Cephalon to purchase all Gemin X outstanding capital stock for $225 million
FRAZER, Pa.—Under a definitive merger agreement, Cephalon, Inc. will be acquiring all of the outstanding capital stock of Gemin X Pharmaceuticals, Inc., for $225 million cash on a cash-free, debt-free basis. Per the agreement, Gemin X stockholders also have the possibility of receiving up to $300 million in cash payments pursuant to the achievement of regulatory and sale milestones. The agreement does not include any royalty obligations to Gemin X stockholders, and is subject to customary closing conditions including the receipt of necessary regulatory approvals.
"I am pleased to have entered into a merger agreement with Gemin X," says Kevin Buchi, CEO of Cephalon. "Its array of novel, targeted cancer therapeutics is a welcome addition to our current oncology portfolio."
Gemin X's current pipeline developments consist of target cancer therapeutics that reinitiate apoptotic and autophagic cell death, and that also focus on inhibiting the metabolism of cancerous cells. The company's lead project, obatoclax, is a pan Bcl-2 inhibitor which is active across all Bcl-2 proteins, especially Mcl-1, a dominant protein. The drug has also shown to be effective reinitiating apoptosis and inducing autophagy, or self-digestion, of cancer cells. Currently, obatoclax is in Phase I and Phase II trials, including a Phase IIb clinical trial composed of over 160 patients with extensive stage small cell lung cancer and evaluating the efficacy and safety of the drug in combination with standard chemotherapy. Trial enrollment was completed in November 2009.
Buchi says that he is "particularly excited" about obatoclax, adding that if it is successful, it has "the potential to significantly benefit patients suffering from small cell lung cancer, a devastating disease for which current treatments are limited and additional therapies are desperately needed. "
"Gemin X and our investors have been very excited by the promise and potential of our obatoclax program in patients with extensive stage small cell lung cancer, a condition for which there has been no change in the standard of care for 25 years," says Peter R. Dolan, Chairman and Chief Executive Officer of Gemin X. "The management team of Gemin X, as well as our investors, believes that Cephalon has the history of innovation and the proven expertise to continue the advancement of obatoclax and realize the potential of our full pipeline of targeted cancer therapies."
Additional pipeline developments from Gemin X included other targeted programs, such as teglarinad (GMX1777), a "water-soluble intravenously administered prodrug of GMX1778 that Gemin X in-licensed from LEO Pharma," according to the Gemin X website. So far, this compound has been shown to inhibit NAD+ synthesis in cancer cells. Gemin X is also in the midst of a preclinical telomere capping program. Telomeres are the ends of chromosomes, and the study is investigating how disrupting capped telomere structures can lead to immediate apoptosis activation.
After the merger, which is expected to close in the second quarter of 2011, Gemin X will become a wholly-owned subsidiary of Cephalon. Both companies have facilities in Pennsylvania, with Cephalon's corporate headquarters in Frazer and with Gemin X's U.S. facility located in Malvern.
"This acquisition not only returns value to Gemin X's shareholders, but most importantly, it enables the rapid and efficient advancement of an innovative program in an indication where cancer patients desperately need safe and effective treatments," says Dolan.
Cephalon's financial advisor for the transaction was Deutsche Bank Securities Inc., and Ballard Spahr LLP acted as legal counsel. The financial advisor for Gemin X was Citi, and Cooley LLP acted as legal counsel.