La Jolla Pharma Steps In With Better Offer, Wins Tetraphase Bidding War

Xconomy San Diego — 

It’s common for antibiotics developers to run into financial trouble these days but what’s unusual is seeing a bidding war erupt for one of them. The competition for Tetraphase Pharmaceuticals now has a new winner: La Jolla Pharmaceutical.

San Diego-based La Jolla (NASDAQ: LJPC) has pledged to pay Tetraphase shareholders $43 million in cash now plus another $16 million tied to sales goals for Tetraphase (NASDAQ: TTPH) antibiotic eravacycline (Xerava). That beats the $39 million in upfront cash and $16 million in milestone payments that antibiotics company Melinta Therapeutics had offered.

Melinta had offered Tetraphase the prospect of adding its product to a lineup of four commercialized antibiotics sold to hospitals. La Jolla is not an antibiotics developer. The company’s lone commercialized product, angiotensin II (Giapreza), is approved to increase blood pressure in patients with septic shock or other types of blood flow problems. The drug produced about $23 million in product sales last year. But like eravacycline, the La Jolla drug is a hospital-based treatment, and the company now gains a second product it can sell to distributors using the same sales force.

Watertown, MA-based Tetraphase won FDA approval for eravacycline in 2018 as a treatment for gut infections that have become complicated, meaning that they have spread. But that’s still short of what Tetraphase had hoped for the antibiotic. The drug previously failed a pivotal study testing it as a treatment for complicated urinary tract infections. With approval in only gut infections, the product has struggled commercially. In 2019, the drug accounted for $3.6 million in sales. With a cash crunch looming, Tetraphase last year started looking for opportunities for a sale or a merger of the company.

Redwood City, CA-based AcelRx Pharmaceuticals (NASDAQ: ACRX) was the first company to reach a merger deal with Tetraphase, an all-stock offer in March valued at $14.4 million upon the close of the transcaction, with another $12.5 million tied to milestones. Melinta and La Jolla followed with unsolicited bids, and Melinta’s revised offer earlier this month appeared to be the winner. But last Friday, La Jolla submitted another unsolicited bid, topping the Melinta offer, according to a Tetraphase securities filing. On Tuesday, the company terminated the merger agreement with Melinta. Per the terms of that deal, Tetraphase must pay Melinta a $1.15 million termination fee.

If a higher bid emerges and Tetraphase decides to end its agreement with La Jolla, it must pay a more than $2 million termination fee, according to the merger agreement.

Photo by Tetraphase Pharmaceuticals