Tobira eyes Wall Street with Regado merger, targeting NASH

Tobira Therapeutics, moving on from a failed IPO of its own, is plotting a merger with the struggling Regado Biosciences ($RGDO), a deal that would get it on the public market as it develops a treatment for liver disease.

The plan is to merge with a subsidiary of Regado, reduced to penny-stock territory after a series of clinical setbacks, in an all-stock deal, renaming the company Tobira. Under the agreement, Regado's shareholders will own a 32% stake in the combined outfit, with Tobira's investors picking up the rest. And Tobira's investor syndicate--which includes Novo Ventures, Frazier Healthcare and Canaan Partners--has signed on to invest up to $22 million in the combined company.

All of this is in service of Tobira's top prospect, cenicriviroc, a treatment for non-alcoholic steatohepatitis (NASH) now in Phase II. NASH is a liver-scarring disease that affects as many as 20% of people in the developed world but has no approved therapies, and its commercial prospects have spurred a frenzy of activity in R&D around the industry.

Last year, Tobira planned to raise $69 million in an IPO but called off the effort in August when the market turned sour. And Regado, for its part, ran into serious safety issues with its Phase III anticoagulant, tanking its share price just months after the biotech pulled off a downsized IPO.

Now the two companies believe their brightest future lies ahead, inking a deal that allows Tobira to back its way onto the Nasdaq and the remnants of Regado to find some value in a new disease area.

"We expect Tobira to be the next breakout company in NASH based on the best-in-class profile and potential of their lead drug CVC," Regado CEO Michael Metzger said in a statement. "The merged company will derive a significant advantage from the extensive clinical, commercial and transactional expertise of the combined board and management teams."

The deal, expected to close in the second quarter, will allow Tobira to fund its ongoing Phase IIb study on cenicriviroc in NASH, and the company expects to present top-line data next year for its lead candidate.

Elsewhere in NASH, Gilead Sciences ($GILD) splashed into the field this month with a $470 million deal with Phenex Pharmaceuticals that gives it a Phase II treatment for the disease. Leading the way is Intercept Pharmaceuticals ($ICPT), whose NASH-treating obeticholic acid has charted stellar efficacy and some troubling side effects in its ongoing Phase II program. Shire ($SHPG) is also toiling in the field after buying Lumena Pharmaceuticals for up to $260 million and getting its hands on a Phase I NASH treatment, trailed by La Jolla Pharmaceuticals ($LJPC), Raptor Pharmaceuticals ($RPTP) and others.

- read the statement

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