Genome Therapeutics and Genesoft Pharmaceuticals Complete Merger to Form Biopharmaceutical Company Focused on Anti-Infectives
09-Feb-2004
Genome Therapeutics Corp. has completed its merger with Genesoft Pharmaceuticals and its related common stock offering, effective today. The Company's product portfolio now includes the FDA-approved fluoroquinolone antibiotic, FACTIVE(R) (gemifloxacin mesylate) tablets, approved for two indications.
"With the capital resources we have raised and the experienced commercial and development teams we are building, we are preparing for the launch of FACTIVE tablets in the U.S. later this year," stated Steven M. Rauscher, President and Chief Executive Officer of Genome Therapeutics. "Through this merger, we have created an opportunity to build value by establishing an operating company focused on the development and commercialization of anti-infective pharmaceutical products."
Genome Therapeutics' common stock offering conducted in conjunction with the merger raised a total of $88.2 million in gross proceeds, for total net proceeds of approximately $80 million after expenses and fees. J.P. Morgan Securities Inc. acted as the lead placement agent for the financing and Legg Mason Wood Walker, Incorporated was co-placement agent. In the offering, the Company sold 16.8 million shares at $5.25 per share. The capital resources raised in conjunction with the merger will be used primarily to prepare for the U.S. launch of FACTIVE tablets, anticipated to commence in the summer of 2004, and to fund additional clinical development programs.
With the completion of both the financing and the merger transaction, Genome Therapeutics has approximately $110 million dollars in cash and equivalents and 73.5 million shares outstanding. Under the merger agreement, Genesoft shareholders will receive 1.19 shares of Genome Therapeutics common stock for each share of Genesoft common stock. In connection with the closing of the merger, Genome Therapeutics assumed approximately $22 million in Genesoft debt, restructured at a 5% annual interest rate, by issuing promissory notes of Genome Therapeutics that are convertible, at the option of the holder, into shares of Genome Therapeutics common stock at a price of $6.6418 per share. As part of the planned integration and transformation process, Genome Therapeutics has taken steps to reduce redundancy and its investment in early-stage discovery research. The Company presently has 60 employees in two offices and plans to continue to expand its sales and marketing team as it prepares for the launch of FACTIVE tablets.
Life Science Group, an investment banking firm focused exclusively on the healthcare field, served as an advisor to Genome Therapeutics on the transactions. Genome Therapeutics' Board of Directors received a fairness opinion from Harris Nesbitt Gerard in connection with the merger. Genesoft was advised by Merrill Lynch with respect to this merger.
David Singer, founding CEO of Genesoft and Affymetrix, will serve as Chairman of the new Board of Directors for Genome Therapeutics, and will be joined by: Luke Evnin, Ph.D., Managing Director of MPM Asset Management, Robert Hennessey, former Chairman and CEO of Genome Therapeutics, Vernon Loucks, Jr., former Chairman and CEO of Baxter International, Steven Rauscher, President and CEO of Genome Therapeutics, William Reardon, former Life Sciences industry practice partner at PricewaterhouseCoopers, Norbert Riedel, Ph.D., Corporate Vice President and Chief Scientific Officer at Baxter International, William Rutter, Ph.D., Professor Emeritus of biochemistry at the University of California, San Francisco and Founder of Chiron, and David Stone, Managing Director of Flagship Ventures.
The Company intends to seek shareholder approval of a new name in the coming months, and until then will retain the name Genome Therapeutics Corp. and continue to trade under the ticker "GENE". The Company will be headquartered in Waltham, Massachusetts.
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