Pfizer partner Catalyst finds shortcut to Nasdaq in reverse merger with Targacept

Back in the summer of 2009, little Catalyst Biosciences struck a $521 million licensing deal with Wyeth on the biotech's lead program, a Factor VIIa to control bleeding. At the time, Wyeth R&D chief Mikael Dolsten called it an "excellent fit."

Fast-forward about 6 years and South San Francisco-based Catalyst, which has kept a low profile in recent years, has jumped back into the spotlight with a reverse merger with Targacept ($TRGT), the beleaguered North Carolina biotech that suffered a long string of embarrassing failures in the clinic. Wyeth, of course, merged with Pfizer ($PFE) and their drug, PF-05280602, has just completed a four-year Phase I study, according to

Catalyst CEO Nassim Usman

Catalyst CEO Nassim Usman tells FierceBiotech today that Pfizer's study was a success, though the data is being held back for a scientific meeting. And Pfizer and Catalyst are laying the groundwork for a followup study. The wrap-up and the launch of a recent partnership with Korea's ISU Abxis set the stage for the reverse, in which Targacept shareholders will get to split $20 million in cash and convertible notes worth $37 million. Targacept will be renamed Catalyst and the ticker symbol will be switched from $TRGT to $CBIO, with shares trading on Nasdaq. And Catalyst has plans to pursue some new work on hemophilia treatments.

"This was a way to go public in a one-step process," says Usman, a necessary maneuver as Catalyst didn't quite fit the profile for an IPO, with a mezzanine round and balance sheet that would have been required to make a go of it.

The reverse merger leaves Catalyst with $40 million in new capital, he adds, and the recent partnership with ISU Abxis will provide the funding to get their second product through a Phase I study as the biotech now builds on its 13-member staff with new hires for its clinical and development teams. The partnership makes good sense, says Usman, as ISU was drawn to the notion of partnering on one of Catalyst's "biobetters," taking a known therapeutic and focusing on an improved efficacy and safety profile.

Catalyst works with protease-based product candidates through "multiple future value inflection points." And in addition to their Factor VIIa program the biotech plans to complete a proof-of-concept study of CB 2679d, a Factor IX biobetter for hemophilia B patients, as well as further development of its novel Factor Xa variant.

Thus ends Targacept's ill-fated work on nicotinic receptor drugs for depression and Alzheimer's. AstraZeneca ($AZN) stayed through four Phase III failures for TC-5214. The Big Pharma finally pulled out last fall, leaving Targacept in search of some new role for itself. 

Reverse mergers have become rarer as biotechs prefer to raise cash through IPOs. But the public shells of failed biotechs are still worth something, as Regado ($RGDO) demonstrated recently as it became a vehicle for Tobira Therapeutics, which had seen its attempted IPO flop.

- here's the release