Merger Will Provide an Important Revenue
Stream to Jaguar from Mytesi, an FDA Approved Napo Anti-Diarrheal
Launched October 2016 Offering a First-in-Class, Novel Mechanism of
Action Highly Conserved Across All Mammals
Napo Pharmaceuticals, Inc. (“Napo”), a human health company
developing and commercializing novel gastrointestinal prescription
products from plants used traditionally in rainforest areas, and
Jaguar Animal Health, Inc. (NASDAQ:JAGX) (“Jaguar”), an animal
health company focused on developing and commercializing
first-in-class gastrointestinal products for companion and
production animals, foals, and high value horses, announced today
that they have entered into a definitive merger agreement (the
“Agreement”) by unanimous approval by the boards of directors of
both companies.
Under the terms of the Agreement, Jaguar’s stockholders and
option and warrant holders calculated on a fully diluted basis as
of today (excluding approximately 365,437 shares issuable under
securities convertible at $5.00 or more per share) will hold
approximately 25% of the total outstanding fully diluted equity of
Jaguar. Conversely, the balance of the outstanding fully diluted
equity of Jaguar will be held by existing Napo creditors, RSU,
option and warrant holders together with new convertible debt and
equity investors upon consummation of the merger. As indicated on
February 9, 2017, the financial terms of the merger include an
approximate 3-to-1 Napo-to-Jaguar value ratio to calculate relative
ownership of the combined entity.
Holders of Napo common stock immediately prior to the merger
(the “Napo Stockholders”) will receive contingent rights to
receive, upon the satisfaction of certain conditions as described
more fully below, up to 21.5% of Jaguar’s shares calculated on a
fully-diluted basis (the “Escrow Shares”), which such shares will
be held in an escrow account upon the closing. Assuming a specified
cash return (a “Hurdle Amount”) is achieved from the subsequent
resale of certain shares of common stock issued by Jaguar to one of
Napo’s existing secured creditors in connection with the merger
(the “Tranche A Shares”), as described further below, the Napo
Holders will be entitled to receive their pro rata share of the
Escrow Shares following the release of the Escrow Shares from
escrow. In addition, if such Hurdle Amount is achieved before all
of such Tranche A Shares are sold, then 50% of the remaining unsold
Tranche A Shares will be distributed pro rata among the Napo
Stockholders and RSU holders. The proposed merger remains subject
to customary conditions to closing, including but not limited to
regulatory approvals inclusive of the effectiveness of the S-4
Registration Statement, debt limitations of Napo, absence of any
material adverse change in the business, results of operations or
condition (financial or otherwise) of either party and stockholder
approval from each party. As of January 31, 2017, Napo owned
approximately 19% of Jaguar’s outstanding shares of common
stock.
Napo’s proprietary, patented gastrointestinal compound,
crofelemer, is a first-in-class anti-secretory agent sustainably
harvested from the rainforest. The merger of the two companies will
provide Jaguar with an important prescription revenue stream from
sales of Mytesi™ (crofelemer 125mg delayed-release tablets), a Napo
prescription product formerly known as Fulyzaq. Mytesi™ is a human
drug approved by the U.S. FDA for the symptomatic relief of
noninfectious diarrhea in adults with HIV/AIDS on antiretroviral
therapy. Napo launched Mytesi™ in October 2016. Napo and Jaguar
estimate the potential U.S. market for Mytesi™ to be approximately
$100 million in gross annual sales. Napo is deploying a direct
sales effort in the field to promote Mytesi™ to HIV prescribers in
the second quarter of 2017, with both live representatives and
telesales. As a result, Napo and Jaguar forecast that Mytesi™ will
generate approximately $7.0 million in net sales in 2017, with the
greatest impact on prescription growth coincident with the
deployment of the sales force and a sampling program.
The product candidates in the pipelines of both companies target
a mechanism of action highly conserved across all mammals, and
benefit from the chronic safety profile that supports Mytesi™.
“Upon the consummation of the merger, as stated previously, we
believe Jaguar and Napo together will be poised to realize a number
of synergistic, value-adding benefits—most importantly a
prescription product revenue stream—and an expanded pipeline of
important follow-on indications for Mytesi™ upon which to forge
global partnerships,” commented Lisa Conte, Jaguar's President and
CEO and Napo’s interim CEO. “The board members of both Jaguar and
Napo are confident that this merger will enable both companies,
through a joint management team, to benefit from the economies of
scale of combined manufacturing for various human and animal
indications and enhance potential value creation.”
Napo holds global unencumbered rights to key indications for
Mytesi™, and is seeking geographical collaborations to develop and
commercialize Mytesi™ worldwide. Napo is continuing
development of Mytesi™ for other antidiarrheal indications, with
investigational studies completed in irritable bowel syndrome,
cholera, traveler’s diarrhea, and in pediatric patients, and two
planned investigator-initiated trials of the product in breast
cancer patients suffering from chemotherapy-induced diarrhea (CID).
