Capricor to become wholly-owned subsidiary of Nile Therapeutics

Jul 8 2013

Capricor, Inc., a privately held biotechnology company developing cardiac stem cell (CDC) therapeutics to repair damaged heart muscle, and Nile Therapeutics, Inc. (OTCQB: NLTX) announced today that they have entered into a Merger Agreement under which Capricor will become a wholly-owned subsidiary of Nile Therapeutics, Inc. in an all-stock transaction. Upon closing, the combined company will be named Capricor Therapeutics, Inc., and will operate under the leadership of the Capricor management team with Linda Marban, Ph.D. serving as Chief Executive Officer. In addition, the company's Board of Directors will have representatives from both the existing Capricor and Nile boards.

The merger will create a publicly traded company focused on the development of novel treatments to prevent and treat heart disease, as well as having a core expertise in regenerative medicine. Capricor is currently recruiting patients to its ALLSTAR Trial, a Phase I/II clinical trial involving 274 patients who have suffered large heart attacks. The Phase I portion of the trial has been funded in part by a grant from the National Institutes of Health (NIH).  Phase II of Capricor's ALLSTAR clinical trial is funded in part through the support of the California Institute for Regenerative Medicine (CIRM). Both awards are non-dilutive to the Capricor shareholders, but the CIRM award is subject to repayment.

"Capricor's and Nile's product portfolios complement each other well, as our therapies will address both the underlying causes and debilitating effects of heart disease," said Linda Marban, Ph.D., Chief Executive Officer of Capricor, Inc. "Capricor's CDCs are allogeneic cardiac derived stem cells that aim to attenuate and potentially improve damage to the heart that can result in heart failure, while Nile's cenderitide is intended to treat patients following hospital discharge from an acute episode of heart failure." Dr. Marban further stated, "Heart failure is a medical and economic crisis in that it is a leading cause of death, hospitalization and cost to the healthcare system in developed nations."

Darlene Horton, M.D., Chief Executive Officer of Nile Therapeutics, Inc. added, "We are excited to merge with Capricor, combining two clinical stage companies focused on treating patients with advanced cardiovascular disease. Each company germinated from strong science, from which has evolved CDCs and cenderitide. The combined company should have better access to capital, more potential for steady pipeline development and more risk diversification."

The merger will take the form of a stock-for-stock reverse merger intended to qualify as a tax-free reorganization. Under the terms of the agreement, which has been approved by the Boards of Directors of both Capricor and Nile, upon completion of the merger, Nile will issue to Capricor stockholders shares of Nile common stock such that Capricor stockholders will own approximately 90% of the combined company's outstanding shares, and Nile stockholders will own approximately 10%, calculated in each case on a fully-diluted basis assuming the issuance of shares underlying options and warrants. Options of Capricor will be assumed by Nile and become options to acquire stock of Nile.

The closing is subject to the satisfaction of certain conditions, including Nile and Capricor stockholder approval.