Cerecor Inc(NASDAQ: CERC), a biopharmaceutical company focused on becoming a leader in development and commercialization of treatments for orphan and rare diseases, as well as neurology announced today it has entered into a definitive merger agreement to acquire Aevi Genomic Medicine (NASDAQ: GNMX) in an all-stock transaction valued at approximately $16.1 million at closing, plus contingent value rights, or CVRs, for up to an additional $6.5 million in subsequent milestone payments on clinical or regulatory successes, or both. Additionally, the Company is exploring strategic alternatives for its neurological assets as well as its one commercialized product Millipred®.
“This deal is transformative for both organizations and solidifies Cerecor’s commitment to developing new medicines for rare and orphan diseases,” said Dr. Simon Pedder, Executive Chairman of the Board, Cerecor. “This acquisition expands our rare disease pipeline with the addition of three clinical-stage programs in areas of high unmet need. Additionally, the merger of Aevi into Cerecor will enhance our leadership team with the appointment of Mike Cola as Chief Executive Officer and Dr. Garry Neil as Chief Medical Officer upon closing.”
- The transaction is structured as a merger and is anticipated to be tax-deferred to the Aevi stockholders, with Cerecor retaining its public reporting and current NASDAQ listing status.
- 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, which, 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, 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.
- The contingent value rights also entitle former Aevi stockholders to an additional $4.5 million in cash or stock (at Cerecor’s discretion) upon FDA approval of a New Drug Application (NDA) for AEVI-007 (MEDI2338) or AEVI-006 (OSI-027) within 60 months.
- Closing is targeted during the first quarter of 2020, subject to effectiveness of a Cerecor registration statement on Form S-4, Aevi shareholder approval and other standard closing conditions.
Benefits of the Transaction
- Commitment to Rare and Orphan Diseases: Cerecor continues its commitment to becoming an R&D-focused biopharmaceutical company with a robust pipeline of rare and orphan disease programs. This transaction expands the number of clinical programs in development at Cerecor while creating depth of focus in rare and orphan and pediatric diseases. To that end, the Company looks forward to continuing Aevi’s work with Children’s Hospital of Philadelphia in the field of rare and orphan diseases.
- 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 and orphan 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 be eligible for a Priority Review Voucher (PRV) granted by the Food and Drug Administration (FDA) associated with Rare Pediatric Disease (RPD) 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” (RPD) may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product.
- AEVI-007 is a fully human anti-IL-18 monoclonal antibody with the potential to address multiple auto-inflammatory diseases, including Adult Onset Stills Disease (AOSD) and Multiple Myeloma (MM). IL-18 is a pro-inflammatory cytokine; patients with AOSD and MM show elevated levels of IL-18. Cerecor seeks to initiate a Phase 1b/2a proof-of-concept study of AEVI-007 in AOSD and MM patients in 2020.
- AEVI-006 is an mTORC1/2 inhibitor (a class of drugs that inhibit the mammalian target of rapamycin) targeted towards Complex Lymphatic Malformations (LM). LM patients often have activating mutations along the PI3K/AKT/mTOR pathway and sirolimus is an mTORC1 inhibitor that has demonstrated clinical utility in LM. AEVI-006 has the potential to improve on both the safety and efficacy of mTOR inhibition in LM. Cerecor seeks to initiate a Phase 1b/2a proof-of-concept study of AEVI-006 in LM patients in 2020.
- AEVI-002 is an anti-LIGHT (Lymphotoxin-like, exhibits Inducible expression, and competes with HSV Glycoprotein D for HVEM, a receptor expressed by T lymphocytes (part of the Tumor Necrosis Super Family 14)), fully human, monoclonal antibody being developed as a treatment for Pediatric Crohn’s Disease. AEVI-002 is currently in a Phase I study in adult Crohn’s patients and has recently dosed the first patient. We anticipate initial data in the first half of 2020.
- Aligns with Cerecor’s transformation and innovation strategy: Cerecor’s pipeline strategy is focused on developing new medicines for 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 (“CERC-800 programs”), 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 (“ODD”) to all three CERC-800 compounds, thus qualifying the Company to receive a PRV upon approval of an NDA.
- Organizational fit:Upon closing of the merger, it is expected that Mike Cola, current Chief Executive Officer of Aevi, will become Chief Executive Officer of Cerecor and Dr. Garry Neil, current Chief Scientific Officer of Aevi, will become Chief Medical Officer of Cerecor. Both of these individuals bring a wealth of clinical development and commercialization experience in the biopharmaceutical industry and should complement and enhance the executive leadership team at Cerecor.
Mike Cola, Chief Executive Officer of Aevi, stated, “We at Aevi Genomics are extremely excited about joining the Cerecor organization. The combined pipeline of both organizations is an immediate transformation of Cerecor into a leading biopharmaceutical company focused in the Rare and Orphan Disease space. The pipeline of six near-term assets are focused in areas of significant unmet need where there are no or few approved therapies. While there is a lot of work to do in our ongoing clinical programs, I feel confident that the combined team will be able to submit numerous NDAs and gain FDA approvals over the next several years to bring new therapies to patients and families in need.”
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