Durham’s Tranzyme to move HQ in merger with California company

Apr. 24, 2013 @ 06:34 PM

Tranzyme Pharma, a Durham-based biopharmaceutical company that discontinued clinical trials for two drug candidates last year, is planning to merge with private drug developer Ocera Therapeutics Inc. in an all-stock deal.

The combined company, which will be headquartered in California, will focus on development of therapeutics for patients with later-stage liver disease. San Diego-based Ocera has a candidate in Phase 2 trials for treatment of orphan liver diseases.

Tranzyme Inc.’s board has been looking into the possible sale, merger or other business combination for the company following the discontinued development of both of its two clinical-stage drug candidates.

The company was developing a candidate called ulimorelin to speed gastro-intestinal recovery in patients after surgery. It planned to focus on another candidate, TZP-102, after it discontinued development of ulimorelin due to clinical trial results.

It later discontinued testing of TZP-102 in diabetic patients for the management of the stomach condition gastroparesis after the candidate didn’t meet its primary endpoint in two clinical trials.

The merger with Ocera is expected to close in the third quarter, subject to approval by the majority of Tranzyme shareholders and other closing conditions, according to a news release. The boards of both companies have voted to approve the deal.

When the merger is complete, Tranzyme shareholders will own about 27 percent of the company, and Ocera shareholders will own about 73 percent.

Tranzyme’s President and CEO Vipin Garg will leave the company, and Ocera’s president and CEO will lead the business.

Tranzyme’s chief medical officer, Dr. Franck Rousseau, will lead the company’s clinical and regulatory operations from Durham.

“We expect the merger will benefit from the substantial synergies of the combined management team's extensive experience in drug development, specifically in hepatology, which will help accelerate the transition and allow for efficient execution of the development plan,” Garg said in a statement in a news release.

With the merger, a group of investors committed $20 million in a private investment in public equity financing. Ocera’s largest preferred stock investors committed to participating.

In connection with the merger, Tranzyme plans to complete a reverse stock split that’s intended to raise its trading price above Nasdaq’s minimum to allow the company to remain listed following the transaction, according to the release.