BioCryst and Presidio call off planned merger

Acquisition deal announced in October 2012 had been for a proposed $101 million

Jeffrey Bouley
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RESEARCH TRIANGLEPARK, N.C. & SAN FRANCISCO—After about a month-and-a-half of time to think it over, the proposed $101 million deal under which BioCryst Pharmaceuticals Inc. would acquire privately-held Presidio Pharmaceuticals Inc. in a stock swap valued is off the table.
The two companies described it as a "mutual termination" of the merger agreement and the related investor financing agreement enteredinto on Oct. 17, and they noted in a news release that "Although the original rationale for the mergerhad merit, the parties determined that terminating the merger was inthe best interest of both companies and their respective shareholders atthis time."
The termination of the transaction has been approved by the boards of directors ofboth companies. In association with the termination, both parties willrelease each other from all obligations with respect to the proposedtransaction, and each company will bear its own legal and transaction fees.
Theresulting company, had the merger taken place, was to be renamed and headquartered in Durham,N.C. Founded in Birmingham, Ala., BioCryst moved its headquartersto North Carolina in 2011, though it still has some employees in Birmingham. Presidio, for its part, is based in San Francisco.
As for the "why?" of it all, there were a trio of stumbles that likely made the deal seem a lot less sweet and that tarnished the appeal of BioCryst as a worthy suitor to Presidio. For example, BioCryst recently announced thatthe FDA had put a clinical hold on development of BCX41 for hereditaryangioedema after regulators raised red flags regarding plans for compounding thedrug at study sites.
Before that, there was news earlier in November that a late-stage clinical trial of BioCryst's influenza drug peramivir had turned out to be a failure and word was that further study of the drug was unlikely. And even before that, less than a month after talking about combining hepatitis C pipelines that both companies had, plans for an early-stage trial of BioCryst's experimental NS5B inhibitor BCX5191 were scrapped when regulators raised concerns about the toxicity of the compound.
Given the huge bumps in the road for both BCX41 and BCX5191, it's not hard to imagine that Presidio was no longer upbeat about BioCryst CEO Jon Stonehouse's words when the acquisition deal was announced and he said the merger would create "a focused,clinical-stage biopharmaceutical company" that will be a leader indeveloping drugs to treat hepatitis C and hereditary angioedema.
Stonehouse may have been right when he said in October that "Presidio bringsexciting (hepatitis C) assets to the new company, and a highlyexperienced scientific team with a proven track record in antiviral drugdiscovery and development." But with such a notable hiccup in BioCryst's own hepatitis C program and Presidio's chiefscientific officer, Richard Colonno, having noted the merged company's initial focuswould be on development of therapies for hepatitis C,  the board of Presidio likely had second thoughts about the fit between the companies and the initial goal, as Colonno said, of "joining forces with BioCryst in the pursuit ofgroundbreaking oral therapies for HCV and other important diseases."

Jeffrey Bouley

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