Why Did Apricus Biosciences (APRI) Stock Shoot the Lights Out Today?


It’s a big day for Apricus Biosciences (NASDAQ:APRI). The drug maker announced this morning its execution of a definitive agreement to merge with Seelos Therapeutics, a privately-held biotechnology company, in an all-stock transaction. Apricus investors reacted positively to the news, bidding up the stock nearly 30% to $0.48 in pre-market trading.

The merged company will focus on the development and commercialization of central nervous system (CNS) therapeutics with known mechanisms of action in areas with a highly unmet medical need. Upon completion of the proposed merger, the name of the merged company will be Seelos Therapeutics, Inc., and the company is expected to begin trading on the Nasdaq Capital Market under the ticker symbol “SEEL.” Seelos will maintain its headquarters in New York, New York.

“Following a comprehensive review of strategic alternatives conducted through a structured process, the Apricus Board of Directors has concluded that the proposed merger with Seelos is in the best interest of our shareholders, as it will provide an opportunity to create value from a diversified pipeline of late-stage clinical assets in areas of high unmet need,” said Richard Pascoe, Chief Executive Officer (CEO) of Apricus. “Moreover, we believe that the Seelos management, led by Dr. Raj Mehra, is well positioned to advance Seelos’ robust pipeline towards regulatory approval and commercialization in the United States.”

“The announcement of this merger with Apricus marks the beginning of the next stage of growth for Seelos,” said Raj Mehra, Ph.D., CEO of Seelos. “We have built a strong foundation with a team of established industry leaders and a robust pipeline of transformative product candidates with proven mechanisms of action, including several late-stage assets. The transaction builds upon our shared vision to develop, advance and commercialize innovative therapeutics for patients with CNS disorders. We look forward to establishing a leadership position in the field of neurologic disorders, growing our team, driving long-term shareholder value, and bringing to market therapies for patients who currently have no viable treatment options.”

Seelos’ Pipeline

With a broad product pipeline, Seelos is well-positioned to address unmet needs in multiple CNS disorders. The Company is advancing late-stage therapeutic candidates with proven mechanisms of action, including:

  • SLS-002: intranasal racemic ketamine for patients with suicidality in post-traumatic stress disorder (PTSD) and major depressive disorder (MDD). The clinical development program for SLS-002 includes two parallel healthy volunteer studies, expected to be followed by pivotal registration studies after an end-of-phase II meeting with the U.S. Food and Drug Administration (FDA). SLS-002 has shown promising efficacy in suicidality (with depression) with an unremarkable safety profile. Ketamine’s rapid antidepressant action is independent of NMDAR inhibition and involves early and sustained activation of AMPAR activation. With no other drugs currently approved in this indication, SLS-002 has the potential to address approximately 600,000 cases of suicidality in U.S. emergency rooms alone each year.
  • SLS-006: first-in-class, small molecule, partial dopamine agonist for Parkinson’s disease that has successfully completed phase II studies. Seelos intends to meet with the FDA and the European Medicines Authority (EMA) to discuss the plans for pivotal registration studies to commence in 2019. SLS-006 has shown remarkable efficacy in early-stage Parkinson’s disease patients as a monotherapy and as a potential adjunctive therapy in late-stage Parkinson’s disease patients upon co-administration with a low dosage of L-Dopa.
  • SLS-008: once-daily, oral CRTH2 (Chemo-attractant Receptor-homologous molecule expressed on TH2 cells) that focuses on an undisclosed pediatric orphan indication. Seelos has a “family” of compounds under its SLS-008 program. Seelos intends to file an Investigational New Drug (IND) Application in this pediatric orphan indication with a highly unmet need for an effective oral therapy.

In 2016, Seelos established a multi-program partnership with Ligand Pharmaceuticals, Incorporated(Nasdaq: LGND) forming the basis for Seelos’ lead programs.  Ligand has an established track record of licensing foundational assets at the early stages of company formation.  The license agreement grants Seelos worldwide rights to develop and commercialize the SLS-006, -008, -010 and -012 programs from Ligand.  Ligand is expected to be a shareholder of Seelos at the closing of the merger by way of an equity milestone payment from Seelos and is entitled to other potential future milestones and royalties for licensed programs.

About the Proposed Merger

Under the terms of the merger agreement, the holders of Seelos’ outstanding capital stock immediately prior to the merger will receive shares of common stock of Apricus upon closing of the merger. On a pro forma and fully-diluted basis, Seelos shareholders are expected to own approximately 86% of the merged company and current Apricus shareholders are expected to own approximately 14% of the merged company, subject to customary adjustments of net cash upon closing.
Upon closing, current Apricus shareholders will receive one Contingent Value Right (CVR) per share of Apricus common stock owned. The CVR is comprised of the following payments:

  1. Upon successful out-licensing of Vitaros assets, 90% of any cash amount exceeding $500,000 will be distributed to Apricus shareholders as of the record date immediately prior to the closing of the proposed merger transaction.
  2. If any consideration is received other than cash, 90% of the fair market value of such consideration shall be paid to Apricus  shareholders as of the record date, as fully described in the CVR Agreement that will be entered into among Apricus, Seelos, and the Rights Agent.

In order to be eligible for the CVR, an Apricus shareholder must be a holder of record at the close of business immediately prior to the closing of the merger between Apricus and Seelos.

The proposed merger has been unanimously approved by the board of directors of each  company and is expected to close during the second half of 2018, subject to approval of the transaction by the shareholders of both companies, and other customary closing conditions.

Board of Directors of the Combined Company

Pursuant to the merger agreement, Raj Mehra, Ph.D., Chairman, founder & CEO of Seelos will serve as the Chairman, CEO and President of the merged company, and Richard Pascoe, CEO of Apricus will serve on the Board of Directors. Other board members will include: Robin L. Smith, M.D., Chairman of the Board of The Stem for Life Foundation; Daniel J. O’Connor, CEO of OncoSec Medical, Inc.; and Brian Lian, Ph.D., CEO and President of Viking Therapeutics, Inc.