RARE Daily

LEO Pharma to Acquire Timber Pharmaceuticals for $36 Million

August 22, 2023

Rare Daily Staff

LEO US Holding, a wholly owned subsidiary of Danish biotech LEO Pharma, said it will acquire Timber Pharmaceuticals in a transaction valued at up to $36 million.

Timber is a clinical-stage biopharmaceutical company focused on the development and commercialization of treatments for rare and orphan dermatologic diseases.

The deal includes an initial upfront consideration of $14 million and up to an additional $22 million in contingent value rights (CVRs) payable upon achievement of certain milestones. All of the issued and outstanding shares of capital stock and other equity interests of Timber will be converted into the right to receive the initial upfront consideration, less the payments for certain outstanding warrants that contain a cash payout value. Timber expects the initial amount per share to be paid to Timber stockholders to be approximately $2.62 based on approximately 3.4 million shares of Timber common stock and restricted stock issued and outstanding as of August 20, 2023.

The current estimated value to stockholders is based on an implied value assigned to certain outstanding warrants based on Black Scholes option pricing model as of August 18, 2023. This value will not be finalized until the closing of the merger and is subject to increase or decrease based on certain variables, including the actual trading price of Timber at the time of the merger and the trading volatility of Timber common stock prior to the merger.

The CVRs that Timber stockholders will receive provide for the payment of up to an additional $22 million with respect to specific milestones for TMB-001, of which up to $12 million is related to FDA approval of TMB-001 by October 1, 2025 for the treatment of congenital ichthyosis, and up to $10 million of which is related to the first achievement of TMB-001 net sales exceeding $100 million within four consecutive calendar quarters by December 31, 2028. As part of the transaction, LEO Pharma has agreed to provide Timber with a bridge loan of up to $3 million, subject to certain conditions. The payments of the CVRs are subject to certain deductions relating to the repayment of 50 percent of the bridge loan provided by LEO Pharma to Timber in connection with the merger.

The transaction has been unanimously approved by the boards of directors of both companies and is expected to close in the fourth quarter of 2023, subject to customary closing conditions, including approval by the holders of a majority of the shares of Timber’s common stock. Following completion of the transaction, Timber will become a privately held company and shares of Timber’s common stock will no longer be listed on any public market.

“LEO’s expertise and global footprint make it the best choice to advance and achieve the full potential of Timber’s portfolio of product candidates, said John Koconis, chairman and CEO of Timber. “We believe that LEO has the potential to establish TMB-001 as the standard of care in the treatment of congenital ichthyosis, a devastating, rare disease.”

Photo: John Koconis, chairman and CEO of Timber

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