Melinta Therapeutics has struck a deal to buy Tetraphase Pharmaceuticals. The deal, which follows a bidding war with AcelRx Pharmaceuticals, gives Melinta another approved product and potentially complementary R&D expertise to support its bid to bounce back from bankruptcy.
Tetraphase won FDA approval for the antibiotic Xerava in patients with complicated intra-abdominal infections in 2018. However, Tetraphase, like other antibiotic biotechs, has struggled to turn Xerava into a commercial success. Full-year sales for 2019 totaled $3.6 million. Melinta has faced similar challenges, leading it to file for bankruptcy despite having four approved products.
Deerfield offered Melinta a way out of its difficulties around the start of the year. Now, Melinta has identified Tetraphase and its approved drug Xerava as enablers of its attempt to become a viable commercial-stage antibiotic company.
Melinta is set to pay $39 million upfront in cash to close the deal. The agreement also features up to $16 million in potential payments tied to the commercial performance of Xerava. To trigger the first milestone, Melinta will need to book Xerava sales of upward of $20 million during 2021. Tetraphase failed to come close to that target in 2019, although sales did head in the right direction.
Tetraphase accepted Melinta’s bid after courting AcelRx. The AcelRx bid fell away after it declined to raise its upfront offer of around $33.3 million in cash and equity in response to the package proposed by Melinta. The scuttled AcelRx deal also featured up to $16 million more in contingent payments.
When Tetraphase disclosed Melinta’s new offer on Monday, its board retained its recommendation in favor of the merger with AcelRx. However, AcelRx, which has a copromotion deal with Tetraphase, subsequently backed out rather than improve its offer. Tetraphase will pay AcelRx a $1.8 million termination fee as a result of the collapse of the deal.
Having outbid AcelRx, Melinta now faces the challenge of delivering a return on its investment. The near-term prospects of that happening rest on the commercial success, or otherwise, of Xerava.
Jennifer Sanfilippo, the latest person to occupy the CEO role at Melinta, albeit on an interim basis, sees synergies between the two companies’ portfolios of approved drugs. There are also hopes that pooling the companies’ scientific capabilities could support the development of new treatments.