Transcept Pharmaceuticals Inc(NASDAQ:TSPT) Climbs 34% – To Merge With Privately-Held Paratek

Transcept Pharmaceuticals Inc (NASDAQ:TSPT) is surging higher after the specialty pharmaceutical company said it plans to merge with privately-held Paratek Pharmaceuticals. In late-morning trading, shares are up 34.4% at $2.68, with a 52-week range of $1.85 – $3.90.

The board of directors of both Transcept and Paratek have unanimously approved the transaction. The merger is expected to close during the second half of 2014. Excess cash will be distributed via an additional special cash dividend to Transcept stockholders of record immediately prior to the closing. If the transaction is consummated, Transcept’s name will be changed to Paratek Pharmaceuticals and Transcept intends to apply to change its ticker symbol on the NASDAQ Global Market to “PRTK.”

Under the terms of the deal, stockholders of Paratek will become the majority owners of Transcept and the operations of Transcept and Paratek will be combined. New investors, certain Transcept stockholders and certain Paratek stockholders will invest approximately $93 million in the combined organization.

“Under the proposed transaction, Transcept’s stockholders will maintain a meaningful equity ownership stake in Transcept, which will refocus its operations as a late-stage therapeutics company with product candidates we believe possess significant commercial potential,” said Glenn Oclassen, Chief Executive Officer and Chairman of the Transcept Board. “The transaction also provides for our stockholders an additional special cash dividend and the opportunity to realize any upside potential from our INTERMEZZO and TO-2070 assets.”

Paratek stockholders will receive newly issued shares of common stock of Transcept in connection with the merger contemplated by the merger agreement. Transcept will issue approximately 167.5 million new shares of its common stock to Paratek stockholders.

The executive officers of Transcept will resign from their positions with Transcept upon the closing of the merger, and the executive officers of Paratek will assume their respective positions in Transcept. Michael F. Bigham, Partner at Abingworth, has been appointed as Chairman of the Board of Directors and Chief Executive Officer. In addition, Dr. Evan Loh, Chief Medical Officer (CMO) at Paratek, has been promoted to President and CMO and will continue to serve on the Board of Directors.