Transave, a US-based healthcare company to treat lung infections, has agreed effectively a reverse-takeover of Nasdaq-listed biopharmaceutical company Insmed.
Although Transave’s corporate and venture capital backers will own a minority, 46.7%, stake in the combined business, its staff will take the senior jobs.
Donald Hayden, Transave’s former chairman, will take the same role at the combined entity, while Timothy Whitten will be executive president and Renu Gupta will be chief medical officer.
From Insmed, Kevin Tully, will be chief financial officer of the combined group, and Nicholas LaBella, will remain as its chief scientific officer.
Insmed will pay off Transave’s $7.8m debt, for 25.9 million shares of its common stock and 91.7 million shares of Insmed series B conditional convertible preferred stock with a stated value of $0.7114 per share and cash consideration of $561,280 – or about $90m in total.
Transave was backed by Fidelity Biosciences, a venture capital team that invests on behalf of mutual fund manager Fidelity, and peers Quaker BioVentures, Prospect Venture Partners, TVM Capital, Forbion Capital Partners, Bessemer Venture Partners and Easton Hunt Capital Partners.
Transave had borrowed $12.5m in a venture loan from CIT Healthcare and Compass Horizon Funding Company in October 2008, having raised $35m in equity in March that year from its venture consortium. Its series C round in 2006 raised $40m, with earlier rounds gathering an aggregate $17.75m since 2000, according to news provider VentureWire.
Instead of Transave’s $7.8m in debt, Insmed gained a net $123m from selling its biologics platform to US-based Merck & Co in March last year.
The merger will give the company $110m of cash in order to progress Transave’s lead product candidate, Arikace, to phase three trials and then commercial launch, if successful.
Investment bank RBC Capital Markets, advised Insmed, while Lazard Freres acted for Transave with legal counsel from Greenberg Traurig and Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, respectively.