Raleigh’s Innovate Biopharmaceuticals buying Israeli pharma company
Raleigh’s Innovate Biopharmaceuticals Inc., a clinical stage biotechnology company, plans to acquire Tel Aviv-based RDD Pharma Ltd., which focuses on therapies for gastrointestinal disorders, according to a filing with the Securities and Exchange Commission.
Innovate Biopharmaceuticals plans to acquire the stock of the privately held Israeli firm through a combination of common and preferred shares, the filing shows. Following completion of the merger, which is expected to close this year, RDD will become a subsidiary of Innovate, which will be renamed 9 Meters Biopharma Inc. The total cost of the acquisition is expected to be as much as $25 million with an initial payment of $10 million.
Innovate will purchase the outstanding stock of RDD using newly-issued shares of the company’s common stock, which will be converted to preferred stock immediately prior to the acquisition and represents about 19.5% of the biotech firm’s voting power, pending approval from Innovate stockholders. Once the merger is completed, former Innovate stockholders will own about 58.5% of the combined company’s stock and former RDD stockholders will own about 45.1% of the stock.
San Francisco-based capital market firm OrbiMed Advisors LLC helped raise capital for the acquisition and is a lead investor.
“The merger attracts a highly seasoned board and management team led by a proven CEO, fundamentally driven healthcare-dedicated institutional investors and a shared vision to build a truly world-class platform biopharmaceutical company,” Dr. Sandeep Laumas, executive chairman of Innovate, said in the filing.
9 Meters develops treatments for specialty, rare and orphan patients with gastrointestinal diseases, such as celiac disease. The combined company will have a diversified pipeline of treatments and active clinical studies, including the first drug to enter Phase 3 trials for celiac disease. 9 Meters expects to reach major milestones in the development process for its different treatments over the next two years, according to the filing.
John Temperato, the CEO of RDD, will become the CEO of 9 Meters and join the board of directors once the acquisition is finalized. Temperato was CEO of New Jersey-based Salix Pharmaceuticals and oversaw the commercialization of the company, which was acquired by Valeant Pharmaceuticals for $16 billion in 2015. Valeant is now part of Bausch Health Companies Inc.
Mark Sigo, CEO of ArunA Bio Inc., vice chairman of BioDelivery Sciences International Inc. and chairman of RDD, has been named the incoming chairman of the board of directors for 9 Meters. Dr. Laumas and Dr. Nissim Darvish, senior managing director for OrbiMed and member of the board for RDD, along with Dr. Lorin Johnson, co-founder of Salix Pharmaceuticals, will maintain their positions on the combined company’s board of directors.
9 Meters will be a NASDAQ-listed company, but the company’s new ticker has not been announced. Innovate Biopharmaceuticals (NASDAQ:INNT) shares were trading around $1 during the time of publication. The company has a marketcap of about $37 million, according to Yahoo! Finance.