Specialty Pharma Companies Salix Pharmaceuticals and Cosmo Technologies Agree to Merge
The specialty pharmaceutical companies, Salix Pharmaceuticals, Ltd. and Cosmo Pharmaceuticals S.p.A. have signed a definitive merger agreement under which Salix will combine with Cosmo Technologies Limited (Cosmo Tech), a subsidiary of Cosmo. Under the terms of the agreement, Salix will become a wholly owned subsidiary of Irish domiciled Cosmo Tech, which will change its name to Salix Pharmaceuticals, plc and is expected to have its ordinary shares listed and traded on the NASDAQ Global Select Market.
Cosmo, the parent company of Cosmo Tech, is a publicly traded, specialty pharmaceutical company headquartered in Lainate, Italy. Cosmo's proprietary clinical development pipeline specifically addresses innovative treatments for the gastrointestinal tract, such as inflammatory bowel disease, colon infections, and diagnostics for the colon. Cosmo's proprietary MMX technology, designed to deliver active ingredients in a targeted manner in the colon, is at the core of the company's product pipeline and was developed from its expertise in formulating and manufacturing gastrointestinal drugs for at its GMP facilities in Lainate, Italy. Currently, Cosmo, through its appointed partners, has three products on the market and six in clinical development.
Salix Pharmaceuticals, Ltd., headquartered in Raleigh, North Carolina, develops and markets prescription pharmaceutical products and medical devices for the prevention and treatment of gastrointestinal diseases. Salix's strategy is to in-license or acquire late-stage or marketed proprietary therapeutic products, complete any required development and regulatory submission of these products, and commercialize them through Salix's 500-member specialty sales force.
Under the deal, Salix Pharmaceuticals plc will own Cosmo's US patents for rifamycin MMX, methylene blue MMX, and Uceris (budesonide) and have specified rights of negotiation with respect to all products Cosmo or its affiliates seek to develop or commercialize in the US. In addition, Salix Pharmaceuticals, will acquire Cosmo's patents for rifamycin MMX in Canada, specified Latin American countries, India, China, Japan, and the rest of the Far East, excluding Australia and New Zealand, and Cosmo's patents for Uceris in Japan.
Upon completion of the merger, shareholders of Salix are expected to own slightly less than 80% of the ordinary shares of Salix Pharmaceuticals, and Cosmo is expected to own slightly more than 20%. Shareholders of Salix will receive one ordinary share of Salix Pharmaceuticals, plc in exchange for each share of Salix Pharmaceuticals, Ltd common stock they own at closing. In connection with the merger, Cosmo will continue to supply Uceris to Salix and will also supply rifamycin MMX and methylene blue MMX. Additionally, Cosmo will have the right to designate one director to serve on the board of directors of Salix Pharmaceuticals plc and will be subject to certain standstill provisions for at least 10 years following the completion of the merger. The transaction, which will be taxable to Salix's shareholders, is expected to close in the fourth quarter of 2014.
In connection with the transaction, Salix will also receive certain rights and protections under a Right of Negotiation and Non-Compete Agreement, which will: (1) give Salix a right of first negotiation with respect to all future products Cosmo or its affiliates seek to market in the U.S. in the GI space, and (2) prohibit Cosmo from competing directly with the combined company in the GI space in the US These terms will apply as long as Cosmo is entitled to designate a director to serve on the board of directors of Salix Pharmaceuticals, plc. The current officers and members of the executive team of Salix will continue to serve in their respective capacities within Salix Pharmaceuticals, plc. Salix Pharmaceuticals, plc's board of directors will consist of the current directors of Salix plus Alessandro Della ChÃ¡, as Cosmo's initial designated board member.
The transaction, which has been unanimously approved by the boards of directors of both Salix and Cosmo, is subject to approval by Salix's stockholders and the satisfaction of certain closing conditions, including antitrust approval in the U.S. The transaction does not require the vote of Cosmo's shareholders.
Source: Salix Pharmaceuticals