Catalyst Biosciences, Inc. (NASDAQ: CBIO) (“Catalyst”) and GNI
Group Ltd. (2160.T) (“GNI”) today announced that the parties have
signed definitive agreements for the sale and purchase of GNI’s
proprietary new chemical entity F351 program. F351 has shown
clinical efficacy as a treatment for both liver and kidney
fibrosis. In a separate independent transaction, GNI and other
minority stockholders will, subject to stockholder approval and
certain customary closing conditions, exchange their controlling
interest in Beijing Continent (“Continent”), a commercial-stage
pharmaceutical company based in China and majority-owned subsidiary
of GNI, for newly issued shares of Catalyst. Catalyst will continue
to trade on NASDAQ under the ticker symbol “CBIO” after both
transactions.
Continent is the first marketer of pirfenidone in China for
idiopathic pulmonary fibrosis, which was approved in China in 2011.
Continent recorded sales of 513 million RMB ($73 million USD) in
the nine months ended September 30, 2022. Continent has operated
profitably during the last 5 years while funding a clinical
pipeline focused on other fibrosis indications, including F351 for
hepatitis B virus (HBV)-associated fibrosis and non-alcoholic
steatohepatitis (“NASH”).
In conjunction with these transactions, CBIO will distribute
$7.5 million on January 12, 2023 as a special dividend and grant a
non-transferable (CVR), each to stockholders of record on January
5, 2023. The CVR entitles stockholders of record to future
dividends associated with the monetization of Catalyst intellectual
property and other assets, including additional potential cash
distributions. Catalyst expects the ex-dividend date for its common
stock to be January 13, 2023. This distribution follows a previous
distribution of $45 million in September 2022. The Company expects
to make one or more additional distributions through the CVR in
2023.
The acquisition of F351, consummated concurrently with the
execution of the definitive asset purchase agreement, provides
Catalyst with the global rights to F351 (excluding Mainland China,
where the rights are held by Continent) in consideration for
6,266,521 shares of common stock and 12,340 shares of a new series
of preferred stock (Series X) with economic rights equivalent to
Catalyst’s common stock. Each share of Series X preferred stock is
convertible into 10,000 shares of common stock, subject to
stockholder approval under Nasdaq rules and subject to a beneficial
ownership conversion blocker.
Both the conversion of the Series X preferred stock and the
acquisition of a 65.18% interest in Continent will be subject to
Catalyst stockholder approval, which will be sought in 2023. If the
acquisition is approved by stockholders, Catalyst would issue at
closing a total of up to 1,110,776,224 shares of common stock for a
controlling interest in Continent, at which point Catalyst would
expect to consolidate results of operations with Continent.
“The asset purchase of F351 and the subsequent business
combination with Continent allows CBIO to both accelerate the
return of cash to stockholders and provide additional value to our
stockholders through equity ownership of Continent and a CVR for
the monetization of our legacy assets,” said Nassim Usman, Ph.D.,
chief executive officer of Catalyst Biosciences. “The company is
continuing its efforts to monetize the legacy assets, and we expect
to distribute additional cash in 2023. We believe that this set of
transactions creates an attractive fibrosis company with further
upside for our stockholders. Continent is profitable with a robust
fibrosis pipeline in various stages of development, including a
Phase 3 study of F351 in HBV associated fibrosis and a Phase 2
study poised to initiate in NASH fibrosis.”
Ying Luo, Ph.D., CEO of GNI Group added, “Continent has funded
its drug discovery programs in China using its own profits. We are
very excited with the positive results from the F351 Phase 2
clinical study of HBV-associated liver fibrosis in China and are
keenly interested in expanding the clinical development of F351 for
NASH fibrosis in the U.S. This transaction enables GNI Group to
accelerate the clinical development of F351.”
Leadership & OrganizationEffective with the
closing of the F351 acquisition, the Catalyst Board will consist of
three legacy Catalyst directors (Augustine Lawlor, Nassim Usman.
Ph.D., and Andrea Hunt), and two directors newly designated by GNI
(Ying Luo, Ph.D. and Thomas Eastling). Nassim Usman and Seline
Miller will continue to serve as the Chief Executive Officer and
Interim Chief Financial Officer, respectively, at least through the
closing of the Continent acquisition.
About F351F351 is a next-generation pirfenidone
analog in Phase 3 clinical development for the treatment of HBV
associated liver fibrosis in China and the combined company expects
to file an IND in the United States and commence Phase 2 studies in
NASH fibrosis, an advanced form of non-alcoholic fatty liver
disease (“NAFLD”) in 2023.
