Erytech Pharma has branded an activist investor’s effort to obstruct a long-planned merger with Pherecydes as evidence that the group is trying to “destabilize” the biotech.
The merger, which was announced in February, had seemed like a win-win for both companies, ensuring Erytech’s expertise didn’t go to waste, while giving fellow French biotech Pherecydes access to more cash and a U.S. presence. A shareholder vote on the merger is scheduled for Erytech’s AGM on June 23.
But Akkadian Partners, which Erytech estimates owns around 5% of the biotech’s stock, has thrown a spanner in the works by initiating legal proceedings to secure a postponement of the vote.
To add insult to injury, Akkadian has also requested that a legal expert be appointed to review the terms of the merger.
In a defiant press release Monday morning, the biotech branded Akkadian’s maneuvering “part of their campaign to destabilize Erytech.”
“Erytech intends to obtain the dismissal of this legal action, which it considers unfounded, and thus enable its shareholders to vote on the merger with Pherecydes on June 23,” the biotech said in a release Monday morning.
Under the deal due to be voted on this month, the merger will see Pherecydes absorbed into publicly listed Erytech, with Pherecydes shareholders receiving 15 new Erytech shares for every four of their current shares.
In May, Akkadian announced that it had “conducted a detailed analysis of the merits of the proposed strategic alliance between Erytech and Pherecydes Pharma with particular focus on the strategic alignment of the expertise between the two companies, on their market competitiveness, their future prospects and the respective valuations chosen in this merger.”
Among a long list of objections, the investing group’s verdict was that the market value of Pherecydes used as the basis of the deal was “unjustified” and they argued that the merger “does not serve the interests of Erytech's shareholders.”
On the surface, the merger seemed like a good fit when it was announced. Erytech appeared to have run out of options after it was blindsided by a phase 3 fail in 2021 that forced a pivot from pancreatic cancer to leukemia.
The combined company was expected to maintain Pherecydes’ focus on extended phage therapies—natural bacteria-killing viruses—to combat antimicrobial resistance (AMR). The business was set to have around 41 million euros ($35.6 million) in the bank that could fund both current and new clinical programs into the third quarter of 2024.
Top of the combined company’s to-do list was due to be a European expansion of the ongoing PhagoDAIR phase 2 trial in patients with knee or hip prosthetic joint infections due to the bacteria Staphylococcus aureus. There were also plans to build an R&D strategy around Erytech’s expertise. The idea is to use the company’s red blood cell-derived vesicle and oncology know-how to develop phage and endolysins therapeutic approaches in anti-infective fields like AMR and beyond.