FRAZER, Pa.—Under a definitive merger agreement, Cephalon,Inc. will be acquiring all of the outstanding capital stock of Gemin XPharmaceuticals, Inc., for $225 million cash on a cash-free, debt-free basis.Per the agreement, Gemin X stockholders also have the possibility of receivingup to $300 million in cash payments pursuant to the achievement of regulatoryand sale milestones. The agreement does not include any royalty obligations toGemin X stockholders, and is subject to customary closing conditions includingthe receipt of necessary regulatory approvals.
"I am pleased to have entered into a merger agreement withGemin X," says Kevin Buchi, CEO of Cephalon. "Its array of novel, targetedcancer therapeutics is a welcome addition to our current oncology portfolio."
Gemin X's current pipeline developments consist of targetcancer therapeutics that reinitiate apoptotic and autophagic cell death, andthat also focus on inhibiting the metabolism of cancerous cells. The company'slead project, obatoclax, is a pan Bcl-2 inhibitor which is active across allBcl-2 proteins, especially Mcl-1, a dominant protein. The drug has also shownto be effective reinitiating apoptosis and inducing autophagy, orself-digestion, of cancer cells. Currently, obatoclax is in Phase I and PhaseII trials, including a Phase IIb clinical trial composed of over 160 patientswith extensive stage small cell lung cancer and evaluating the efficacy andsafety of the drug in combination with standard chemotherapy. Trial enrollmentwas completed in November 2009.
Buchi says that he is "particularly excited" aboutobatoclax, adding that if it is successful, it has "the potential tosignificantly benefit patients suffering from small cell lung cancer, adevastating disease for which current treatments are limited and additionaltherapies are desperately needed."
"Gemin X and our investors have been very excited by thepromise and potential of our obatoclax program in patients with extensive stagesmall cell lung cancer, a condition for which there has been no change in thestandard of care for 25 years," says Peter R. Dolan, Chairman and ChiefExecutive Officer of Gemin X. "The management team of Gemin X, as well as ourinvestors, believes that Cephalon has the history of innovation and the provenexpertise to continue the advancement of obatoclax and realize the potential ofour full pipeline of targeted cancer therapies."
Additional pipeline developments from Gemin X included othertargeted programs, such as teglarinad (GMX1777), a "water-soluble intravenouslyadministered prodrug of GMX1778 that Gemin X in-licensed from LEO Pharma,"according to the Gemin X website. So far, this compound has been shown toinhibit NAD+ synthesis in cancer cells. Gemin X is also in the midst of apreclinical telomere capping program. Telomeres are the ends of chromosomes,and the study is investigating how disrupting capped telomere structures canlead to immediate apoptosis activation.
After the merger, which is expected to close in the secondquarter of 2011, Gemin X will become a wholly-owned subsidiary of Cephalon.Both companies have facilities in Pennsylvania, with Cephalon's corporateheadquarters in Frazer and with Gemin X's U.S. facility located in Malvern.
"This acquisition not only returns value to Gemin X'sshareholders, but most importantly, it enables the rapid and efficientadvancement of an innovative program in an indication where cancer patientsdesperately need safe and effective treatments," says Dolan.
Cephalon's financial advisor for the transaction wasDeutsche Bank Securities Inc., and Ballard Spahr LLP acted as legal counsel.The financial advisor for Gemin X was Citi, and Cooley LLP acted as legalcounsel.
