Aevi Genomic Medicine Inc. has entered into a definitive merger agreement with Cerecor Inc., through which Aevi will merge with a wholly owned subsidiary of Cerecor in an all-stock transaction valued at approximately $16.1 million at closing, plus contingent value rights for up to an additional $6.5 million in subsequent milestone payments on clinical or regulatory successes, or both.
The combined bio-pharmaceutical company will continue to be focused on pediatric orphan diseases and operate under the name Cerecor. Michael F. Cola will become CEO and Garry Neil will become Chief Medical Officer of the combined company.
Deal Components
- Cerecor will acquire all outstanding shares of Aevi stock at an aggregate purchase price of $16.1 million less an amount by which Aevi's net assets at closing are less than negative $1.3 million, but in no event will such adjustment be more than $500,000. The per share price will be based on the number of Aevi shares outstanding immediately prior to closing, including the shares of Aevi stock to be issued to Children's Hospital of Philadelphia Foundation upon conversion of its outstanding secured promissory note and to AstraZeneca in connection with the exercise by Aevi of its license option for MEDI2338, which, is anticipated to result in an approximate per share value of $0.134 to Aevi stockholders, assuming the maximum net asset related adjustment.
- Cerecor will issue contingent value rights to former Aevi stockholders, which would entitle them to an additional $2 million in cash or stock (at Cerecor's discretion) upon the enrollment of a patient in a Phase II study related to the AEVI-002, AEVI-006 or AEVI-007 within 24 months of closing.
- The contingent value rights also entitle former Aevi stockholders to an additional $4.5 million in cash or stock (at Cerecor's discretion) upon Food and Drug Administration (FDA) approval of a New Drug Application (NDA) for AEVI-007 (MEDI2338) or AEVI-006 (OSI-027) within 60 months of closing.
Benefits of the Transaction
- Value creation through pipeline assets: The integration of Aevi's pipeline programs should enhance the Cerecor pipeline and broaden an already rich set of near-term inflection points for Cerecor's rare disease portfolio, which includes the CERC-800s. Aevi's clinical-stage programs have the potential to benefit a variety of patient populations with significant unmet needs. Additionally, one or more of Aevi's programs may have the potential to be eligible for a Priority Review Voucher granted by the FDA associated with Rare Pediatric Disease Designation. FDA will award priority review vouchers to sponsors of rare pediatric disease product applications that meet certain criteria. Under this program, a sponsor who receives an approval for a drug or biologic for a "rare pediatric disease" may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product.
- Aligns with Cerecor's and Aevi's transformation and innovation strategies: Cerecor's pipeline strategy is focused on developing new medicines for rare and orphan diseases and Aevi is focused on developing novel therapies primarily for pediatric onset, life-altering diseases, including rare and orphan diseases. Aevi's pipeline programs complement Cerecor's existing pediatric rare disease pipeline led by CERC-801, CERC-802 and CERC-803, which are therapies for inborn errors of metabolism, specifically disorders known as Congenital Disorders of Glycosylation. The FDA has granted RPD Designation and Orphan Drug Designation to all three CERC-800 compounds, thus qualifying Cerecor to receive a PRV upon approval of an NDA.
The boards of directors of both Aevi and Cerecor have approved the proposed transaction. The consummation of the merger is subject to customary closing conditions, including the stockholders of Aevi approving the merger and the Securities and Exchange Commission declaring effective the registration statement on which the shares of Cerecor common stock issued in the merger will be registered. The merger is expected to close during the first quarter of 2020.
Wedbush PacGrow is acting as the exclusive strategic adviser to Aevi and Pepper Hamilton LLP is serving as its legal counsel. Wyrick Robbins Yates & Ponton LLP is serving as Cerecor's legal counsel.
