Rare Daily Staff
Xeris Pharmaceutics will acquire Strongbridge Biopharma in a stock swap with contingent value rights that create a drug company focused on rare endocrine disorders.
The agreement, including the maximum aggregate amount payable under the CVRs, values Strongbridge at approximately $267 million based on the closing price of Xeris common stock of $3.47 on May 21, 2021 and Strongbridge’s fully diluted share capital.
Under the terms of the agreement at closing, Strongbridge shareholders will receive a fixed exchange ratio of 0.7840 shares of Xeris Biopharma Holdings common stock for each Strongbridge ordinary share they own. Based on the closing price of Xeris common stock on May 21, 2021, this represents approximately $2.72 per Strongbridge ordinary share and a 12.9 percent premium to the closing price of Strongbridge ordinary shares on May 21, 2021. Strongbridge shareholders will also receive up to $1 per share in contingent value rights.
The transaction was unanimously approved by the boards of directors of both companies except for Jeffrey Sherman, a director in common to both companies, who abstained from the voting, and is expected to close early in the fourth quarter of 2021, subject to the satisfaction of closing conditions.
The combined company, which will be known as Xeris Biopharma Holdings, will have two commercial products and a pipeline that includes Strongbridge’s Recorlev, which is under review for marketing approval by the U.S. Food and Drug Administration as a treatment for Cushing’s syndrome.
Upon closing of the transaction, Xeris shareholders will own about 60 percent of the combined company and Strongbridge shareholders will own approximately 40 percent.
“Through this combination with Xeris, we will gain additional scale and financial resources to better meet the unmet needs of those we serve,” said John Johnson, CEO of Strongbridge. “Our combined pipeline, drug development talent, and commercial infrastructure will enable us to accelerate product launches and drive further growth. We look forward to working closely with the Xeris team to unlock the potential value of our combined assets, while providing our shareholders with the opportunity to participate in the success of the combined company.”
The combined company is expected to generate approximately $50 million in pre-tax synergies by the end of 2022 resulting from immediate savings, including redundant general, administrative, and other public company costs, and from the avoidance of future costs, most notably within the commercial and medical affairs functions. Shareholders of the combined company are expected to benefit from significant cost avoidance and the potential for more rapid and achievable near-term growth by utilizing Xeris’ existing commercial infrastructure to launch Recorlev soon after product approval.
Xeris Biopharma Holdings will have its principal executive offices in Chicago. Xeris chairman and CEO, Paul Edick, will act as chairman and CEO of the combined company. The Xeris Biopharma Holdings board will comprise the other existing Xeris directors, together with John Johnson and Garheng Kong, who will join the combined company’s board as new independent directors. Sherman, a director in common to both companies, will continue to serve on the Xeris Biopharma Holdings board following the transaction.