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Discovery Partners merges with Infinity Pharmaceuticals
CAMBRIDGE, Mass.—September 21, 2006—Its merger with Discovery Partners International complete, Infinity Pharmaceuticals announced three strategic appointments designed to support priority initiatives in the new company. Gerald Quirk, J.D., joins the company as VP and General Counsel, with experience in securities offerings and SEC compliance activities, M&As, licensing and collaboration agreements, and product commercialization initiatives. Dr. Steven Kafka joins as VP, Strategic Product Planning and Finance, where he will be responsible for corporate financial planning and analysis, new product marketing, and portfolio management. And John Evans will serve as Manager, Investor Relations and Business Development, leading Infinity's IR and PR functions, as well as business development and strategic planning.
SAN DIEGO—Faced with the expiration of a long-term services contract with Pfizer late last year and a discovery services business model that has seen severe pressure from offshore competition, Discovery Partners International moved to resurrect value for its shareholders by agreeing to a reverse merger last month with privately held Infinity Pharmaceuticals of Cambridge, Mass. Once completed, the result will be a NASDAQ-traded company operating under the name Infinity Pharmaceuticals Inc., a company focused on cancer drug discovery and development.
The move comes as DPI's fortunes and share price were flagging and Infinity was examining options for additional funding. At the time of the announcement, DPI's shares were trading in the mid-$2 range, a price that resulted in a market capitalization lower than the more than $80 million the company carried on its balance sheet. Ultimately, it was DPI's strong cash position and Infinity's desire for additional funds that made the merger possible.
"We have been evaluating our options for financing on a regular basis," says Adelene Perkins, executive vice president and chief business officer of Infinity. "One option was another round of private funding and we had been getting a very warm reception. But we learned that DPI was examining its options in how to invest the cash they had in a business that better matched the market's interest. At the end of the day, it was a creative, time-efficient and cost-effective way for us to generate additional capital to fund our growth."
Under the terms of the merger agreement, Infinity stock holders will own approximately 69 percent of the combined company with DPI's shareholders owning approximately 31 percent. These percentages are based on an estimate of $70 million to $75 million cash on hand by DPI at the time of closing, expected in the third quarter this year. The percentages of ownership are subject to adjustments based on DPI's actual cash on hand at the time of closing.
For Michael Venuti, acting CEO of DPI, the Infinity deal was one that provided the best option for what had essentially become an end-game for the company and its discovery services model. "After an extensive review of potential merger candidates and their product pipelines, Discovery Partners identified Infinity Pharmaceuticals as an organization with the potential to create significant value for our stockholders," Venuti said at the time the agreement was announced.
With the agreement set and a new path in drug discovery and development as part of Infinity, DPI is actively engaged in efforts to transfer ownership of its drug discovery services unit that currently has locations here, Basel, Switzerland and Heidelberg, Germany. It is not clear whether this activity will occur before or after the closing of the merger. DPI's compound management facility in South San Francisco, Calif., currently under contract with the NIH as part of the NIH Chemo-Genomic Roadmap initiative will continue to be fully staffed and operational as a part of Infinity.
Management of the new public entity will comprise Infinity's current team including Steven Holtzman as chairman and CEO, Julian Adams as president and CSO and Adelene Perkins. DPI is expected to provide three of the 12 board members, most likely current directors Venuti, Harry F. Hixson, Jr. and Herm Rosenman.