Under the merger proposals, Nasdaq-listed Supergen will make an initial payment to Astex shareholders of $25m in cash plus a further deferred payment of $30m in stock or cash at some point over the next 30 months. Astex shareholders will also receive 35 per cent of the new company's stock.
The deal is expected to go through in July this year, forming a new company that will be named Astex Pharmaceuticals Inc and list on the Nasdaq stock exchange with a new ticker symbol, ASTX.
Should the deal receive shareholder and regulatory approval, the new enlarged group will have what it claims is nearly $2 billion in potential future milestone revenues, plus royalties.
Supergen chairman, president and CEO, James Manuso will take the role of chairman and CEO of Astex Pharmaceuticals while Harren Jhoti, chief executive officer and co-founder of Astex Therapeutics, will become president and a member of the board of directors of the combined entity.
Speaking to Cabume, Jhoti said despite the structure of the transaction being an acquisition by Supergen, it would actually be a merger of equals and was a great opportunity for Cambridge.
"I think it's a great news story for Cambridge," he said. "Given all the opportunities it has in the US, a successful US company based around the San Francisco area is choosing to look at a Cambridge, UK, partner."
Jhoti said Astex had taken on 18 people in the last 18 months and hoped to grow the Cambridge base further once the deal went through.
"This is a company building exercise with less of a focus on exit points for investors and more on growing value." said Jhoti. "Based on Supergen's market capitalisation yesterday of around $185m it's a 60/40 merger in terms of valuation."
That values Astex at over $120m, a reflection of the £80 million it has raised in its lifetime from a dozen high-profile investors.
Jhoti says if and when the deal closes, the $120m in cash and cash equivalents forecasted post deal closure will allow it to continue the development of the new expanded portfolio of drugs.
Supergen already has one drug on the market, Dacogen, which generated $52.5m in royalty revenues in 2010 and has another in phase 3 clinical trials.
Both companies have strong partnership deals with major pharma outfits, including GlaxoSmithKline, Novartis, AstraZeneca, Eisai and Johnson & Johnson. The last two market Dacogen worldwide (Eisai North America, J&J everywhere else), a revenue stream which the new company says it plans to leverage for development purposes.
The combined company's clinical pipeline will include seven drugs in development – four of which are currently in or entering into Phase II clinical trials and three of which are currently partnered with the larger pharmaceutical companies.
Astex was founded in 1999 by Harren Jhoti, former Head of Structural Biology and of UK Bioinformatics at GlaxoWellcome, together with Cambridge University professors Sir Tom Blundell, and Chris Abell, as well as Dr Roberto Solari, then a director at founding investor, Abingworth.
The company technology uses a high-throughput X-ray crystallography to underpin its fragment-based drug discovery platform, Pyramid, which it uses to discover and develop novel small molecule therapeutics.
Astex has used the technique to build a pipeline of molecularly-targeted oncology drugs, of which three are currently being tested in clinical trials with others in discovery and pre-clinical development.
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