Napo is also evaluating an orphan indication around congenital
diarrhea disease, such as congenital tufting enteropathy, an
intractable form of chronic diarrhea of infancy leading to
significant mortality. This rare disease has a higher incidence in
Middle Eastern families.1
Crofelemer is also the active pharmaceutical ingredient in
Canalevia™, Jaguar’s lead prescription drug product candidate for
companion animals, which is being evaluated for treatment of acute
diarrhea and CID in dogs and is the subject of a recently forged
collaboration with Elanco US Inc. Diarrhea is one of the most
common reasons for veterinary office visits for dogs, and according
to the American Veterinary Medical Association, there were
approximately 70 million dogs in the U.S. in 2012.
In conjunction with the proposed merger, Napo entered into a
settlement and discounted payoff agreement with one of its existing
secured creditors. As a discounted payoff and complete settlement
and satisfaction of certain loans previously made by such lenders
to Napo under a litigation financing agreement, Napo has agreed,
upon consummation of the merger, to (i) pay such creditor the
amount of $8 million in cash and (ii) pay in kind certain shares of
Jaguar voting and non-voting common stock, including certain shares
of Jaguar non-voting common stock comprising the Escrow Shares to
be held pursuant to an escrow agreement. Assuming the Hurdle Amount
is achieved from the subsequent resale of the Tranche A Shares
within a certain time period, all or a portion of the Escrow Shares
will be released from escrow to the Napo Stockholders.
Additional Description of the Proposed Merger
The proposed merger has been unanimously approved by the boards
of directors of both companies. Subject to the conditions to
closing outlined above, the proposed merger is expected to close
during the second quarter of 2017. The merger agreement contains
further details with respect to the proposed merger. If the merger
is consummated, Jaguar’s name will be changed to Jaguar Health,
Inc., and Napo will operate as a wholly-owned subsidiary of Jaguar,
focused on human health.
The directors and executive officers of Napo will resign from
their positions with Napo upon the closing of the proposed merger
and the combined company will be under the leadership of Jaguar’s
current executive management team. Following the closing of the
proposed merger, the board of directors of the combined company is
expected to consist of the seven existing members of the Jaguar
board.
Additionally, the financial terms of the merger and conditions
to closing include provisions that without Jaguar’s consent or
waiver (i) Napo’s secured convertible debt shall not exceed $11.3
million and its trade payables and certain other debt shall not
exceed $6.2 million, (ii) a third party will invest $3.0 million in
Jaguar for approximately 3.2 million shares of newly issued common
stock of Jaguar with the investment proceeds loaned to Napo
immediately prior to consummation of the merger and (iii) Napo’s
cash at closing shall be no less than $500,000. Jaguar and Napo
believe these debt and investment conditions will provide the
combined entity with a stronger capital structure.
Reed Smith LLP and Stifel Nicolaus & Company, Incorporated
are serving as Jaguar’s legal and financial advisors, respectively,
in connection with the transaction, and Boies Schiller Flexner is
serving as Napo’s legal advisor.
About Crofelemer
Napo’s proprietary, patented gastrointestinal compound,
crofelemer, is a first-in-class anti-secretory agent isolated and
purified from Croton lechleri, a medicinal plant sustainably
harvested under fair-trade working conditions in several South
American countries. Crofelemer (trade name Mytesi™) was approved in
2012 and is indicated for the symptomatic relief of noninfectious
diarrhea in adult patients with HIV/AIDS on antiretroviral therapy.
Crofelemer is in various stages of clinical development by Napo for
the following indications:
- Crofelemer for diarrhea predominant
irritable bowel syndrome (IBS-D), Phase 2,
- Crofelemer for acute infectious
diarrhea, including cholera, Phase 2,
- Crofelemer for pediatric diarrhea,
Phase 1, and
- Crofelemer for chemotherapy-induced
diarrhea, Phase 2.
About Mytesi™
Mytesi™ (crofelemer 125mg delayed-release tablets) is an
antidiarrheal indicated for the symptomatic relief of noninfectious
diarrhea in adult patients with HIV/AIDS on antiretroviral therapy
(ART). Mytesi™ is not indicated for the treatment of infectious
diarrhea. Rule out infectious etiologies of diarrhea before
starting Mytesi™. If infectious etiologies are not considered,
there is a risk that patients with infectious etiologies will not
receive the appropriate therapy and their disease may worsen. In
clinical studies, the most common adverse reactions occurring at a
rate greater than placebo were upper respiratory tract infection
(5.7%), bronchitis (3.9%), cough (3.5%), flatulence (3.1%), and
increased bilirubin (3.1%). Please see complete Prescribing
Information available at Mytesi.com
About Napo Pharmaceuticals, Inc.
San Francisco-based Napo Pharmaceuticals, Inc. focuses on the
development and commercialization of proprietary pharmaceuticals
for the global marketplace in collaboration with local
partners.
For more information, please visit www.napopharma.com.
