Alteon and HaptoGuard Announce Merger Agreement; Alteon Signs Agreements for Sale of Approximately $2.6 Million in Common Stock
19 April 2006 - 11:00PM
PR Newswire (US)
- Genentech Converts Portion of Alteon Preferred Stock, Transfers
Portion of Preferred Stock to HaptoGuard and Cancels Remaining
Preferred Stock, Acquires Right of First Negotiation for HaptoGuard
Cardiovascular Compound and Future Royalties on Alteon's Alagebrium
- PARSIPPANY, N.J., April 19 /PRNewswire-FirstCall/ -- Alteon Inc.
(AMEX:ALT) and HaptoGuard, Inc., a privately-held biotechnology
company, announced today the signing of a definitive merger
agreement whereby the two companies will combine operations in a
stock transaction valued at $8.8 million. The companies have
complementary product platforms in cardiovascular diseases,
diabetes and other inflammatory diseases, including two Phase 2
clinical-stage compounds focused on cardiovascular diseases in
diabetic patients. In addition, Alteon has signed definitive
agreements for an equity financing, which will result in proceeds
to Alteon of approximately $2.6 million. The new financing will be
used to help fund future clinical development efforts of the
combined companies. The merger of the two companies is structured
as an acquisition by Alteon. Under the terms of the merger
agreement, HaptoGuard shareholders will receive approximately 37.4
million shares of ALT common stock (approximately 31 percent of
total shares after completion of the merger.) As part of the
merger, a portion of existing shares of Alteon preferred stock held
by Genentech, Inc. (NYSE:DNA) will be converted into common stock,
among other transactions. The merger and stock conversion
transactions are subject to the approval of Alteon and HaptoGuard
shareholders and are expected to close in the third quarter of
2006. The PIPE financing includes new and existing institutional
investors, in which Alteon will sell approximately 10.3 million
Units, consisting of common stock and warrants, for net proceeds
after expenses and fees of approximately $2.5 million. Each Unit
consists of one share of Alteon common stock and one warrant to
purchase one share of Alteon common stock. The Units are being sold
at a price of $0.25 per Unit and the warrants are exercisable,
commencing 6 months from the date of issuance, for a period of 5
years at an exercise price of $0.30 per share. The shares of common
stock and warrants to be offered and sold in the financing have not
been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or state securities laws, and may not be offered
or sold in the United States without registration under or
exemption from the Securities Act, or any applicable securities
laws. The Company has agreed to file a registration statement with
the SEC for the resale of the shares of common stock and the shares
of common stock underlying the warrants sold in the PIPE
transaction. Rodman & Renshaw, LLC served as placement agent in
this transaction. The newly combined company will have two products
in Phase 2 clinical development: * BXT-51072, HaptoGuard's licensed
lead compound, is a glutathione peroxidase mimetic in development
for reduction of mortality in post- myocardial infarction patients
with diabetes. The compound has demonstrated the ability to reduce
infarct size by approximately 85 percent in a mouse model of heart
attack called ischemia reperfusion injury. Additionally, HaptoGuard
owns a license to a proprietary genetic biomarker that has shown
the potential to identify patients who are most responsive to the
HaptoGuard compound. * Alagebrium chloride (formally ALT-711),
Alteon's lead compound, is an Advanced Glycation End-product
Crosslink Breaker being developed for heart failure. Recent data,
presented from two Phase 2 clinical studies at the American Heart
Association meeting in November 2005, demonstrated the ability of
alagebrium to improve overall cardiac function, including measures
of diastolic and endothelial function. In these studies, alagebrium
also demonstrated the ability to significantly reduce left
ventricular mass. The compound has been tested in approximately
1000 patients, which represents a sizeable human safety database,
in a number of Phase 2 clinical trials. Key components of the
proposed transactions between Alteon, HaptoGuard and stockholder
Genentech are as follows: * Alteon will acquire all outstanding
equity of HaptoGuard. In exchange, HaptoGuard shareholders will
receive from Alteon $5.3 million in Alteon common stock, or
approximately 22.5 million shares. * Genentech will convert a
portion of its existing preferred Alteon stock to Alteon common
stock. A portion of Genentech's preferred stock, which when
converted to common stock equals approximately $3.5 million in
Alteon common stock, will be transferred to HaptoGuard
shareholders. * The remaining Alteon preferred stock held by
Genentech will be cancelled. * Genentech will receive milestone
payments and royalties on net sales of alagebrium, as well as a
right of first negotiation on BXT-51072. "We believe that this
transaction will truly benefit the shareholders of Alteon by
bringing to the Company a promising clinical-stage product,
additional proprietary technologies as well as additional
management and Board expertise," said Kenneth I. Moch, Chairman and
CEO of Alteon. "By combining our operations we will become a new
company with a promising product pipeline focused on cardiovascular
disease and diabetes," said Noah Berkowitz, M.D., Ph.D., President
and CEO of HaptoGuard. "We look forward to potentially initiating
new Phase 2 clinical trials for both alagebrium and BXT-51072."
