Dara to merge with Midatech

Raleigh-based Dara BioSciences has reached an agreement to merge with Midatech Pharma, a specialty pharmaceutical company based in the United Kingdom.

The deal would convert Dara into the U.S. commercial arm of Oxford-based Midatech, which trades on the London Stock Exchange and is developing therapies for the treatment of diabetes, rare cancers and neurological conditions.

“The agreement with Midatech provides Dara with the opportunity to maximize and expand Dara’s commercial portfolio based on the depth of resources that are now available within the combined company,” Christopher Clement, Dara’s CEO, said in a statement.

Under the terms of the deal, each Dara share would be converted into the right to receive .272 shares of Midatech and a “contingent value right” that would allow the shareholder to receive additional cash payments if certain sales milestones are met for the Dara products Gelclair and Oravig in 2016 and 2017.

The Midatch shares will be delivered as American Depositary Receipts with a value equal to about $1.20 per Dara share. That is a 51 percent premium over the closing price of Dara’s stock on Wednesday. The ADRs will trade on the Nasdaq.

Dara’s stock has been in danger of being delisted from the Nasdaq as its stock price languished under $1 in recent months. The shares rose 18 cents, or 22.5 percent, to close at 99 cents on Thursday.

Dara’s two main products are Soltamox, an oral liquid formulation used in the treatment and prevention of breast cancer, and Gelclair, a treatment of oral mucositis, or swelling and bleeding of the mouth and gums. In March, Dara acquired the U.S. rights to Oravig, a treatment for a condition known as oral thrush.

Midatech completed an initial public offering in December. The company has a manufacturing operation in Bilbao, Spain, and a research and development facility in Cardiff, U.K.

The merger is expected to close in the third of fourth quarter of this year.

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