About the TransactionsThe acquisition of the
F351 intellectual property portfolio F351 is the result of an asset
purchase in which Catalyst acquired from GNI affiliates all right,
title and interest to F351 (including intellectual property, data
and regulatory filings, but excluding intellectual property rights
and related assets in Mainland China) for a combination of
6,266,521 shares of Catalyst common stock and 12,340 shares of
Series X Preferred Stock (the “Preferred Stock”). Each share of
Preferred Stock is convertible into 10,000 shares of common stock,
subject to Catalyst stockholder approval and subject to a customary
beneficial ownership conversion blocker (not to exceed 19.9%).
Stockholder approval for the conversion of the Preferred Stock will
be sought in conjunction with the stockholder vote for the
Continent acquisition.
Catalyst will separately acquire 65.18% of Continent from GNI
and certain other minority holders pursuant to a Business
Combination Agreement. At closing, GNI and the minority holders
will be entitled to receive in the aggregate approximately 1.11
billion shares of Catalyst common stock. Closing of the
transactions contemplated under the Business Combination Agreement
will be subject to Catalyst stockholder approval at a stockholder
meeting expected to be held in the second quarter of 2023 and
Nasdaq’s approval of the listing of the shares of Catalyst Common
Stock to be issued in connection with the Contributions. Following
stockholder approval of the conversion of the Preferred Stock and
the consummation of the Continent business combination, Catalyst
stockholders would own ~2.5% of the combined company which is being
valued at ~$343 million following these transactions.
Raymond James is serving as exclusive financial advisor to
Catalyst and Orrick, Herrington & Sutcliffe LLP is serving as
legal counsel to Catalyst. Gibson, Dunn & Crutcher LLP is
serving as legal counsel to GNI.
Conference Call InformationCatalyst will host a
conference call today, December 27, 2022, at 8:00 a.m. E.T., to
discuss the proposed transactions. The conference call may be
accessed by dialing 1-877-425-9470 (United States and Canada) or
1-201-389-0878 (international) and asking to join the Catalyst
conference call. Investors and interested parties may also access a
live webcast of the presentation by clicking HERE. A replay of the
webcast will be archived on the Catalyst website following the
presentation.
About Catalyst BiosciencesCatalyst Biosciences,
Inc. and its subsidiary (the “Company” or “Catalyst”) is a
biopharmaceutical company with expertise in protease engineering.
Prior to ceasing research and development activities in March 2022,
the Company had several protease assets that may address unmet
medical needs in disorders of the complement or coagulation
systems. The Company is exploring several strategic alternatives to
monetize the Company’s legacy assets and is focused on distributing
its available cash, after paying or reserving for its obligations
and liabilities, to stockholders. Investors and interested
parties may find additional information on the Investor page of the
Catalyst Biosciences website at:
https://ir.catalystbiosciences.com/.
About ContinentContinent is a profitable
fully-integrated specialty biopharmaceutical company with a focus
in the organ fibrosis market. With global research and development
capabilities, commercial-scale manufacturing facilities, a deep
distribution network across China, and a sales and marketing team
of 300 people, Continent is a leader in selling ETUARY
(pirfenidone) for the treatment of idiopathic pulmonary fibrosis
(IPF). The company has a rich pipeline of potential assets,
including F351 for HBV-associated liver fibrosis which is in Phase
3 study in China.
About GNI Group LtdGNI Group is a global
multinational company publicly listed and incorporated in Japan
which engages in the research, development, manufacturing and sales
of pharmaceutical drugs and traditional Chinese medicines.
Cautionary Note Regarding Forward-Looking
StatementsThis press release contains forward-looking
statements (including within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended (Securities Act)) concerning
Catalyst, GNI, the proposed transactions and other matters. These
statements may discuss goals, intentions and expectations as to
future plans, trends, events, results of operations or financial
condition, or otherwise, based on current beliefs of the management
of Catalyst and GNI, as well as assumptions made by, and
information currently available to, management of Catalyst and GNI.
Forward-looking statements generally include statements that are
predictive in nature and depend upon or refer to future events or
conditions, and include words such as “may,” “will,” “should,”
“would,” “expect,” “anticipate,” “plan,” “likely,” “believe,”
“estimate,” “project,” “intend,” and other similar expressions or
the negative or plural of these words, or other similar expressions
that are predictions or indicate future events or prospects,
although not all forward-looking statements contain these words.
Statements that are not historical facts are forward-looking
statements. Forward-looking statements in this communication
include, but are not limited to, expectations regarding the
proposed merger and financing transactions; the potential benefits
and results of such transactions; the expected timing of the
closing of the proposed transactions; statements regarding the
potential of, and expectations regarding, GNI’s programs; and the
expected timing of GNI’s filing of an IND for F351 in NASH.
