Apricus Biosciences Inc. agreed to merge with privately held biotechnology company Seelos Therapeutics Inc in an all-stock deal after failing to win U.S. approval to market an erectile dysfunction treatment.
Under the agreement, Seelos Therapeutics' shareholders are expected to own about 86% of the combined company with Apricus' shareholders owning the remaining 14%. Apricus has a market value of about $8.4 million, according to data on S&P Global Market Intelligence.
Boards of both the companies have unanimously approved the transaction, which will create an entity focused on developing therapies to treat central nervous system diseases. The combined company, to remain headquartered in New York, will be named Seelos Therapeutics and will begin trading on the Nasdaq Capital Market under the symbol SEEL.
The deal is expected to close during the second half of 2018, subject to approval by the shareholders of both the companies.
The July 30 announcement follows a review of strategic options by the board of San Diego-based Apricus, which was dealt a setback in February after the U.S. Food and Drug Administration rejected its application for Vitaros to treat erectile dysfunction for the second time. In April, the company said it was not in compliance with Nasdaq's minimum bid price requirement of $1 per share and that it had until Oct. 8 to remedy the situation.
After the transaction with Seelos closes, Apricus shareholders will receive one contingent value right for each common share owned that will allow them to receive proceeds from the divestment of Vitaros assets. A contingent value right is a security that ensures that the shareholders receive additional benefits if a certain event such as a sale or a regulatory approval occurs.
New York-based Seelos Therapeutics is developing several products, some of which were licensed from Ligand Pharmaceuticals Inc. pursuant to a 2016 agreement.
The licensed products include potential Parkinson's disease therapy SLS-006 and SLS-008, which is being developed for an undisclosed rare disease among children.
Ligand, which like Apricus is based in San Diego, is expected to become a shareholder of Seelos after the merger closes through an equity milestone payment and will have rights to receive potential future milestone payments and royalties for the licensed programs.
Seelos' Chairman, founder and CEO Raj Mehra will become chairman, CEO and president of the combined company, and Apricus CEO Richard Pascoe will serve on the board.
The board of the merged entity will also consist of Robin Smith, chairman of the board of The Stem for Life Foundation; Daniel O'Connor, CEO of OncoSec Medical Inc.; and Brian Lian, CEO and president of Viking Therapeutics Inc.
Canaccord Genuity LLC is acting as exclusive financial adviser and Latham & Watkins is providing legal advice to Apricus. Paul Hastings LLP is acting as legal adviser to Seelos.