PLYMOUTH
MEETING, Pa. and DEVON,
Pa., Aug. 14, 2023 /PRNewswire/ -- Harmony
Biosciences Holdings, Inc. ("Harmony") (Nasdaq: HRMY), a
pharmaceutical company dedicated to developing and commercializing
innovative therapies for patients with rare neurological diseases,
today announced a definitive agreement to acquire Zynerba
Pharmaceuticals, Inc. ("Zynerba") (Nasdaq: ZYNE), a leader in
innovative pharmaceutically-produced transdermal cannabinoid
therapies for orphan neuropsychiatric disorders, including Fragile
X syndrome (FXS).
Under the terms of the definitive agreement, Harmony will
commence a tender offer to acquire all outstanding shares of
Zynerba for a purchase price of $1.1059 per share in cash, or $60 million in the aggregate, plus one
non-tradeable contingent value right (CVR) per share, representing
the right to receive potential additional payments of up to
$140 million in the aggregate,
subject to the achievement of certain clinical, regulatory and
sales milestones, as described in more detail below.
"This is an important step in Harmony's strategy to build a
diversified portfolio of innovative assets to address unmet medical
needs and drive our long-term growth. This acquisition affords us
the opportunity to advance the development and delivery of a
potentially transformative treatment for the symptoms of Fragile X
syndrome and other rare neuropsychiatric disorders," said
Jeffrey M. Dayno, M.D., President and Chief Executive Officer at
Harmony Biosciences. "In addition to the strength of our core
business in narcolepsy and our current life cycle management
programs, led by idiopathic hypersomnia, we are excited to continue
to diversify our portfolio beyond sleep/wake by adding Zynerba's
clinical development programs to our pipeline. The team at Zynerba
has been dedicated to these programs and we are confident that our
combined efforts could have a profound impact on individuals living
with rare neuropsychiatric disorders and their families."
"Harmony's development and commercial expertise, technologies,
people and focus on rare neurological diseases are an excellent
strategic fit with Zynerba," said Armando
Anido, Chairman and Chief Executive Officer of Zynerba. "I
am very proud of Zynerba's accomplishments with Zygel™ to date.
With Harmony's scale, resources and proven commercial excellence,
they are well positioned to potentially bring to market the first
pharmaceutical product indicated for the treatment of behavioral
symptoms of Fragile X syndrome and to maximize the value of
Zygel."
Zynerba's lead asset, Zygel, is the first and only
pharmaceutically manufactured, synthetic cannabidiol, a
non-euphoric cannabinoid, formulated as a patent-protected
permeation-enhanced gel for transdermal delivery through the skin
and into the circulatory system. Zygel is manufactured through a
synthetic process in a cGMP facility and is not extracted from the
cannabis plant. Therefore, it is devoid of THC, which is what
causes the euphoric effect of cannabis, and has the potential to be
a nonscheduled product if approved. Zygel is currently being
evaluated in a pivotal Phase 3 clinical trial for patients living
with FXS, known as the RECONNECT Trial. Additionally, Zygel showed
positive signals in an open label Phase 2 trial in patients living
with 22q11.2 deletion syndrome (22q), called the INSPIRE Trial.
Cannabidiol, the active ingredient in Zygel, has been granted
orphan drug designation by the United States Food and Drug
Administration (FDA) and the European Medicines Agency (EMA) for
the treatment of FXS and for the treatment of 22q. Additionally,
Zygel has received FDA Fast Track designation for the treatment of
behavioral symptoms in patients with FXS.
FXS is a rare genetic disorder that affects approximately 80,000
people in the U.S., causing intellectual disabilities and
behavioral challenges. Despite considerable progress in medical
science, there remains a significant unmet medical need in treating
patients living with this debilitating disorder. There are
currently no FDA approved therapies to treat FXS.
It is estimated that there are approximately 80,000 people
living with 22q in the U.S. Patients with 22q are affected by
symptoms related to many organ systems including neuropsychiatric
symptoms such as anxiety and behavioral difficulties. There are
currently no FDA-approved therapies to treat 22q.
