Cubist Pharmaceuticals Inc. and Optimer Pharmaceuticals Inc. have signed a merger agreement under which Cubist will acquire all of the outstanding shares of Optimer common stock for $10.75 per share in cash, or approximately $535 million on a fully diluted basis. In addition to the upfront cash payment, each stockholder of Optimer will receive a Contingent Value Right (CVR), which is expected to be publicly traded, entitling the holder to receive an additional one-time cash payment of up to $5.00 for each share they own if certain net sales of DIFICID (fidaxomicin) are achieved, or a total transaction value of up to $801 million on a fully diluted basis. The transaction has been approved by the Boards of Directors of both companies.
Optimer received U.S. Food and Drug Administration approval in May 2011 for DIFICID, the first antibacterial drug approved in more than 25 years to treat Clostridium difficile-associated diarrhea (CDAD) in adults 18 years of age or older. In two large Phase 3 clinical studies, DIFICID 200 mg twice daily was non-inferior to oral vancomycin 125 mg four times daily in clinical response at the end of 10 days of treatment, and was superior to vancomycin in sustained clinical response through 25 days beyond the end of treatment. The CDAD market is large, with over 700,000 cases annually in the U.S. alone and a high recurrence rate at 20-30%. Hospital stays related to CDAD increased four-fold from 1993 to 2009 and, according to the U.S. Centers for Disease Control and Prevention, the disease is estimated to be responsible for approximately 14,000 deaths per year in the U.S.
DIFICID was launched in the U.S. in July 2011. In April 2011, Cubist and Optimer entered into a two-year agreement under which Cubist has been co-promoting DIFICID to physicians, hospitals, and other healthcare institutions in the U.S. Concurrently with the merger agreement, the companies have agreed to extend the co-promotion agreement for up to one year.
Terms of the contingent value right (CVR) call for an additional one-time cash payment of up to $5.00 per share based on cumulative net sales of DIFICID in the U.S. and Canada between July 1, 2013 and December 31, 2015. The CVR payment will be $3.00 if cumulative net sales exceed $250 million, $4.00 if cumulative net sales exceed $275 million and $5.00 if cumulative net sales exceed $300 million. It is expected that the CVR will be listed on the Nasdaq Stock Market. In addition, Cubist has committed to purchase $25 million of non-voting preferred stock of Optimer per quarter, commencing September 15, 2013, to address Optimer’s near-term cash needs prior to closing. The transaction is expected to be accretive to Cubist’s earnings in the first year post closing.
The companies’ expectation is to close the transaction later this year, subject to required regulatory approvals and other customary closing conditions, including stockholder approval.
In other news, Cubist also signed a definitive agreement under which it will acquire all outstanding shares of Trius for $13.50 per share in cash or approximately $707 million on a fully diluted basis. In addition to the upfront cash payment, each Trius stockholder will receive one Contingent Value Right (CVR), entitling the holder to receive an additional cash payment of up to $2.00 for each share they own if certain commercial sales milestones are achieved. The total transaction is valued at up to $818 million on a fully diluted basis. The transaction has been approved by the Boards of Directors of both companies. The companies’ expectation is to close the transaction later this year, subject to required regulatory approvals and other customary closing conditions.
Trius brings to Cubist a complementary, late-stage antibiotic candidate, tedizolid phosphate (TR-701), as well as several pre-clinical antibiotic programs. Tedizolid phosphate is an IV and orally administered second generation oxazolidinone in development for the potential treatment of certain Gram-positive infections, including methicillin-resistant Staphylococcus aureus (MRSA). Tedizolid phosphate met all primary and secondary endpoints in two Phase 3 clinical trials studying patients with acute bacterial skin and skin structure infections (ABSSSI). Trius has partnered with Bayer Pharma AG for the development and commercialization of tedizolid phosphate outside of the U.S., Canada and the European Union. It is currently expected that a New Drug Application for tedizolid phosphate seeking approval for an indication in ABSSSI will be submitted to the U.S. Food and Drug Administration (FDA) during the second half of 2013 and a Marketing Authorization Application will be submitted to the European Medicines Agency in the first half of 2014.