Transaction adds late-stage orphan pipeline asset and platform in inflammation and fibrosis. Calliditas to acquire 62.7% of Genkyotex for €20.3M in cash at €2.80 per share in an off-market transaction. Following the closing of the control transaction a mandatory simplified cash tender offer on the same terms for the remaining outstanding shares would be launched. Total consideration for 100% of Genkyotex would amount to ~€32M, not including milestones of up to €55M payable upon regulatory approvals of setanaxib.
Calliditas Therapeutics AB (publ) (“Calliditas” or the Company) (Nasdaq OMX – CALTX) (NASDAQ – CALT) announced today that the Company has reached an agreement to acquire a controlling interest in Genkyotex SA (“Genkyotex”) (Euronext Paris & Brussels: FR0013399474 – GKTX), a leader in NOX inhibition therapies.
Genkyotex’s lead clinical candidate, setanaxib (GKT831), is in development for Primary Biliary Cholangitis (PBC), a chronic orphan liver disease resulting from progressive destruction of the bile ducts in the liver. In a Phase 2 clinical trial, setanaxib demonstrated evidence of anti-fibrotic activity combined with a favorable tolerability profile, as well as a statistically significant impact on fatigue. In April 2020, Genkyotex completed an End of Phase 2 meeting with the US Food and Drug Administration (FDA) and in June 2020 obtained scientific advice from the European Medicine Agency’s (EMA) Scientific Advice Working Party (SAWP) that provide a path forward for the late stage development and potential registration of setanaxib in PBC. “We believe this transaction represents an exciting expansion of our pipeline in orphan diseases related to inflammation and fibrosis”, says Calliditas’ CEO Renée Aguiar-Lucander. “We believe Genkyotex’s novel NOX inhibition technology may have broad clinical utility not just in PBC, but as a platform therapy with the potential to target other fibrotic indications, including Primary Sclerosing Cholangitis (PSC), selected kidney diseases and Idiopathic Pulmonary Fibrosis (IPF), in which an investigator led Phase 2 trial is expected to start recruitment later this year.”
“We look forward to leveraging our strong late stage clinical team, CMC and regulatory expertise as well as our learnings from our Phase 3 Nefecon program to navigate and execute an efficient path forward for setanaxib. We continue to deliver on our strategy focusing on adding late stage assets with an orphan focus and encouraging data in patients to build a company focused on delivering solution for patients with diseases with high unmet needs”, Ms. Aguiar-Lucander concludes.
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Calliditas has agreed to acquire through an off-market block trade 7,236,515 ordinary shares of Genkyotex representing 62.7% of the share capital and voting rights of Genkyotex[1] from Genkyotex’s largest shareholders and management team (the “Block Sellers”)[2] for a total consideration of €20.3M payable in cash at closing (€2.80 per ordinary share) representing a 25% premium over Genkyotex’s volume weighted average price (VWAP) over the preceding month immediately prior to this announcement and non- transferable contingent rights to receive additional cash payments on confirmation of regulatory approvals or marketing authorizations of setanaxib, as described below. The off-market block trade is expected to close in early October 2020 and remains subject to customary conditions precedent, including the clearance from the French Minister of Economy and Finance regarding foreign investments into France. Calliditas will finance the block trade from its cash reserves.
Calliditas is seeking to acquire all outstanding Genkyotex shares and, as soon as reasonably practicable after and subject to completion of the off-market block trade, in compliance with French and Belgian securities law, Calliditas will file with the French Financial Market Authority (Autorité des Marchés Financiers – the “AMF”) a mandatory simplified cash tender offer for the remaining Genkyotex shares on the same terms as the block trade, €2.80 per share in cash and non-transferable contingent rights as further described below. The tender offer will be followed by a squeeze-out of the non-tendered shares under the same terms (including the contingent rights) if the legal requirements are met. Total acquisition cost would in such case amount to approximately €32.3M with total contingent rights amounting to a maximum of €55M, subject to future regulatory approvals of setanaxib.
The Block Sellers and the Genkyotex shareholders who tender their shares in the centralized tender offer will be eligible to the following additional cash payments (expressed in relation to 100% of the Genkyotex shares on a fully diluted basis) on confirmation of regulatory approvals or marketing authorizations of setanaxib no later than within ten years of the closing of the tender offer:
- €30M on approval of setanaxib for a first indication by the FDA;
- €15M on approval of setanaxib for a first indication by the European Commission (EC); and
- €10M on approval of setanaxib by the FDA or the EC for either IPF or type 1 diabetes (unless such milestone already has been paid out for such indication by the FDA or the EC as per above).
Bryan Garnier & Co acted as financial advisor to Calliditas in this transaction. Latham & Watkins LLP and Vinge acted as legal advisers to Calliditas.