/PRNewswire-FirstCall/ -- Corgentech Inc. (Nasdaq: CGTK) and AlgoRx
Pharmaceuticals, Inc. today announced that they have entered into a definitive
merger agreement to create a late-stage company with a deep pipeline of
clinical products that will be largely focused on developing and
commercializing products for pain management and inflammation.
The combined company will have four products in its pipeline. AlgoRx's
portfolio of pain management drug candidates includes ALGRX 3268, which is in
Phase 3 clinical trials, ALGRX 4975, which is in Phase 2 clinical trials, and
ALGRX 1207, which is soon to enter the clinic. Corgentech continues to
develop NF-kappaB Decoy, which is in two Phase 1/2 trials for the treatment of
Under the terms of the agreement, Corgentech will issue, and AlgoRx
stockholders will receive in a tax-free exchange, shares of Corgentech common
stock such that AlgoRx stockholders will own approximately 62 percent of the
combined company on a pro forma basis and Corgentech stockholders will own
approximately 38 percent. The agreement and plan of merger has been approved
by both boards of directors and will need to be approved by the companies'
"We believe that the combination of Corgentech and AlgoRx will add
significant value for our stockholders by dramatically bolstering our product
pipeline with late-stage product candidates that bring us closer to
commercialization," stated John P. McLaughlin, chief executive officer of
Corgentech. "We are also optimistic about the potential of our NF-kappaB
Decoy product candidate for eczema and believe that the combination of the two
companies offers diversification for stockholders of both companies."
"By combining the financial resources of the two companies and the
expertise of the two management teams, which include significant experience in
regulatory affairs, clinical trials management and product marketing and
commercialization, we believe that our late-stage products in pain management
will be more expeditiously commercialized," stated Ronald M. Burch, M.D.,
Ph.D., chief executive officer of AlgoRx. "This merger may enable us to file
a New Drug Application (NDA) for our lead product candidate, ALGRX 3268 for
topical local anesthesia in 2006."
With a seasoned management team and $124 million in cash, cash equivalents
and short-term investments in the combined companies at the end of the second
quarter, the company would also have a deep pipeline of four product
candidates after the approval of the merger:
-- ALGRX 3268 represents a near-term product opportunity, which is
expected to complete Phase 3 trials in 2005 and file an NDA during
2006. The product is for topical local anesthesia and is aimed at
reducing the pain associated with needlesticks for venipunctures
(blood draws) and intravenous line placements. ALGRX 3268 is based
on a needleless injection system called Powderject(R), which
accelerates lidocaine particles into the epidermis in order to
anesthetize nerves. The product, which may be especially useful in
pediatric populations and emergency room settings, is easy to use and
anesthetizes quickly -- generally in one minute -- offering an
important advantage over currently available therapies.
-- ALGRX 4975, a VR1 agonist, is being developed for site-specific,
severe or intractable pain. These types of pain are poorly treated
by existing drugs such as opioids, and use of ALGRX 4975 could result
in the reduction in opioid side effects as well as shorter
rehabilitation and shorter hospital stay. Phase 2 clinical trials
are currently underway for post-surgical pain following a variety of
surgeries including bunionectomies, total knee replacements and
various abdominal surgeries. Additional Phase 2 trials are underway
for Morton's neuroma and tendonitis. Its advantages over currently
available therapies are that it is non-opioid based and it is
long-acting, providing pain relief to many patients for weeks or
months after a single treatment. ALGRX 4975 is a C-neuron
anesthetic, based on capsaicin. The product is administered locally
at the site of pain and selectively reduces pain in nerve endings.
-- NF-kappaB Decoy is currently being evaluated in Phase 1/2 clinical
trials for the inflammatory skin condition, eczema. Two multi-center
trials are currently underway -- one in the United States and the
other in Australia and Switzerland -- evaluating the company's
NF-kappaB Decoy across nearly 200 patients. Clinical data are
expected to be presented in the first quarter of 2006. NF-kappaB
Decoy is a highly selective and potent inhibitor of the NF-kappaB
transcription factor, which is implicated in inflammatory diseases
such as eczema, asthma and inflammatory bowel disease.
-- ALGRX 1207 is a new class of anesthetic that is undergoing
preclinical development as a topical local anesthetic. This product
is expected to enter clinical trials for cutaneous neuropathic pain,
such as chemotherapy-induced neuropathy, in 2006. This product
candidate acts by binding to the fast sodium channel and may have a
faster onset and longer duration of action as well as improved
penetration when compared with products currently on the market.
Leadership and Organizational Structure
Pending stockholder approval of the merger, the board of directors of the
combined company will be comprised of Richard B. Brewer, Dr. Charles M. Cohen,
Thomas J. Colligan, Carter H. Eckert, Dr. Rodney A. Ferguson, John P.
McLaughlin, Dr. Arnold L. Oronsky and Dr. Michael F. Powell. The management
team of the combined company will be led by John McLaughlin as chief executive
officer. Dr. Ronald Burch will serve as vice president of development, and
Richard P. Powers will serve as chief financial officer. Both the Corgentech
and AlgoRx facilities are expected to be retained with Corgentech's South San
Francisco facility becoming the company's headquarters. Corgentech and AlgoRx
currently have approximately 95 total employees, and the combined management
team will work to integrate the two companies as well as to identify synergies
and redundancies across the combined organization.