About Jaguar Animal Health, Inc.
Jaguar Animal Health, Inc. is an animal health company focused
on developing and commercializing first-in-class gastrointestinal
products for companion and production animals, foals, and high
value horses. Canalevia™ is Jaguar’s lead prescription drug product
candidate, intended for the treatment of various forms of diarrhea
in dogs. Equilevia™ (formerly referred to as SB-300) is Jaguar’s
prescription drug product candidate for the treatment of
gastrointestinal ulcers in horses. Canalevia™ and Equilevia™
contain ingredients isolated and purified from the Croton lechleri
tree, which is sustainably harvested. Neonorm™ Calf and Neonorm™
Foal are the Company’s lead non-prescription products. Neonorm™ is
a standardized botanical extract derived from the Croton lechleri
tree. Canalevia™ and Neonorm™ are distinct products that act at the
same last step in a physiological pathway generally present in
mammals. Jaguar has nine active investigational new animal drug
applications, or INADs, filed with the FDA and intends to develop
species-specific formulations of Neonorm™ in six additional target
species, formulations of Equilevia™ in horses, and Canalevia™ for
cats and dogs.
For more information, please visit
www.jaguaranimalhealth.com.
Important Additional Information will be filed with the
SEC
This press release may be deemed solicitation material regarding
the intended merger between Jaguar and Napo. Jaguar currently
intends to file with the SEC a Registration Statement on Form S-4
that will include a proxy solicitation. Jaguar also plans to file
other relevant materials with the SEC. Stockholders of Jaguar and
Napo are urged to read the proxy solicitation/prospectus contained
in the Registration Statement when it becomes available and any
other relevant materials filed with the SEC because these materials
will contain important information about the potential merger. Once
available, these materials will be made available to the
stockholders of Jaguar and Napo at no expense to them. The
Registration Statement, proxy statement/prospectus and other
relevant materials, including any documents incorporated by
reference therein, once available, may be obtained free of charge
at the SEC’s website at www.sec.gov or from Jaguar at
www.jaguaranimalhealth.com or by emailing grussell@kcsa.com.
Jaguar and certain of its directors and executive officers may
be deemed to be participants in the solicitation of proxies in
connection with the potential merger. Information about the
executive officers and directors of Jaguar is set forth in Jaguar’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2016 as filed with the SEC on February 15, 2017 and Definitive
Proxy Statement for the 2016 Annual Meeting of Stockholders of
Jaguar filed with the SEC on April 29, 2016.
Notice as to Unregistered Securities
In connection with the intended merger, shares of common stock
and other securities of Jaguar have been and will be offered to
accredited institutional and individual investors pursuant to one
or more exemptions from registration under the Securities Act of
1933, as amended (the “Securities Act”). These securities have not
been registered under the Securities Act or the securities laws of
any other jurisdiction and may not be offered or sold in the U.S.
absent registration or an applicable exemption from registration
requirements.
Forward-Looking Statements
Certain statements in this press release constitute
“forward-looking statements” within the meaning of section 27A of
the Securities Act and section 21E of the Securities Exchange Act
of 1934, as amended. These include statements regarding the
structure, timing and completion of the proposed merger or Napo
debt settlement, expectations regarding the capitalization,
resources and ownership structure of the combined company, the
combined company’s ability to benefit from economies of scale,
access efficiencies, and enhance potential value creation, the
expectation that the merger conditions to closing will be satisfied
including the receipt by Jaguar of a $3.0 million third-party
investment, the belief that the combined entity will have a
stronger capital structure, Jaguar’s plan to develop formulations
of Equilevia™ in horses and species-specific formulations of
Neonorm™ in additional target species, and Jaguar’s plan to develop
formulations of Canalevia™ for cats and dogs. In some cases, you
can identify forward-looking statements by terms such as “may,”
“will,” “should,” “expect,” “plan,” “aim,” “anticipate,” “could,”
“intend,” “target,” “project,” “contemplate,” “believe,”
“estimate,” “forecast,” “predict,” “potential” or “continue” or the
negative of these terms or other similar expressions. The
forward-looking statements in this release are only predictions.
Jaguar has based these forward-looking statements largely on its
current expectations and projections about future events. These
forward-looking statements speak only as of the date of this
release and are subject to a number of risks, uncertainties and
assumptions, some of which cannot be predicted or quantified and
some of which are beyond Jaguar’s control. Except as required by
applicable law, Jaguar does not plan to publicly update or revise
any forward-looking statements contained herein, whether as a
result of any new information, future events, changed circumstances
or otherwise.
1W Tang et al. Novel Mutations in EPCAM Cause Congenital Tufting
Enteropathy. Journal of Clinical Gastroenterology. 2016 Nov 21.
Jaguar-JAGX
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version on businesswire.com: http://www.businesswire.com/news/home/20170331005344/en/
KCSA Strategic CommunicationsGarth Russell,
212-896-1250grussell@kcsa.com
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