Cerulean Pharma Inc. (NASDAQ:CERU) Gets Gobbled Up in Fire-Sale

Cerulean Pharma Inc. (NASDAQ:CERU)

As previously reported in, Cerulean Pharma Inc. (NASDAQ:CERU) was searching for strategic alternatives that could give continued life to the troubled biotech firm. Today that alternative was announced and shared cratered. CERU closed Friday at $3.32, gapped down to open at $1.30 today, and ended the session at $1.25. Volumes were very heavy – over eight times CERU’s average daily volume.

The Deal

Cerulean Pharma Inc. (NASDAQ:CERU) entered into a stock purchase agreement with Daré Bioscience, Inc., a privately-held, clinical-stage pharmaceutical company. Daré Bioscience, Inc. will become the majority shareholder.

Daré Bioscience shareholders will receive shares of soon-to-be newly issued Cerulean Pharma Inc. (NASDAQ:CERU) common stock. Daré Bioscience options and convertible securities will be assumed by Cerulean shareholders. In essence – a swap of newly issued CERU shares for existing options and convertible securities issued by Daré. The deal is engineered so that existing Cerulean stockholders will own between 30% and 49% of the combined company, and existing Daré Bioscience stockholders will own between 51% and 70% of the combined company. The boards of directors of both Cerulean and Daré have already approved the deal. The transaction is expected to close during Q2 2017, subject to customary closing conditions, including approval by stockholders of Cerulean.

Additionally, Cerulean Pharma Inc. (NASDAQ:CERU) has entered into two agreements to sell assets for a combined total of $7.5 million. Cerulean sold its clinical product candidates, CRLX101 and CRLX301, for $1.5 million to BlueLink Pharmaceuticals for $1.5 million. They received $6 million from Novartis (NVS), an existing collaborator, for all rights to Cerulean’s Dynamic Tumor Targeting™ Platform.

The New Company

Daré Bioscience, Inc. centers its therapeutic development program around women’s reproductive health – specifically contraceptive options. Contraception is a $16 billion market globally. Daré Bioscience believes it has the skills and resources to exploit a therapeutic hole in the market. The contraceptive pill (“The Pill”) was granted FDA approval in 1960. Since then few contraceptive options have been available to women that are not hormone based.

Ovaprene, a contraceptive ring, is a Daré Bioscience’s product in development that is a non-hormonal option and provides multi-week protection. It is this product that will likely become the focus of the combined company. Sabrina Martucci Johnson, Daré Bioscience’s CEO, will assume that leadership role in the new company. She remarked on the merger “”We are thrilled to have the opportunity to grow our business as a public company. Women’s reproductive health encompasses a broad spectrum of categories, many of which have unmet needs. Daré is committed to developing a portfolio that expands options, improves outcomes, and enhances safety for women.”

The new company will be without 11 employees of Cerulean Pharma Inc. (NASDAQ:CERU) who were released as part of the deal.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.