Election of James Huang to President
James Z. Huang, Corgentech's senior vice president of business development
and commercial operations, has been elected to the position of president. Mr.
Huang has been with Corgentech for three years and will have responsibility
for commercial and other operations within the company. In addition, he will
coordinate integration relating to the merger announced today. Mr. Huang has
successfully negotiated multiple collaborations for the company, two of which
include this merger agreement and the company's former worldwide partnership
with Bristol-Myers Squibb. He was with Tularik prior to Corgentech and prior
to that held various positions with Alza Corporation, Bristol-Myers Squibb and
SmithKline Beecham PLC (now GlaxoSmithKline) where he launched several
products including the billion dollar product, Avandia.
The companies expect to file an S-4 and related joint proxy statement with
the Securities and Exchange Commission and any other necessary government
filings in the coming weeks. Depending upon the review process of the
agencies, the companies would expect the stockholder vote to occur in late
December or early January. Lazard Freres & Co. LLC served as financial
advisor and Heller Ehrman LLP as legal advisor to AlgoRx. Houlihan Lokey
Howard & Zukin provided a fairness opinion to the M&A Committee of the AlgoRx
board of directors. Piper Jaffray & Co. acted as financial advisor, and
Cooley Godward LLP served as legal advisor to Corgentech.
As a result of this deal, Corgentech is withdrawing its 2005 financial
guidance provided earlier this year and plans to offer updated financial
guidance after the deal closes.
AlgoRx is a private, emerging pharmaceutical company focused on developing
and commercializing a diversified portfolio of pharmaceutical product
candidates to address pain, a large and under-served market. AlgoRx is based
in Secaucus, NJ. For more information on the company and its technologies,
please visit www.algorx.com.
Corgentech is a biopharmaceutical company focused on the development and
commercialization of novel therapeutics for significant unmet medical needs.
Corgentech is based in South San Francisco, CA. For more information on the
company and its technologies, please visit www.corgentech.com.
Webcast Conference Call Details
Corgentech will conduct a webcast conference call with the investment
community at 8:30 a.m. EDT / 5:30 a.m. PDT, today, September 26, 2005 to
discuss the proposed merger. The call will be available via live audio
broadcast over the Internet on the Corgentech website at www.corgentech.com.
For those unable to participate via the Internet, a 24-hour replay will be
available for seven days after the call by calling 800-642-1687 (international
dial: 706-645-9291) and giving the following pass code: 9837942.
Forward Looking Statements
This press release includes "forward-looking statements" within the
meaning of the safe harbor provisions of the United States Private Securities
Litigation Reform Act of 1995. Words such as "expect," "estimate," "project,"
"budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could,"
"should," "believes," "predicts," "potential," "continue," and similar
expressions are intended to identify such forward-looking statements. Forward-
looking statements in this press release include, without limitation,
forecasts of product development, FDA filings, benefits of the proposed
merger, and other matters that involve known and unknown risks, uncertainties
and other factors that may cause actual results, levels of activity,
performance or achievements to differ materially from results expressed or
implied by this press release. Such risk factors include, among others:
difficulties encountered in integrating merged businesses; uncertainties as to
the timing of the merger; approval of the transaction by the stockholders of
the companies; the satisfaction of closing conditions to the transaction,
including the receipt of regulatory approvals; whether certain market segments
grow as anticipated; the competitive environment in the biotechnology
industry; and whether the companies can successfully develop new products and
the degree to which these gain market acceptance. Actual results may differ
materially from those contained in the forward-looking statements in this
press release. Additional information concerning these and other risk factors
is contained in Corgentech's Form 10-K/A for the year ended December 31, 2004
and most recently filed Form10-Q.
Corgentech and AlgoRx undertake no obligation and do not intend to update
these forward-looking statements to reflect events or circumstances occurring
after this press release. You are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
press release. All forward-looking statements are qualified in their entirety
by this cautionary statement.
Additional Information and Where to Find It
Corgentech Inc. intends to file a registration statement on Form S-4, and
Corgentech and AlgoRx Pharmaceuticals, Inc. intend to file a related joint
proxy statement/prospectus, in connection with the merger transaction
involving Corgentech and AlgoRx. Investors and security holders are urged to
read the registration statement on Form S-4 and the related joint
proxy/prospectus when they become available because they will contain
important information about the merger transaction. Investors and security
holders may obtain free copies of these documents (when they are available)
and other documents filed with the SEC at the SEC's web site at www.sec.gov.
In addition, investors and security holders may obtain free copies of the
documents filed with the SEC by contacting Corgentech Investor Relations at
the email address: email@example.com.
Corgentech, AlgoRx and their directors and executive officers may be
deemed to be participants in the solicitation of proxies from the stockholders
of Corgentech and AlgoRx in connection with the merger transaction.
Information regarding the special interests of these directors and executive
officers in the merger transaction will be included in the joint proxy
statement/prospectus of AlgoRx and Corgentech described above. Additional
information regarding the directors and executive officers of Corgentech is
also included in Corgentech's proxy statement for its 2005 Annual Meeting of
Stockholders, which was filed with the SEC on April 27, 2005. This document
is available free of charge at the SEC's web site at www.sec.gov and from
Investor Relations at Corgentech as described above.
SOURCE Corgentech Inc.