Transaction Details
Under the terms of the definitive
agreement, which was unanimously approved by the boards of
directors of Harmony and Zynerba, Harmony will commence a tender
offer to acquire all outstanding shares of Zynerba for a purchase
price of $1.1059 in cash per share,
or $60 million in the aggregate
payable at closing of the transaction plus one non-tradeable CVR
representing the right to receive potential additional payments of
up to $140 million or approximately
$2.5444 in additional cash per share,
for a total potential consideration of up to $200 million in cash. The CVR is payable subject
to certain terms and conditions upon achievement of the following
milestones:
Clinical Milestones
- Completion of FXS Phase 3 clinical trial: $15 million in the aggregate or approximately
$0.2747 per share
- Positive data readout from FXS Phase 3 clinical trial:
$30 million in the
aggregate or approximately $0.5494
per share if completed on or before December
31, 2024
$20 million in the aggregate or
approximately $0.3663 per share if
completed on or before June 30,
2025
$10 million in the aggregate or
approximately $0.1831 per share if
completed after June 30, 2025
Regulatory Milestones
- FDA approval in FXS: $35 million
in the aggregate or approximately $0.6389 per share
- FDA approval in Second Indication: $15
million in the aggregate or approximately $0.2707 per share
Net Sales Milestones
- Achievement of $250 million in
aggregate Net Sales: $15 million in
the aggregate or approximately $0.2702 per share
- Achievement of $500 million in
aggregate Net Sales: $30 million in
the aggregate or approximately $0.5405 per share
Each CVR is subject to the achievement of the milestone
conditions described above, and there can be no assurance whether
any such milestones will be achieved or when any payments will be
made with respect to any CVR.
Harmony will fund the transaction from its existing cash on
hand. As of June 30, 2023, Harmony
had cash, cash equivalents and investment securities of
$429.6 million. Zynerba's existing
cash and cash equivalent balance was approximately $36.0 million as of June
30, 2023.
The transaction is expected to close by the fourth quarter of
2023, subject to customary closing conditions, including that the
holders of at least a majority of the outstanding shares of
Zynerba's common stock tender such shares to Harmony in connection
with the tender offer. Following the successful closing of the
tender offer, Harmony will acquire any shares of Zynerba it does
not already own through a second-step merger at the same per share
offer price as paid in the tender offer. Zynerba's board of
directors unanimously recommends that Zynerba's stockholders tender
their shares in the tender offer.
Advisors
For Harmony, Hogan Lovells US LLP is acting
as legal counsel. For Zynerba, MTS Health Partners, L.P. is acting
as financial advisor and Goodwin Procter LLP is acting as legal
counsel.
Conference Call Today at 8:30 AM
ET
At 8:30 AM ET
Harmony will host a live webcast to review this proposed
acquisition. The live and replay webcast of the call will be
available on the investor relations page of our website at
https://ir.harmonybiosciences.com/. To participate in the live call
by phone, dial (800) 245-3047 (domestic) or +1 (203) 518-9765
(international), and reference passcode HRMY0814.
About Harmony Biosciences
At Harmony Biosciences, we
specialize in developing and delivering treatments for rare
neurological diseases that others often overlook. We believe that
where empathy and innovation meet, a better life can begin for
people living with neurological diseases. Established by Paragon
Biosciences, LLC, in 2017 and headquartered in Plymouth Meeting, PA, our team of experts from
a wide variety of disciplines and experiences is driven by our
shared conviction that innovative science translates into
therapeutic possibilities for our patients, who are at the heart of
everything we do. For more information, please visit
www.harmonybiosciences.com.
About Zynerba Pharmaceuticals, Inc.
Zynerba
Pharmaceuticals is the leader in innovative pharmaceutically
produced, synthetic transdermal cannabidiol therapies for orphan
neuropsychiatric disorders. We are committed to improving the lives
of patients and their families living with severe, chronic health
conditions including Fragile X syndrome and 22q11.2 deletion
syndrome. Learn more at www.zynerba.com.
About Fragile X Syndrome
Fragile X syndrome (FXS) is a
rare genetic disorder that is the leading known cause of both
inherited intellectual disability and autism spectrum disorder,
affecting 1 in 3,600 to 4,000 males and 1 in 4,000 to 6,000
females. The disorder negatively affects synaptic function,
plasticity and neuronal connections, and results in a spectrum of
intellectual disabilities and behavioral symptoms, such as social
avoidance and irritability. There are approximately 80,000 people
in the U.S. and approximately 121,000 people in the European
Union and UK living with FXS. There is a significant unmet medical
need in patients living with FXS as there are currently no FDA
approved treatments for this disorder.
FXS is caused by a mutation in FMR1, a gene which modulates
a number of systems, including the endocannabinoid system, and most
critically, codes for a protein called FMRP.
The FMR1 mutation manifests as multiple repeats of a DNA
segment, known as the CGG triplet repeat, resulting in deficiency
or lack of FMRP. FMRP helps regulate the production of other
proteins and plays a role in the development of synapses, which are
critical for relaying nerve impulses, and in regulating synaptic
plasticity. In people with full mutation of
the FMR1 gene, the CGG segment is repeated more than 200
times, and in most cases causes the gene to not function.
Methylation of the FMR1 gene also plays a role in
determining functionality of the gene. In approximately 60% of
patients with FXS, who have complete methylation of
the FMR1 gene, no FMRP is produced, resulting in
dysregulation of the systems modulated by FMRP.
