Waving White Flag, Cerulean Merges With Dare Bio, Sells Cancer Drugs

Xconomy Boston — 

Cerulean Pharma may have been able to survive one brush with death, but the second has proven fatal. Today, the Waltham, MA, company announced plans to merge with a privately held women’s health company, Dare Bioscience, and sell off, for a pittance, the cancer drugs that were once its prized assets.

Under the terms of the merger, current Dare stockholders will own anywhere from 51 to 70 percent of the combined company, depending on how much cash each of the two entities have when the deal is finalized. Current Cerulean (NASDAQ: CERU) stockholders will own the rest. The deal is expected to close during the second quarter, pending approval from Cerulean’s stockholders.

The new company will operate under the Dare name and be run by Dare CEO Sabrina Martucci Johnson. Dare is based in San Diego, CA, and is developing an experimental, non-hormonal contraceptive ring called Ovaprene.

Separately, Cerulean has sold its core nanoparticle drug delivery technology, which came from CalTech and MIT, to Novartis for just $6 million. And it has sold its two lead cancer drug candidates—CRLX101 and CRLX301, which helped the company go public three years ago—to BlueLink Pharmaceuticals, a subsidiary of Ames, IA biotech NewLink Genetics (NASDAQ: NLNK), for just $1.5 million. With these deals, Cerulean will pay off the debt it owes Hercules Capital. About $12.4 million was outstanding on the loan as of Sept. 30, according to a regulatory filing on Monday.

Cerulean will also let go of another 11 workers, 58 percent of its remaining workforce. Shares of Cerulean, which had closed at just $2.09 Friday, fell 62 percent to $1.23 apiece in early trading on Monday.

The deals aren’t surprising for Cerulean, which has been in crisis mode ever since CRLX101 failed a Phase 2 trial in kidney cancer in August. That marked the second time Cerulean’s drug had failed a clinical trial. In 2013, before Cerulean went public, CRLX101 flunked a mid-stage study in lung cancer. As Xconomy profiled in 2015, Cerulean survived by the skin of its teeth, thanks in part to a new strategic plan and two bridge loans that kept the company afloat.

The financial lifeline and a strategic shift—to start combining CRLX101 with other agents, such as bevacizumab (Avastin)—gave Cerulean just enough leeway to pull off an IPO in April 2014. It raised $60 million in the offering, albeit on vastly lower terms than it had hoped for. Shares haven’t traded above the company’s $7 per share IPO price since March 2015.

Here’s more on Cerulean, which was formed in 2005 and largely funded by Polaris Partners and Venrock. Polaris was the firm’s largest institutional shareholder as of an April 2016 proxy filing, with a 17.2 percent stake. Venrock owned 11.1 percent as of the filing.