The boards of directors of Tetraphase and AcelRx have each approved the second amendment to the Merger Agreement. Tetraphase’s board of directors has determined that as a result of the second amendment to the Merger Agreement with AcelRx, Melinta’s proposal is not superior and recommends the Merger Agreement, as amended by the amendment, to its stockholders.
Based on the closing price of AcelRx stock on May 28, 2020, the total upfront consideration to be received by Tetraphase equityholders is valued at approximately $37.0 million, with approximately $18.7 million of this amount allocated to the Company’s outstanding common stock warrants. In the merger, Tetraphase stockholders would also be entitled to receive, for each share of Tetraphase common stock, one non-tradeable CVR, the holders of which will be entitled to receive potential payments of up to an additional $16.0 million in cash in the aggregate upon the achievement of net sales of XERAVA™ in the United States, payable as follows: (i) $2.5 million upon annual net sales of $20.0 million during 2021, (ii) $4.5 million upon annual net sales of $35.0 million during any year ending on or before December 31, 2024 and (iii) $9.0 million upon annual net sales of $55.0 million during any year ending on or before December 31, 2024.
The special meeting of Tetraphase’s stockholders to approve the pending transaction is scheduled for June 8, 2020. The transaction is expected to close in June 2020, subject to specified closing conditions, including Tetraphase having a minimum amount of net cash as of the closing and approval by Tetraphase stockholders. Upon the closing of the transaction, Tetraphase will become a privately held company and shares of Tetraphase’s common stock will no longer be listed on any public market. Subject to certain limited exceptions, the CVRs will be non-transferable.
Melinta has offered to acquire Tetraphase for $34.0 million in cash, plus an additional $16.0 million in cash potentially payable under contingent value rights (“CVR”) to be issued in the proposed acquisition. Under the Amended Melinta Proposal, the upfront cash consideration would be as follows: (i) $1.52 per share of Tetraphase common stock (including common stock underlying restricted stock units, performance-based stock units and pre-funded warrants), (ii) $2.21 per share of Tetraphase common stock underlying the common stock warrants issued by the Company in 2019, and (iii) $2.21 per share of Tetraphase common stock underlying the common stock warrants issued by the Company in 2020. In addition, the Amended Melinta Proposal does not provide for a downward adjustment based on the Company’s closing net cash amount. The Amended Melinta Proposal is not subject to any financing contingencies. The definitive terms and conditions of a merger agreement detailing the Amended Melinta Proposal have been fully negotiated. If the Amended Melinta Proposal continues to constitute a Superior Offer through Monday, June 1, 2020, the Tetraphase Board will consider terminating the AcelRx Merger Agreement and entering into the merger agreement with Melinta.
At this time, the Tetraphase Board has not changed its recommendation with respect to the pending transaction with AcelRx, and the Tetraphase Board (1) continues to recommend the AcelRx Merger Agreement to its stockholders, (2) is not modifying or withdrawing its recommendation with respect to the AcelRx Merger Agreement and the merger, or proposing to do so, and (3) is not making any recommendation with respect to the Melinta proposal or the proposed merger agreement with Melinta.