Calliditas Therapeutics to acquire Genkyotex for €88 million

Calliditas Therapeutics is a specialty pharmaceutical company based in Stockholm, Sweden focused on identifying, developing and commercializing novel treatments in orphan indications, with an initial focus on renal and hepatic diseases with significant unmet medical needs.

Calliditas has agreed to acquire, through an off-market block trade, ordinary shares of Genkyotex representing 62.7% of the share capital from Genkyotex's largest shareholders and management team (the “Block Sellers”) for a cash consideration at closing of €2.80 per ordinary share representing a 32.3% maximum premium on Genkyotex’s volume weighted average price (VWAP) over the preceding 10 trading days immediately prior to this announcement. In addition, the Block Sellers will receive non-transferable contingent rights to additional cash payments on confirmation of regulatory approvals or marketing authorizations of setanaxib, as described below.

The off-market block trade is expected to close in October 2020 and remains subject to customary conditions precedent, including the clearance from the French Minister of Economy and Finance regarding foreign investments in France. Calliditas will finance the block trade from its cash reserves.

Calliditas is seeking to acquire all outstanding Genkyotex shares and, as soon as reasonably practicable after and subject to completion of the off-market block trade. Calliditas will file with the French Financial Market Authority (Autorité des Marchés Financiers – the “AMF”) a mandatory simplified cash tender offer for the remaining Genkyotex shares on the same terms as the block trade (€2.80 per share in cash and contingent rights as further described below). Total acquisition cost would thus amount to a maximum of approximately €87.9m including contingent rights subject to future regulatory approvals of setanaxib.

Additional milestone payments
Genkyotex’ lead product candidate, setanaxib (GKT831), a NOX1 and NOX4 inhibitor has shown evidence of anti-fibrotic activity in a Phase II clinical trial in primary biliary cholangitis (PBC, a fibrotic orphan disease). Based on its positive Phase II results, a phase 3 trial with setanaxib in PBC is being planned. Setanaxib is also being evaluated in an investigator-initiated Phase II clinical trial in Type 1 Diabetes and Kidney Disease (DKD).

The Block Sellers and the Genkyotex shareholders who tender their shares in the centralized tender offer will be eligible to additional cash payments (expressed in relation to 100% of the Genkyotex shares on a fully diluted basis on the day preceding the settlement and delivery of the tender offer) on confirmation of following regulatory approvals or marketing authorization of setanaxib no later than within ten years of the closing of the tender offer:

• €30m on approval of setanaxib for a first indication by the US Food and Drug Administration (FDA);
• €15m on approval of setanaxib for a first indication by the European Commission (EC); and
• €10m on approval of setanaxib by the FDA or the EC for either idiopathic pulmonary fibrosis (IPF) or type 1 diabetes (unless such milestone has already been paid out for such indication by the FDA or the EC as per above).