M&A

Under pressure from shareholders, BioCryst drops plan to merge with Idera

BioCryst is backpedaling hard from its proposed merger agreement with Idera following an outcry from shareholders this spring. The Durham, North Carlina-based company said Tuesday evening after the market closed that the merger is officially off.

The retraction comes a few months after BioCryst $BCRX announced it would join up with Research Triangle Park company Idera $IDRA. Together, they would rebrand and focus on their combined rare disease programs.

At the time, Idera’s CEO Vincent Milano said the merger would create “operational synergies and strengthen” their financial position.

But a major shareholder of BioCryst wasn’t convinced that the deal was good for all parties. RA Capital Management — which holds a 7% stake in BioCryst — dismissed the deal as “unnecessary and unjustified” in a letter delivered in April and vowed to vote against it. The letter followed a lengthy objection letter from Great Point Partners in February. While the Idera management team’s expertise meant they could offer good advice to BioCryst, the fund wrote, the proposed merger wouldn’t help BioCryst’s ongoing Phase III trial for its lead product candidate BCX-7353, meant to treat hereditary angioedema. Nor would the merger lessen future financing burdens, they said.

Plus, the investors weren’t big fans of Idera, it seems: “While we appreciate that both companies could potentially create value, we made the conscious choice to invest in BioCryst and not Idera because we consider BioCryst to be far more undervalued with far less associated risk.”

In their view, the merger was unfair to all BioCryst shareholders but one: the largest shareholder, who would see its 14% stake boosted to 16% in the new company (according to a recent SEC filing, Baker Bros owns slightly more than 14% of BioCryst).

Jon Stonehouse

At a special meeting of shareholders Tuesday, the merger was voted down.

“We respect and understand the views of our stockholders and are moving forward fully-focused on executing our business plan as a standalone company,” said Jon Stonehouse, BioCryst’s president and CEO. “The BioCryst board and management team remain confident in BCX-7353 and our ability to execute on our plan and advance our programs.”

BioCryst had to pay Idera $6 million for transaction-related expenses tied to the merger cancellation. Idera’s stock is down nearly 9% in after-hours trading.


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