Drugmaker Madrigal going public in $80M+ merger deal
Combining with Synta, gaining cash and a stock listing
Fort Washington-based Madrigal is combining with publicly-traded Synta Pharmaceuticals Corp., of Lexington, Mass., in a deal that will pay Madrigal investors stock worth more than $80 million in Synta's depreciated shares.
"Madrigal will be the new company, and will still be in the Philadelphia area," its founder, Dr. Rebecca Taub, told me. "This is effectively a reverse merger." She expects to hire additional staff following the merger; both firms currently are "virtual companies," each with a dozen or fewer direct employees; they contract outside researchers, drug developers and consultants. What's in it for Madrigal: Synta's cash hoard (the company must have at least $28.5 million on hand for the sale to go through), and its stock-market listing.
Running the expanded Madrigal will be Dr. Paul A. Friedman, former CEO and Chairman of Incyte, the Wilmington drug company Friedman spun off from the DuPont Co., and a past director of Synta. Taub will be Chief Medical Officer and executive vice president for research at the combined company, which will focus on bringing Madrigal's most promising drug, MGL-3196, a treatment for hepatitis- and cholesterol-related liver problems, through the last clinical trials and onto the market.
Synta will pay off all Madrigal owners in exchange for around 253 million shares of Synta, which was trading at around 33 cents a share before the deal announcement, and rose above 40 cents in early trading. The exchange will leave Synta shareholders, including Vanguard and other big investment companies, with about 36% of the combined company's shares (corrected), and Madrigal owners with the majority. Synta shareholders still have to approve the deal, which Synta chairman Keith R. Gollust said in a statment presents the best value the board could find in an "extensive" search for profitable alternatives.
Synta's share price fell and it laid off staff after its lung-cancer treatment failed to advance past clincal trials last year.
A group of investors including Boston-based Bay City Capital and its founder, Dr. Fred Craves, along with SQN LLC, representing Drs. Friedman and Taub, "has committed to investing $9 million" in Madrigal before the merger takes effect. Madrigal will use the money to bring its liver drug closer to market.