Melinta Therapeutics and Tetraphase Pharmaceuticals, two antibiotics companies that have struggled separately, will now see if they have better luck together.
Morristown, NJ-based Melinta has reached a deal to acquire Tetraphase (NASDAQ: TTPH) for $39 million in cash up front. Tetraphase shareholders could earn up to $16 million more if the Watertown, MA-based biotech’s sole commercialized product hits sales targets.
An antibiotic developed by Tetraphase, eravacycline (Xerava), was approved in 2018 as a treatment for adults with intra-abdominal infections in adults that have spread. Like the four antibiotics in the Melinta portfolio, it’s a hospital-based treatment. Despite having four commercialized products, however, Melinta has struggled to increase its revenue, a problem encountered by many antibiotics makers.
Last year, Melinta filed for bankruptcy protection. No bidders emerged for its assets, which were acquired by creditor Deerfield Management. That deal made Melinta a private company backed by the financial muscle of Deerfield. When the acquisition closed this April, Deerfield said it expected Melinta would tack on commcialized products and clinical-stage compounds intended to serve hospitalized patients.
Tetraphase sells eravacycline to distributors, who make it available to hospitals and treatment centers. Nearly a year ago, the company slashed its headcount by 20 percent, a restructuring that eliminated R&D work in favor of a focus on selling the antibiotic. The drug generated $3.6 million in sales, according to the company’s 2019 annual report. The filing also indicated that Tetraphase was exploring a sale or merger due to the firm’s limited cash resources.
In March, Tetraphase agreed to be acquired by Redwood City, CA-based AcelRx (NASDAQ: ACRX). But the Massachusetts company became the center of a bidding war, as San Diego-based La Jolla Pharmaceutical (NASDAQ: LJPC) and Melinta submitted unsolicited bids. Melinta emerged as the winner when the other companies declined to match or beat its offer.
In addition to the cash payment, Tetraphase shareholders will receive contingent value rights, which makes them eligible for further payments pegged to sales of the antibiotic. According to the agreement, those payments break down to $2.5 million if eravacycline achieves $2.5 million in US sales in 2021; $4.5 million more if sales reach at least $35 million in any year by 2024; and an additional $9 million if sales exceed $55 million any year by 2024.
Photo by Tetraphase