Melinta Therapeutics to Acquire Tetraphase Pharmaceuticals

Tetraphase Pharmaceuticals, Inc. announced that it has entered into a definitive merger agreement with Melinta Therapeutics, Inc. (“Melinta”), pursuant to which Melinta would acquire Tetraphase, through a tender offer, for an aggregate of $39.0 million in cash, plus an additional $16.0 million in cash potentially payable under contingent value rights (“CVRs”) to be issued in the proposed acquisition. The Board of Directors of Tetraphase unanimously recommends that stockholders tender their shares in the Melinta tender offer once it is commenced.

Under the terms of the definitive merger agreement, the upfront cash consideration in the transaction will be as follows: (i) $1.79 per share of Tetraphase common stock (including common stock underlying restricted stock units, performance-based stock units and pre-funded warrants), (ii) $2.47 per share of Tetraphase common stock underlying the common stock warrants issued by the Company in 2019, and (iii) $2.47 per share of Tetraphase common stock underlying the common stock warrants issued by the Company in 2020. Tetraphase equityholders would also be entitled to receive, for each share of Tetraphase common stock, one non-tradeable CVR, the holders of which will be entitled to receive payments of up to an additional $16.0 million in the aggregate upon the achievement of net sales of XERAVA in the United States of at least (i) $20 million during 2021, (ii) $35 million during any year ending on or before December 31, 2024 and (iii) $55 million during any year ending on or before December 31, 2024.

“This transaction is critically important for XERAVA and for the patients who need this life-saving treatment, and it allows Tetraphase to move forward and focus on growth,” said Larry Edwards, President and Chief Executive Officer of Tetraphase. “We are excited to collaborate with Melinta, a company experienced in addressing unmet medical needs and providing antibiotics to patients in the healthcare setting. The combined commercial and scientific expertise and synergies with Melinta will enable us to more effectively bring new treatments to patients now and into the future.”

“We are excited to have reached agreement with Tetraphase, a company with a high-growth hospital product that complements Melinta’s antibiotic product offerings,” said Jennifer Sanfilippo, Interim Chief Executive Officer of Melinta. “This transaction increases our world-class infectious disease portfolio and we are eager to build upon our synergies and leverage our collective expertise and scale to offer patients and providers battling serious bacterial infections with an additional potentially life-saving treatment option.”

Under the terms of the definitive merger agreement, the tender offer is required to be commenced within seven business days. Any shares not tendered in the tender offer will be acquired in a second-step merger at the same cash price as paid in the tender offer. Closing of the transaction is subject to specified closing conditions, including that a majority of the Company’s shares of common stock (treating the shares underlying the Company’s RSUs and PRSUs as outstanding) are validly tendered and not validly withdrawn. Upon the closing of the transaction, Tetraphase will become a privately held company and shares of Tetraphase’s common stock will no longer be listed on any public market. Subject to certain limited exceptions, the CVRs will be non-transferable.

The transaction was unanimously approved by the Tetraphase board of directors and is expected to close early in the third quarter of 2020. Certain Tetraphase stockholders and warrant holders, including Armistice Capital, LLC, holding in the aggregate approximately 20% of Tetraphase’s outstanding voting power, have signed support agreements or exchange agreements under which such equityholders agreed, among other things, to tender their shares in the tender offer and to the treatment of the warrants described above.

On June 4, 2020, Tetraphase terminated its previously announced merger agreement with AcelRx Pharmaceuticals, Inc., dated as of March 16, 2020, as amended on May 27, 2020 and May 29, 2020, in order to enter into the definitive merger agreement with Melinta. In connection with the termination the definitive merger agreement with AcelRx, Tetraphase paid AcelRx a termination fee in the amount of $1,778,000.

Janney Montgomery Scott is acting as financial advisor to Tetraphase and has rendered a fairness opinion to Tetraphase’s board of directors in connection with the transaction. Wilmer Cutler Pickering Hale and Dorr LLP is acting as legal advisor to Tetraphase in connection with the transaction.