Upon shareholder approval, Alteon's new management team will be as
follows: * Kenneth I. Moch, Chairman - Currently Chairman,
President & CEO of Alteon * Noah Berkowitz, M.D., Ph.D.,
President & CEO - Currently President & CEO of HaptoGuard *
Malcolm MacNab, M.D., Ph.D., Vice President of Clinical Development
- Currently Chief Medical Officer of HaptoGuard * Mary T. Phelan,
Director of Finance and Financial Reporting - Currently Director of
Finance and Financial Reporting of Alteon Additionally, the Board
of Directors of the combined company will be composed of four
current members of the Alteon Board of Directors and three current
members of the HaptoGuard Board: * Kenneth I. Moch, Chairman -
Director of Alteon since December 1998 * Noah Berkowitz, M.D.,
Ph.D. - Director of HaptoGuard since November 2003 * Marilyn G.
Breslow - Director of Alteon since June 1988 * Thomas A. Moore -
Director of Alteon since October 2001 * George M. Naimark -
Director of Alteon since June 1999 * Mary Tanner - Director of
HaptoGuard since January 2004 * Wayne P. Yetter - Director of
HaptoGuard since August 2004 (For additional information on the
management team and Board of Directors, please refer to the press
release section of the Alteon website, http://www.alteon.com/)
Assuming completion of the merger, there will be approximately
119.2 million outstanding shares of Alteon common stock. A
conference call will be held today at 5:00 p.m. ET to discuss this
definitive merger agreement. The dial-in telephone number for the
conference call will be 1-877-704-5381. International participants
may call +913-312-1295. Participants should call approximately 5-10
minutes before 5:00 p.m. In addition, the conference call will be
accessible through a webcast on the company website,
http://www.alteon.com/ in the Investor Relations section, and a
digital rebroadcast will be available through April 26, 2006 at
11:59 p.m. by dialing 1-888-203-1112, pass code 4603660 for
domestic callers and +719-457-0820, pass code 4603660 for
international callers. About Alteon Alteon is a product-based
biopharmaceutical company engaged in the development of small
molecule drugs to treat and prevent the inflammatory aspects of
cardiovascular disease and diabetes. The Company has identified
several promising product candidates that it believes represent
novel approaches to some of the largest pharmaceutical markets. The
Company's lead drug candidate, alagebrium chloride or alagebrium
(formerly ALT-711), is a product of its drug discovery and
development program. Alagebrium has demonstrated potential efficacy
in two clinical trials in heart failure, as well as in animal
models of heart failure and nephropathy, among others. It has been
tested in approximately 1,000 patients in a number of Phase 1 and
Phase 2 clinical trials. The Company's goal is to develop
alagebrium in diastolic heart failure. This disease represents a
rapidly growing market of unmet medical need, particularly common
among diabetic patients, and alagebrium has demonstrated relevant
clinical activity in two Phase 2 clinical trials. For more detailed
information about alagebrium, please visit the scientific
publications section of the Alteon website, http://www.alteon.com/.
