Epirus Biopharmaceuticals to merge with Zalicus

Apr 16 2014

Zalicus Inc. (Nasdaq Capital Market: ZLCS) (Zalicus), and Epirus Biopharmaceuticals, Inc. (Epirus), a Boston-based biopharmaceutical company focused on the global development and commercialization of biosimilar monoclonal antibodies, announced today that they have entered into a definitive agreement under which Epirus will merge with a wholly-owned subsidiary of Zalicus in an all-stock transaction. Following closing, Zalicus will be re-named Epirus Biopharmaceuticals, Inc., and will operate under the leadership of the Epirus management team with Amit Munshi serving as the president and chief executive officer. In addition, Dr. Mark H.N. Corrigan will serve as chairman of the company's board of directors, which will have representatives from both the existing Epirus and Zalicus boards.

The merger will create a Nasdaq-listed, publicly traded company focused on building a global biosimilar enterprise to improve patient access to important medicines. Epirus is currently developing a pipeline of biosimilars, including BOW015, a biosimilar to Remicade^®, BOW050, a biosimilar to Humira^®, and BOW030 a biosimilar to Avastin^®.

Epirus also announced today that it has closed a $36 million Series B financing round led by Livzon Mabpharm, Inc. Other investors participating in this round include Adage Capital, Greenwoods Investment, Gibralt US, Inc., Monashee Capital Partners LP, and an investment affiliate of Mousse Partners, as well as existing investors TPG Biotech^®, Montreux Equity Partners and 5AM Ventures.

Mark H.N. Corrigan, M.D., president and CEO of Zalicus, said, "We are strong believers in the upside of this newly combined company and the potential of the biosimilar space. Epirus' strategic model and experienced management team, coupled with Zalicus' knowledge of the rheumatoid arthritis space and global clinical development expertise, position us well to leverage our strong relationships with key opinion leaders and experience in conducting European clinical trials in RA. This merger creates a dynamic and exciting new enterprise to successfully develop and commercialize biosimilars for the global market. After an extensive review of potential merger candidates and their product pipelines, Zalicus identified Epirus as an organization with the potential to create significant value for our shareholders."

"Under the new company structure, we will continue to aggressively advance our pipeline of biosimilars, and address diverse global biosimilar markets through local partnerships," said Amit Munshi, president and CEO of Epirus. "Through this transaction, we gain access to additional financial resources as well as clinical trial experience in the rheumatoid arthritis space. Our combined team is committed to expanding patient access to important medications."

The percentage of the combined company that Zalicus stockholders will own as of the closing of the merger is subject to adjustment at the closing based on the level of Zalicus' net cash at the closing. On a pro forma basis, based upon the number of shares of Zalicus common stock to be issued in the merger, (i) current Zalicus stockholders will own approximately 19% of the combined company and current Epirus stockholders will own approximately 81% of the Company if Zalicus' net cash at closing is equal to or in excess of $12 million, (ii) current Zalicus stockholders will own approximately 17% of the combined company and current Epirus stockholders will own approximately 83% of the Company if Zalicus' net cash at closing is equal to or in excess of $9 million but less than $12 million, and (iii) current Zalicus stockholders will own approximately 14% of the combined company and current Epirus stockholders will own approximately 86% of the Company if Zalicus' net cash at closing is equal to or less than $9 million. Zalicus is exploring different alternatives to increase its level of net cash. However, based on Zalicus' current level of net cash and taking into account Zalicus' projected expenses in connection with the proposed transaction, if the merger were to close today, the stockholders of Zalicus would own appropriately 14% of the combined company and current Epirus stockholders would own approximately 86% of the combined company. There can be no assurances that any actions taken by Zalicus to attempt to increase its level of net cash between now and closing will be successful or that any such alternatives are available to Zalicus.

The merger is subject to customary closing conditions, including approval of the stockholders of Zalicus and Epirus. The Boards of Directors of both Zalicus and Epirus have unanimously approved the transaction and recommended that their stockholders vote in favor of the transaction. The transaction is currently expected to close during the summer of 2014.

Wedbush PacGrow Life Sciences and Goodwin Procter are acting as financial and legal advisors, respectively, to Zalicus and Leerink Partners LLC and Latham & Watkins are acting as financial and legal advisors, respectively, to Epirus.