Forward-looking statements are based on current beliefs and
assumptions that are subject to risks and uncertainties and are not
guarantees of future performance. Actual results and the timing of
events could differ materially from those anticipated in such
forward-looking statements as a result of these risks and
uncertainties, which include, without limitation: (i) the risk that
the conditions to the closing of the Contributions are not
satisfied, including the failure to timely obtain stockholder
approval for the transactions contemplated by the Business
Combination Agreement, if at all, and Nasdaq’s approval of the
listing of the shares of Catalyst Common Stock to be issued in
connection with the Contributions; (ii) uncertainties as to the
timing of the consummation of the proposed transactions
contemplated by the Business Combination Agreement and the ability
of each of Catalyst, the Contributors, the Minority Holders and CPI
to consummate the proposed Contributions, as applicable; (iii)
risks related to Catalyst’s ability to manage its operating
expenses and expenses associated with the proposed transactions
contemplated by the Business Combination Agreement; (iv) risks
related to the failure or delay in obtaining required approvals
from any governmental or quasi-governmental entity necessary to
consummate the proposed transactions contemplated by the Business
Combination Agreement; (v) unexpected costs, charges or expenses
resulting from the purchase of the F351 Assets or the
Contributions; (vi) potential adverse reactions or changes to
business relationships resulting from the announcement or
completion of the Contributions or the purchase of the F351 Assets;
(vii) risks related to the inability of the combined company to
obtain sufficient additional capital to continue to advance the
product candidates and preclinical programs of Catalyst; and (viii)
risks associated with the possible failure to realize certain
anticipated benefits of the Contributions or the purchase of the
F351 Assets, including with respect to future financial and
operating results. The foregoing review of important factors that
could cause actual events to differ from expectations should not be
construed as exhaustive and should be read in conjunction with
statements that are included herein and elsewhere, including the
risk factors included in Catalyst’s most recent Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K filed with the SEC as well as the registration statement
on Form S-4 to be filed with the SEC by Catalyst. Catalyst and GNI
can give no assurance that the conditions to the proposed
transactions will be satisfied. Except as required by applicable
law, Catalyst and GNI undertake no obligation to revise or update
any forward-looking statement, or to make any other forward-looking
statements, whether as a result of new information, future events
or otherwise.
This press release contains hyperlinks to information that is
not deemed to be incorporated by reference into this press
release.
No Offer or SolicitationThis press release is
not intended to and does not constitute an offer to sell or the
solicitation of an offer to subscribe for or buy or an invitation
to purchase or subscribe for any securities or the solicitation of
any vote in any jurisdiction pursuant to the proposed transactions
or otherwise, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law.
No offer of securities shall be made except by means of a
prospectus meeting the requirements of the Securities Act. Subject
to certain exceptions to be approved by the relevant regulators or
certain facts to be ascertained, the public offer will not be made
directly or indirectly, in or into any jurisdiction where to do so
would constitute a violation of the laws of such jurisdiction, or
by use of the mails or by any means or instrumentality (including
without limitation, telephone and the internet) of interstate or
foreign commerce, or any facility of a national securities
exchange, of any such jurisdiction.
Important Additional Information Will be Filed with the
SECIn connection with the proposed transactions between
Catalyst and GNI, Catalyst intends to file relevant materials with
the SEC, including a registration statement on Form S-4 that will
contain a proxy statement/prospectus of Catalyst. CATALYST AND GNI
URGE INVESTORS AND STOCKHOLDERS TO READ THESE MATERIALS CAREFULLY
AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT CATALYST, GNI, THE PROPOSED
TRANSACTIONS AND RELATED MATTERS. Investors and stockholders will
be able to obtain free copies of the proxy statement/prospectus and
other documents filed by Catalyst with the SEC (when they become
available) through the website maintained by the SEC at
www.sec.gov. In addition, investors and stockholders will be able
to obtain free copies of the proxy statement/prospectus and other
documents filed by Catalyst with the SEC by contacting Catalyst
Biosciences Inc. at investors@catbio.com. Investors and
stockholders are urged to read the proxy statement/prospectus and
the other relevant materials when they become available before
making any voting or investment decision with respect to the
proposed transactions.
Participants in the SolicitationCatalyst, GNI
and their respective directors and executive officers may be
considered participants in the solicitation of proxies in
connection with the proposed transactions. Information about
Catalyst’s directors and executive officers is included in
Catalyst’s most recent Annual Report on Form 10-K, including any
information incorporated therein by reference, as filed with the
SEC, and the proxy statement for Catalyst’s 2022 annual meeting of
stockholders. Additional information regarding the persons who may
be deemed participants in the solicitation of proxies will be
included in the proxy statement/prospectus relating to the proposed
transactions when it is filed with the SEC. These documents can be
obtained free of charge from the sources indicated above.
Investor Contact:
Catalyst Biosciences, Inc.Trisha Colton, Investor
Relationsinvestors@catbio.com
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