About 22q11.2 Deletion Syndrome
22q11.2 deletion
syndrome (22q) is a disorder caused by a small missing piece of the
22nd chromosome. The deletion occurs near the middle of
the chromosome at a location designated q11.2. It is considered a
mid-line condition, with physical symptoms including characteristic
palate abnormalities, heart defects, immune dysfunction, and
esophageal / GI issues, as well as debilitating neuropsychiatric
and behavioral symptoms, including anxiety, social withdrawal,
ADHD, cognitive impairment and autism spectrum disorder. It is
estimated that 22q occurs in one in 4,000 live births, suggesting
that there are approximately 80,000 people living with 22q in the
U.S. and 129,000 in the European Union and the UK. Patients with
22q deletion syndrome are managed by multidisciplinary care
providers, and there are currently no FDA approved treatments for
this disorder.
Forward Looking Statements
This press release
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements
contained in this press release that do not relate to matters of
historical fact should be considered forward-looking statements.
These forward-looking statements, including as they relate to
Harmony and Zynerba, the anticipated occurrence, manner and timing
of the proposed transaction, the future development of their
technologies and product candidates, including the development of
and market opportunities for Zynerba's technology and product
candidates, the future value (if any) of the contingent value
rights, Harmony's strategy, and the anticipated synergies and
benefits from the proposed transaction, are neither promises nor
guarantees, but involve known and unknown risks, uncertainties and
other important factors that may cause actual results, performance
or achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Potential risks, uncertainties and
other factors to be considered include, among others, that Zynerba
stockholders may not tender a sufficient number of shares in the
tender offer; the length of time necessary to consummate the
proposed transaction may be longer than anticipated, or it may not
be consummated at all; problems may arise in successfully
integrating the business and technologies of Harmony and Zynerba,
and Harmony may not realize the expected benefits of the proposed
transaction; the proposed transaction may involve unexpected costs;
the businesses may suffer as a result of uncertainty surrounding
the proposed transaction, including difficulties in maintaining
relationships with third parties or retaining key employees; and
even if the transaction is consummated no contingent consideration
may become payable. For further discussion of these and other
risks and uncertainties, see Harmony's and Zynerba's most recent
Form 10-K and Form 10-Q filings with the United States Securities
and Exchange Commission (the "SEC"), including under the headings
"Risk Factors." You are cautioned to not place undue reliance on
forward-looking statements, which speak only as of the date of this
document. Except as required by law, neither Harmony nor Zynerba is
under any duty to update any of the information in this
document.
Additional Information about the Acquisition and Where to
Find It:
In connection with the proposed acquisition,
Harmony will commence a tender offer for the outstanding shares of
Zynerba. The tender offer has not yet commenced. This document is
for informational purposes only and is neither an offer to purchase
nor a solicitation of an offer to sell shares of Zynerba, nor is it
a substitute for the tender offer materials that Harmony and
Xylophone Acquisition Corp ("Purchaser") will file with the SEC
upon commencement of the tender offer. At the time the
tender offer is commenced, Harmony and Purchaser will file tender
offer materials on Schedule TO, and Zynerba will file a
Solicitation/Recommendation Statement on Schedule 14D-9 with the
SEC with respect to the tender offer. Holders of shares of Zynerba
common stock are urged to read the tender offer materials
(including an Offer to Purchase, a related Letter of Transmittal
and certain other tender offer documents) and the
Solicitation/Recommendation Statement when they become available
(as each may be amended or supplemented from time to time) because
they will contain important information that holders of shares of
Zynerba common stock should consider before making any decision
regarding tendering their shares. The Offer to Purchase, the
related Letter of Transmittal and certain other tender offer
documents, as well as the Solicitation/Recommendation Statement,
will be made available to all holders of shares of Zynerba at no
expense to them. The tender offer materials and the
Solicitation/Recommendation Statement will be made available for
free at the SEC's website at www.sec.gov. In addition, these
materials will be available at no charge on the Enhanced SEC
Filings section of the Investor Relations page of Zynerba's website
at https://www.zynerba.com/ and by directing a request to the
information agent for the tender offer, whose information will be
set forth in the Offer to Purchase.
Harmony Biosciences Contacts:
Investor:
Luis Sanay,
CFA
445-235-8386
lsanay@harmonybiosciences.com
Media:
Cate McCanless
202-641-6086
cmccanless@harmonybiosciences.com
Zynerba Pharmaceuticals Contact:
Peter Vozzo
ICR Westwicke
443-213-0505
Peter.Vozzo@westwicke.com
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SOURCE Harmony Biosciences and Zynerba Pharmaceuticals, Inc.