Wanted at TorreyPines Therapeutics: Shareholders Who Vote

Xconomy San Diego — 

TorreyPines Therapeutics (NASDAQ: TPTX) has found a new solution to its cash woes: a merger with Novato, CA-based Raptor Pharmaceuticals. To pull off the deal, however, TorreyPines must overcome an old problem: getting its shareholders to vote.

Few biotechs come to an end as embarrassingly as San Diego’s TorreyPines Therapeutics. When its board of directors called for liquidation earlier this year, shareholders displayed their apathy by failing to vote in sufficient numbers for the resolution to pass by the required margin.

So the board gave shareholders more time to turn in their proxies – until July 16. But TorreyPines still couldn’t muster enough votes, so it extended the voting until July 30. It looked like TorreyPines couldn’t even succeed at failing.

Now things could change. Last week, just before the polls “closed” for the third time, the company’s board endorsed a new proposal. TorreyPines announced plans to merge with Raptor Pharmaceuticals (OTC BB: [[ticker:RPTP.OB]]) of Novato, CA., a three-year-old company working on drugs for rare diseases or those with few treatment options. The merged company will be called Raptor and will be headed by Raptor’s current management team. Raptor shareholders will own 95 percent of the merged company. To learn more about the deal, I left messages for executives and PR representatives of both companies yesterday, but no one got back to me.

TorreyPines brings little to the table. It already has sold off much of its pipeline and is down to three employees. But it has something Raptor lacks—a NASDAQ listing. The companies say that when the deal closes, they will initiate a reverse stock split to keep the merged company in compliance with a NASDAQ requirement that shares list for at least $1. That will take some doing. Raptor’s shares have been trading over-the-counter in the 40-cent range. TorreyPines shares have been hovering around 13 cents.

The merged company faces a tough road. In its filing for the quarter ending May 31, Raptor said it anticipated receiving enough cash from deals already in motion to fund operations through the first quarter of 2010. But first, the two companies must persuade TorreyPines shareholders to weigh in on merger deal. Given recent history, that’s far from a sure thing.