AIDS drug company Trimeris (NASDAQ:TRMS) this year vetted an initial list of more than 140 companies in all therapeutic areas and narrowed its business combination prospects to 14, then paired that list even further to five. That list included Synageva BioPharma, the company that in June announced it would acquire Trimeris in a reverse merger.
The deal benefits both companies. With a drug pipeline that ceased R&D in 2008, Durham, North Carolina-based Trimeris had its public listing and declining sales of AIDS drug Fuzeon as its most attractive remaining attributes. Privately held Synageva in Lexington, Massachusetts does not yet have any U.S. Food and Drug Administration-approved products. But private equity-backed Synageva has an active pipeline of candidates and the need to finance their development. Synageva’s quest to go public dates to 2009, when the company discussed acquiring a small, publicly traded diagnostics company as an alternative to an initial public offering.
According to securities filings, the matching of Trimeris to Synageva came from a mutual acquaintance: Felix Baker is a member of the Trimeris board of directors and also chairman of Synageva’s board. But these discussions might not have even taken place had Trimeris experienced better luck with its drug partner or its subsequent suitors, one of which two years ago made an offer nearly $20 million more than the valuation Synageva put on the company.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Trimeris’s only product is antiviral AIDS drug Fuzeon, which was based on technology spun out of Duke University in 1993 and approved by the FDA a decade later. Developed with drug partner Roche (OTC:RHHBY), Fuzeon peaked in 2007 with $266.8 million in sales. But that year Roche told Trimeris it was no longer interested in developing Trimeris’s compounds to follow Fuzeon.
By 2008, a number of new HIV/AIDS drugs from Merck (NYSE:MRK), Pfizer (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ) entered the market. Fuzeon’s 2008 sales plummeted 37 percent. Its sales have been dropping ever since.
Trimeris contacted Roche in 2008 to ask whether it was interested in acquiring the company. Roche declined. In 2009, South Korea-based Arigene made an $81 million offer to buy Trimeris. But months later Arigene bowed out because it couldn’t raise money for the deal.
Trimeris’s introduction to Synageva came last fall. At a September board meeting, Trimeris discussed efforts to find a buyer. A month later at a Synageva board meeting, that company discussed possible acquisition of a public company that was generating ongoing revenue, criteria that would help Synageva meet its funding needs. Baker, familiar with the needs of both companies, had separate discussions with Trimeris CEO Martin Mattingly and Synageva CEO Sanj Patel before the two eventually met with each other.
With the Rise of AI, What IP Disputes in Healthcare Are Likely to Emerge?
Munck Wilson Mandala Partner Greg Howison shared his perspective on some of the legal ramifications around AI, IP, connected devices and the data they generate, in response to emailed questions.
In March, Trimeris hired MTS Health Partners as its financial adviser. MTS formed a list of 47 companies, potential “strategic transaction” candidates. A second tier formed a list of 95 companies. The Trimeris board identified 14 companies from the first list, including Synageva, as the best prospects.
Trimeris entered into confidentiality agreements with Synageva and four other “lead bidders.” But Synageva also took steps in case Trimeris selected another company. The filings say Synageva conducted its own search for potential reverse merger candidates. The company concluded that Trimeris was its best option. After multiple meetings with the lead bidders over the next two months, Trimeris reached the same conclusion.
The merger agreement was negotiated between May 28 and June 13. The announcement was made June 13. Under the terms of the all-stock deal, Synageva will own 75 percent of the combined company’s shares and Trimeris shareholders will own the remaining 25 percent.
The deal means the end of Trimeris and its presence in the Research Triangle. The combined company will retain the Synageva name and operate under Synageva’s existing management team. Synageva is not an AIDS drug company. The company focuses on orphan drugs to treat rare diseases. Lead candidate SBC-102 is an enzyme replacement therapy for patients with lysosomal acid lipase deficiency, a rare genetic disease in which patients are born without the ability to produce the lysosomal acid lipase enzyme. Absence of the enzyme results in buildup of fatty material in blood vessels and organs.
Trimeris’s value to Synageva amounts to money. Trimeris has $47.3 million in cash on hand. Fuzeon’s sales, though declining, can bring in additional money that Synageva can direct toward clinical development of its compounds. And if it needs more funds, the company can turn to the public markets to get it. Synageva has reserved a new stock ticker: “GEVA.”
