Winston-Salem-based Targacept is about to get married and take on the spouse’s name.
The publicly traded company, formed in downtown Winston-Salem in 1997 to do biopharmaceutical development on research started by the R.J. Reynolds tobacco company, is merging with privately held South San Francisco firm Catalyst Biosciences.
The prenuptial agreement calls for Targacept to become Catalyst, and allows Catalyst to instantly become a publicly traded company without going through an Initial Public Offering. The deal involves several levels of cash and stock for Targacept shareholders.
“This transaction with Catalyst reflects the continued commitment of Targacept’s board of directors and management team to deliver value to Targacept stockholders, and make a difference in patients’ lives,” said Stephen Hill, president and CEO of Targacept.
“The proposed transaction employs an innovative structure that is designed to optimize stockholder value for both Catalyst and Targacept. Substantial capital is committed to the combined entity, potential additional capital is earmarked for future investment into the combined company if the notes are converted, and a special dividend is provided for existing Targacept stockholders at the closing.”
The North Carolina Biotechnology Center and Targacept have worked closely together for years to bolster life science employment in the Piedmont Triad region. NCBiotech awarded a $45,000 grant to Wake Forest University in 2006 to help researchers develop some computational software that could also be used to help the company in its drug development work. NCBiotech also supported an industrial fellow’s two-year postdoctoral indoctrination at Targacept.
When it reached its peak, Targacept employed more than 100 people at its highly visible downtown campus. Some of them have worked for 18 years to develop a series of drugs called NNR therapeutics. NNRs targeted brain-cell regions called neuronal nicotinic receptors, believed to regulate various functions of the central nervous system. The Triad firm’s product candidates were aimed at treating a wide range of disorders, including Alzheimer’s disease, cognitive dysfunction in schizophrenia, nicotine addiction, and depression.
The concept drew hundreds of millions of dollars in funding support from global pharmaceutical giants GlaxoSmithKline and Astra Zeneca and from The Michael J. Fox Foundation for Parkinson’s Research, among others. But as is often the case in drug development, promising findings in the lab often do not survive the lengthy, costly and grueling translation into successful human therapeutics.
The merger with Catalyst leverages some of the cash Targacept held, allowing it to be put to use in helping Catalyst pay for clinical trials of its genetically engineered human protease products for treating bleeding disorders such as hemophelia. Catalyst also has a licensing agreement with Pfizer, allowing the drug giant to develop one of its products.
“This merger establishes a well-capitalized public company with resources to advance our unique protease-based product candidates through multiple future value inflection points,” said Catalyst CEO Nassim Usman, Ph.D.
When the merger is completed, Usman will become the president and CEO of the combined company. The company said other Catalyst executive officers will assume their respective positions in the combined company, “with select Targacept executives remaining involved on a transitional basis.”
The seven-member board of directors of the combined company will be comprised of three current Catalyst directors as well as Usman and current Targacept directors John Richard, Errol DeSouza and Hill. Catalyst board member Harold Selick will chair the new board.
(C) NC Biotech Center
Note: Veteran journalist Jim Shamp is director of public relations for the N.C. Biotechnology Center.
