Adamis Pharmaceuticals to acquire La Jolla Pharmaceutical Company

Dec 7 2009

Adamis Pharmaceuticals Corporation (OTCBB: ADMP), announced today that it has entered into a definitive merger agreement providing for the acquisition of La Jolla Pharmaceutical Company (NASDAQ: LJPC) by Adamis.

The transaction was unanimously approved by the boards of directors of both companies and is anticipated to close by the end of the first calendar quarter of 2010 or as soon thereafter as possible. Completion of the transaction is subject to a number of customary closing conditions, including the effectiveness of a registration statement to be filed with the Securities and Exchange Commission relating to the transaction, and approval of Adamis’ and La Jolla’s respective stockholders at stockholder meetings following distribution of a definitive joint proxy statement. After completion of the merger, the combined company expects to trade under the name “Adamis Pharmaceuticals Corporation”.

Adamis’ chief executive officer, Dr. Dennis J. Carlo, will become the chief executive officer of the combined company. Dr. Carlo is a veteran of the pharmaceutical and biotechnology industry. He previously served as CEO of publicly-traded Immune Response Corporation, Vice President of Research and Development and Therapeutic manufacturing of Hybritech Inc. prior to its acquisition by Eli Lilly & Co., and Director of Bacterial Vaccines and Immunology at Merck & Company. Dr. Carlo stated, “This merger is a strategic move to raise additional capital for the purpose of increasing the marketing and sales efforts of our Epinephrine Injection USP 1:1000 (0.3mg Pre-Filled Single Dose Syringe) product that we recently launched. In addition, we believe that La Jolla has over ten thousand stockholders and we look forward to them joining the Adamis stockholder base.” Based on its most recent quarterly report filed with the Securities and Exchange Commission, at September 30, 2009, La Jolla had cash and cash equivalents of approximately $5.8 million and liabilities of approximately $1.0 million. La Jolla anticipates that there will be $2.5 million to $3.0 million net cash left in the company at the time of the merger.

Dr. Deirdre Y. Gillespie, La Jolla’s CEO, stated, “The merger of La Jolla and Adamis will create a new specialty pharmaceutical company focused on the development and commercialization of therapeutic products for a variety of viral diseases, including hepatitis and influenza. We like the fact that in addition to the prefilled epinephrine syringe, Adamis has a pipeline including products for allergic rhinitis, asthma, and chronic obstructive pulmonary disease. We think Adamis is very unique in that it already has a product on the market and is expected to be profitable in the near-term.”

At the effective time of the merger, each outstanding share of Adamis common stock will be converted into the right to receive one (post-reverse stock split) share of La Jolla common stock. Adamis currently has approximately 46 million outstanding shares of common stock, excluding options, warrants and convertible securities. If the transaction is approved by the stockholders, immediately before the closing of the merger La Jolla will implement a reverse stock split; the precise ratio of the reverse stock split will be determined in accordance with the terms of the merger agreement and is dependent on La Jolla’s net cash at closing (reduced by the amount of La Jolla’s liabilities as of the closing date) and Adamis’ stock price over a period before the closing date subject to a variable discount (which in no event will yield a stock price that is less than $0.20 or greater than $1.50).

The percentage ownership of shares after the merger that will be held by persons who were La Jolla stockholders and Adamis stockholders, respectively, will depend on many factors, including without limitation the reverse stock split ratio for the La Jolla shares, the number of outstanding Adamis shares at the closing date of the merger and other factors. However, Adamis expects that after the closing of the merger, the persons who were La Jolla stockholders before the merger could hold approximately 5% - 30% of the outstanding shares of the combined company. Actual ownership percentages could be higher or lower than these estimates.

The merger agreement contains customary non-solicitation provisions restricting La Jolla’s and Adamis’ rights to negotiate or enter into other acquisition or sale transactions before the closing of the merger, subject to limited exceptions. The merger agreement also contains a number of customary representations, warranties and covenants of both parties. The merger agreement contains certain termination rights for both La Jolla and Adamis upon the occurrence of certain events, and further provides that upon termination of the merger agreement under specified circumstances, either party may be required to pay the other party a termination fee. The merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended. .

Source: Adamis Pharmaceuticals Corporation