companies have landed a definitive merger agreement, combining their operations. The newly-formed Austin, Texas-based company is expected to be named Savara Inc., and trade on the NYSE market under a new ticker symbol.
The combined company will focus on advancing a pipeline of inhaled therapies, including AeroVanc to treat chronic methicillin-resistant Staphylococcus aureus pulmonary infection in cystic fibrosis, Molgradex to treat pulmonary alveolar proteinosis and AIR1001 to treat heart failure with preserved ejection fraction. All 3 treatments are in advanced clinical development.
The companies anticipate that the deal will close by the 2nd quarter of 2017.
“Following an extensive review of strategic alternatives and a thorough process, the Mast Board of Directors chose to combine with Savara because we believe the proposed merger provides an attractive opportunity for our shareholders to obtain value appreciation from a diversified pipeline and positions the company for more rapid short- and long-term growth via a triad of late-stage clinical assets with important forthcoming milestones,” Mast director & CEO Brian Culley said in prepared remarks. “We are excited for the prospects of the combined company and believe that Savara’s management team is well equipped to advance the pipeline toward regulatory approvals and commercialization in the US and EU.”
“This merger is transformative for Savara and marks our second transaction in a year, each expanding Savara’s pipeline of inhaled therapies for serious and life-threatening diseases,” Savara chairman & CEO Rob Neville added. “AeroVanc and Molgradex are orphan-designated product candidates in late-stage development, and we see Mast’s AIR001 program potentially adding significant value to our pipeline with a modest capital outlay in 2017. We believe the favorable risk profile of our product candidates combined with their market potential provides a unique opportunity for Savara to become the next breakout company in orphan pulmonary diseases.”
According to the agreement, Mast stockholders will collectively own about 24% of the combined company, while Savara stockholders will own 76% on a pro-forma basis. Savara stockholders will receive newly issued shares of Mast common stock in exchange for their Savara stock, at a ratio determined using a pre-transaction valuation of $115 million for Savara’s business and $36.5 million for Mast’s business.
The companies wrote that the newly-formed company will launch a pivotal phase III study of AeroVanc in the 3rd quarter of this year and announce top-line results from a registration-enabling phase II/III study of Molgradex in Europe and Japan in the 1st quarter of 2018. They also said that the combined company will finish negotiations with the FDA regarding the requirements for a pivotal study of Molgradex in the US by Q3 this year. Finally, it will announce results from an ongoing 100-patient phase II study of AIR001 in Q1 of 2018.
MSTX shares soared 73.4% to ¢17 apiece this morning.