Alcobra and Arcturus Agree to Merge

September 28, 2017

Rare Daily Staff

Publicly-held Alcobra and privately-held RNA drug developer Arcturus Therapeutics said they signed a definitive agreement to merge the two companies in a stock swap valued at $47 million.

The combined company will be listed on Nasdaq and focus on developing RNA medicines and technologies. Arturus has seven development programs in its pipeline, four of which are being developed in partnership with pharmaceutical or strategic partners including Ultragenyx Pharmaceutical, Takeda Pharmaceutical, and the Cystic Fibrosis Foundation. These include programs focused on infectious disease, cystic fibrosis, nonalcoholic steatohepatitis (NASH), and rare liver diseases.

“In contrast to many traditional small molecule and biologic therapeutics, RNA medicines have the potential to cure diseases by addressing the underlying genetic cause rather than treating the symptoms,” said Stuart Collinson, executive chairman of Arcturus. “Arcturus’ technology combines delivery and RNA chemistry to generate innovative medicines with the potential to transform the lives of patients with serious diseases.”

Arcturus has developed proprietary technology platforms that incorporate improvements to the chemical structure of RNA to generate pharmaceutical and therapeutic benefits, and optimize their delivery. The technology also reduces the manufacturing and cost-of-goods and enables particle size control to potentially improve the targeting of clinically important cells and tissues, including liver hepatocytes, liver stellate cells, myocytes, and lung cells.

“Our goal is to establish Arcturus as a leading RNA medicines company and this merger will enable us to accelerate the development of our RNA medicines,” said Joseph Payne, president and CEO of Arcturus. “We believe our proprietary chemistry and drug delivery platforms represent significant advancements in the development of RNA medicines that we and our partners are applying to the treatment of rare and high-incidence diseases where we can have a distinct medical and commercial advantage. In addition to our existing collaborations and internal proprietary programs, we plan to pursue additional strategic partnerships to support other medical applications of our technology.”

The merger comes after Tel Aviv-based Alcobra, which has been developing abuse-deterrent amphetamine to treat attention deficit hyperactivity disorder, announced that its CEO had stepped down, reduced its staff by 40 percent, and would review its strategic alternatives.

Under the terms of the merger agreement, the holders of Arcturus outstanding capital stock immediately prior to the merger will receive ordinary shares of Alcobra in the merger. Alcobra shareholders are expected to own approximately 40 percent and Arcturus shareholders are expected to own approximately 60 percent of the combined company, subject to certain adjustments based on net cash of the two companies at closing. The conversion ratio for the transaction is based on a valuation of Alcobra of $46.7 million, which includes approximately $35 million of expected Alcobra cash at the time of closing.

The proposed merger has been unanimously approved by the boards of directors of both companies. The proposed merger is expected to close during the fourth quarter of 2017, subject to the approval of the transaction by the shareholders of both companies.

The combined company will operate under the Arcturus name. Arcturus CEO Joseph Payne is expected to serve as the president and CEO of the combined company. The board of directors of the combined company will be comprised of seven members, including three members to be designated by Alcobra and four members to be designated by Arcturus.

September 28, 2017

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