About HaptoGuard HaptoGuard, Inc. is a biopharmaceutical company
developing and commercializing therapeutics for inflammatory
diseases, particularly those that are present as a consequence of
elevated oxidized lipids in the blood. The Company's portfolio
includes orally bioavailable, organoselenium mimics of glutathione
peroxidase that metabolize lipid peroxides. Its lead compound
BXT-51072 is in Phase 2 clinical trials. The Company also controls
rights to a diagnostic assay that identifies the large subset of
diabetic patients at highest risk for cardiovascular complications,
because of a defect in oxidized lipid metabolism that results in
increased cardiovascular inflammation. This news release shall not
constitute an offer to sell or the solicitation of an offer to buy,
nor shall there be any sale of these securities in any state in
which such offer, solicitation or sale would be unlawful prior to
the registration or qualification under the securities laws of any
state. Any statements contained in this press release that relate
to future plans, events or performance are forward-looking
statements that involve risks and uncertainties including, but not
limited to, that Alteon may not complete the acquisition of
HaptoGuard, and if completed, that the combined company's financial
condition may not be as expected, and those relating to Alteon's
ability to obtain sufficient financing to allow it to continue as a
going concern and to continue the development of alagebrium,
technology and product development (including the possibility that
early clinical trial results may not be predictive of results that
will be obtained in large-scale testing or that any clinical trials
will not demonstrate sufficient safety and efficacy to obtain
requisite approvals or will not result in marketable products),
regulatory approval processes, intellectual property rights and
litigation, competitive products, and other risks identified in
Alteon's filings with the Securities and Exchange Commission.
Further information on risks faced by Alteon are detailed under the
caption "Risk Factors" in Alteon's Annual Report on Form 10-K for
the year ended December 31, 2005 and in subsequent filings with the
SEC. These filings are available on a website maintained by the
Securities and Exchange Commission at http://www.sec.gov/. The
information contained in this press release is accurate as of the
date indicated. Actual results, events or performance may differ
materially. Alteon undertakes no obligation to publicly release the
result of any revision to these forward- looking statements that
may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Participants in the Solicitation In connection with the proposed
merger, Alteon Inc. and HaptoGuard, Inc. will be filing a joint
proxy statement with the Securities and Exchange Commission.
Investors and security holders of Alteon Inc. and HaptoGuard, Inc.
are advised to read the joint proxy statement regarding the
proposed merger referred to in this communication when it becomes
available because it will contain important information. Alteon
Inc. and HaptoGuard, Inc. expect to mail the joint proxy statement
about the proposed merger to their respective stockholders. In
addition to the proxy statement, Alteon Inc. files annual,
quarterly, and special reports, proxy statements and other
information with the Securities and Exchange Commission. Investors
and security holders may obtain a free copy of the proxy statement
and any other documents filed by Alteon Inc. at http://www.sec.gov/
and directly from Alteon Inc. Alteon Inc. and its officers and
directors may be deemed to be participants in the solicitation of
proxies from stockholders of Alteon Inc. with respect to the
proposed merger. Information regarding such officers and directors
is included in Alteon Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2005 and in its proxy statement for
the 2006 annual meeting, which will be filed with the Securities
and Exchange Commission. Once filed, these documents are available
free of charge at the Securities and Exchange Commission's website
at http://www.sec.gov/ and directly from Alteon Inc. HaptoGuard,
Inc. and its officers and directors may be deemed to be
participants in the solicitation of proxies from stockholders of
HaptoGuard, Inc. HaptoGuard, Inc. is a private company and does not
file annual or quarterly reports with the SEC. DATASOURCE: Alteon
Inc. CONTACT: Susan M. Pietropaolo of SMP Solutions, Inc.,
+1-201-818-5537, for Alteon Inc. Web site: http://www.alteon.com/
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