Shares of Jaguar Animal Health, Inc. (NASDAQ:JAGX) Fall Upon News of Merger With Napo Pharmaceuticals

Animal health company, Jaguar Animal Health, Inc. (NASDAQ:JAGX), announces the signing of a non-binding letter of intent with Napo Pharmaceuticals, Inc., potentially merging the two companies.


Jaguar Animal Health, Inc. (JAGX) (“Jaguar”), an animal health company focused on developing and commercializing first-in-class gastrointestinal products for companion and production animals, foals, and high value horses, announced today that it has signed a non-binding letter of intent (“LOI”) with Napo Pharmaceuticals, Inc. (“Napo”) potentially to merge the two companies. Napo focuses on human product development and commercialization from plants used traditionally in rainforest areas, and has provided Jaguar with exclusive worldwide rights for veterinary applications to crofelemer and corresponding rights to all related Napo technology.

The LOI contemplates a 3-to-1 Napo-to-Jaguar value ratio (inclusive only of in-the-money convertible securities of Jaguar at the time a definitive agreement is entered into) to calculate the relative ownership of the merged entity. As of October 1, 2016, Napo owned 22.6% of Jaguar’s outstanding shares of common stock. The LOI also outlines capitalization requirements that Napo would be required to satisfy to proceed with a potential merger.

A merger of the two companies, should it occur, would allow Jaguar to recognize revenue from sales of crofelemer, under the brand name Mytesi™ (formerly known as Fulyzaq®), an important Napo revenue stream. Crofelemer was approved by the Food and Drug Administration (“FDA”) in 2012 for the symptomatic relief of noninfectious diarrhea in adults with HIV/AIDS on antiretroviral therapy. In May 2016, Napo regained ownership of the New Drug Application (NDA) and commercial rights for human applications of crofelemer (Mytesi™) from Valeant Pharmaceuticals International, which acquired those rights from Salix Pharmaceuticals in April 2015. Napo is now recognizing the sales of Mytesi™, and will begin promotion of Mytesi™ to HIV prescribers in October 2016.

Napo is continuing development of Mytesi™ for other antidiarrheal indications, with investigational studies completed in irritable bowel syndrome, cholera, traveler’s diarrhea, and in pediatric patients, and two planned investigator-initiated trials of the product in breast cancer patients suffering from chemotherapy-induced diarrhea. Diarrhea is a common adverse event seen with chemotherapy agents in the therapeutic classes of epidermal growth factor receptor (EGFR) monoclonal antibodies and tyrosine kinase inhibitors (TKI). The increased need for and use of these agents has made diarrhea one of the most disabling issues for cancer patients. Crofelemer offers the potential for an appropriate mechanism of action against this likely secretory diarrhea and has prompted interest among physicians concerned about this diarrheal symptom, stimulating the aforementioned investigator-initiated trials.

Crofelemer is also the active pharmaceutical ingredient (API) in Canalevia™, Jaguar’s lead prescription drug product candidate, intended for the treatment of various forms of diarrhea in dogs. Jaguar is planning a multi-site pilot study of Canalevia™ in dogs with malignancies treated with toceranib phosphate, another TKI, with diarrhea as a frequent adverse effect. Dr. Roger Waltzman, a human medical oncologist and experienced drug-development executive who serves as Jaguar’s Chief Scientific Officer and a medical consultant to Napo, added, “I expect that a merger of Napo and Jaguar would play a significant and positive role in supporting the development of crofelemer to address the problem of chemotherapy-induced diarrhea in both humans and companion animals.”

Canalevia™ is under license for exclusive global veterinary rights to Jaguar from Napo. Twelve members of Jaguar’s team contributed to the successful development of crofelemer for human indication while at Napo.

As previously announced, Napo and Jaguar have been engaged in exploratory discussions since February 2016 regarding a potential merger and/or other ways to cooperate with their respective business endeavors.

“We are confident that a merger will enable both companies, through a joint management team, to maximize the potential value creation for stockholders,” stated Lisa Conte, Jaguar’s president and CEO, as well as the CEO and founder of Napo. “We believe both Jaguar and Napo will benefit from the synergies and economies of scale that a merger should create in manufacturing and commercialization of crofelemer for various human and animal indications. In addition, we are confident that the commercial readiness that Napo’s team would bring to a combined entity would prove beneficial for Jaguar as it prepares for the launch of its first prescription products—Canalevia™ for canine diarrhea, and Equilevia™ for equine gastric ulcers—if approved.”

Original Source

Jaguar Animal Health, Inc. (NASDAQ:JAGX) shares have moved -4.80% on the news thus far today and have traded in the range of $1.06 – 1.40 during the current session. In order to take a look at where the stock might be headed longer term, investors often look to research firms that cover the stock. Sell-side research firms currently have a consensus one-year price target of $6.75 on the stock.  This is according to brokerage analysts polled by Thomson Reuters First Call.  The sell-side analysts are projecting earnings per share of $0.00 for the next fiscal quarter.  For the current year, analysts are predicting earnings of $-1.56 per share according to First Call.

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In looking at where the stock is trading on a technical level, the stock is trading -13.09% away from its 50-day moving average of $1.25.  Based on the most recent available data, the equity is -76.81% off of its 52-week high of $4.70 and +2.83% away from its 52-week low which is $1.06.

Today, the stock opened at $1.36 and the last bid at the time of writing stood at $1.09.  During the session thus far, the equity dipped down to $1.06 and touched $1.40 as the high point.  Jaguar Animal Health, Inc. (NASDAQ:JAGX) has a market cap of $12.12M and has seen an average daily volume of 172540 over the past three months.

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