Mast Therapeutics Inc (NYSEMKT:MSTX) and Savara, a privately held pharmaceutical firm aimed at treating rare respiratory diseases captivated the attention of investors in the biotech sector after announcing a merger to become combined company Savara Inc.
For Laidlaw analyst Yale Jen, this merger is a strategic step forward for MSTX. Though the analyst comments from the sidelines, he is cautiously optimistic, and believes investors should take the news in stride.
Jen asserts, “We view the merger to Savara positively because it potentially provides an attractive opportunity for the current MSTX shareholders to become part of a company that owns a relatively risk-balanced and clinically advanced product pipeline. As such, share-value of current MSTX shareholders could potentially appreciate.”
Canaccord analyst John Newman likewise reveals an affirmative view on the merger, recognizing a “strong synergy with Savara inhaled assets for AIR-001,” and lauding the collaborative partnership.
MSTX CEO and Director Brian Culley specifically chose to join forces with Savara to “a diversified pipeline,” which will set the biotech firm in motion for accelerated short-term as well as long-term growth.
“We are excited for the prospects of the combined company and believe that Savara’s management team is well equipped to advance the pipeline toward regulatory approvals and commercialization in the US and EU,” affirms Culley.
From the Savara side of the alliance, Chairman and CEO Rob Neville sees the deal as “transformative” and looks forward to further broadening his firm’s pipeline of inhalation therapies.
Neville adds, “AeroVanc and Molgradex are orphan-designated product candidates in late-stage development, and we see Mast’s AIR001 program potentially adding significant value to our pipeline with a modest capital outlay in 2017. We believe the favorable risk profile of our product candidates combined with their market potential provides a unique opportunity for Savara to become the next breakout company in orphan pulmonary diseases.”
Savara brings two key drugs to the table: AeroVanc, an inhaled dry-powder vancomycin aimed to treat Methicillin-resistant Staphylococcus aureus (MRSA) infection in cystic fibrosis patients, and Molgradex, a drug designed to treat pulmonary alveolar proteinosis (PAP).
Combined with MSTX’s AIR001, an inhaled sodium nitrite solution for patients suffering from heart failure with preserved ejection fraction (HFpEF), the merged company will procure a triple threat of inhaled assets.
A notable advantage for Mast from the deal will be to “leverage Savara’s formulation expertise for development going forward,” notes Newman, who looking ahead expects the FDA will “carefully consider” approving AIR001- especially taking into account the agency’s past willingness to green light inhalation therapies.
The Mast-Savara merger is expected to close by the second quarter of 2017, with an AeroVanc Phase III trial anticipated to commence come third quarter of 2017, and a prospective top-line data read-out likely to follow in 2019.