Zafgen Inc. and Chondrial Therapeutics Inc., have entered into a definitive merger agreement under which Chondrial will become a wholly-owned subsidiary of Zafgen and the stockholders of Chondrial Therapeutics will become the majority owners of Zafgen’s outstanding common stock upon the close of the merger. The proposed merger will result in a combined publicly traded, clinical-stage biopharmaceutical company operating under a new name, Larimar Therapeutics Inc.
Under the terms of the merger agreement, stockholders of Chondrial will receive shares of newly issued Zafgen common shares in a private placement. Chondrial stockholders are expected to own approximately 60 percent of the combined company and current Zafgen stockholders will own approximately 40 percent of the combined company. The percentage of the combined company that Chondrial’s stockholders will own as of the close of the transaction is subject to adjustment based on the amount of Zafgen’s net cash at the closing date, among other adjustments as described in the merger agreement.
Upon closing of the transaction, Zafgen will be renamed Larimar Therapeutics, Inc. and will be headquartered in Bala Cynwyd, Pennsylvania. Carole Ben-Maimon, M.D. will serve as President and CEO of the combined company. The merger agreement provides that the board of directors of the combined company will be comprised of Peter Barrett, Ph.D., Carole Ben-Maimon, M.D., Thomas Daniel, M.D., Thomas Hamilton, Jonathan Leff, Frank Thomas, and one designee of Deerfield Management. The merger agreement has been unanimously approved by the board of directors of each company. The transaction is expected to close in the first half of 2020, subject to approvals by stockholders of each company and other customary closing conditions.
MTS Health Partners, L.P. is serving as the exclusive financial adviser to Zafgen and Goodwin Procter LLP is serving as legal counsel to Zafgen. McCarter & English, LLP is serving as legal counsel to Chondrial.
Chondrial Therapeutics’ lead asset, CTI-1601, is in clinical development for the treatment of Friedreich’s ataxia, a progressive and irreversible mitochondrial disease caused by a genetic defect resulting in abnormally low amounts of frataxin. FA typically presents in childhood or adolescence and leads to devastating symptoms and early death. The company believes there are approximately 15,000 patients in the U.S and E.U. Currently, there are no cures and no therapies that can modify the course of the disease.
Chondrial Therapeutics separately announced today that Phase 1 dosing in patients began this month and that CTI-1601 has received Rare Pediatric Disease (RPD) Designation and Fast Track Designation from the U.S. Food and Drug Administration (FDA). Topline results from the Phase 1 clinical program are expected by the end of 2020.