Transcept Pharmaceuticals and Paratek Pharmaceuticals Sign Merger Agreement

 Transcept Pharmaceuticals and Paratek Pharmaceuticals Sign Merger Agreement

Merger to result in NASDAQ-listed biopharmaceutical company whose lead asset
is a novel Phase 3-ready, oral and intravenous antibiotic drug candidate
designed to address the treatment needs of patients with serious
community-acquired bacterial infections.

Upon the closing of the merger, Paratek stockholders will acquire in the
aggregate approximately 89.6 percent of the outstanding capital stock of
Transcept in exchange for their shares in Paratek, and Paratek will become a
wholly owned subsidiary of Transcept. Transcept stockholders will retain their
existing equity in Transcept for an aggregate ownership stake of approximately
10.4 percent.

Combined organization expects to be capitalized with cash and cash equivalents
of between approximately $108 million and $111 million at the closing of the
transaction, comprised of between approximately $15 million and $18 million of
cash on hand at Transcept and Paratek and an additional approximately $93
million from a broad investor syndicate comprised primarily of new investors
as well as certain existing Transcept and Paratek stockholders.

Immediately prior to the closing of the transaction, existing Transcept
stockholders will receive a special dividend of cash, as well as rights to
future royalties on INTERMEZZO sales, and potential proceeds from any sale of
INTERMEZZO and TO-2070 assets within 24 months following closing.

PR Newswire

BOSTON, Mass., and POINT RICHMOND, Calif., July 1, 2014

BOSTON, Mass., and POINT RICHMOND, Calif., July 1, 2014 /PRNewswire/
--Transcept Pharmaceuticals, Inc. (Nasdaq: TSPT) and Paratek Pharmaceuticals,
Inc., a privately-held biopharmaceutical company, announced today that they
have entered into a definitive merger agreement under which the stockholders
of Paratek will become the majority owners of Transcept and the operations of
Transcept and Paratek will be combined. As part of the proposed transaction,
new investors (including The Baupost Group, Abingworth LLP, and other
institutional investors); certain Transcept stockholders (including InterWest
Ventures and Roumell Asset Management); and certain Paratek stockholders
(including Omega Funds, HBM Healthcare Investments and Aisling Capital) will
invest approximately $93 million in the combined organization.

Glenn Oclassen, Chief Executive Officer and Chairman of the Transcept Board,
commented: "Following Transcept's recent June 3, 2014 special cash dividend
of approximately $25.4 million, this transaction with Paratek reflects the
continued commitment of Transcept's Board of Directors and management team to
deliver value to Transcept's stockholders. Under the proposed transaction,
Transcept's stockholders will maintain a meaningful equity ownership stake in
Transcept, which will refocus its operations as a late-stage therapeutics
company with product candidates we believe possess significant commercial
potential. The transaction also provides for our stockholders an additional
special cash dividend and the opportunity to realize any upside potential from
our INTERMEZZO and TO-2070 assets."

Michael Bigham, Chief Executive Officer and Chairman of the Paratek Board of
Directors, commented: "Antibiotic resistance continues to be a growing public
health concern worldwide. This transaction provides the financial support
necessary for the Phase 3 development of our lead product candidate,
Omadacycline, which is an important new once daily, oral and intravenous,
broad-spectrum antibiotic for serious community-acquired infections.
Omadacycline was designed specifically to address the mechanisms by which
bacteria develop resistance to existing antibiotics. The combined
organization will have the resources to initiate and complete our planned
Phase 3 registration program, as agreed with FDA per Special Protocol
Assessments, for both Acute Bacterial Skin and Skin Structure Infections
(ABSSSI) and Community-acquired Bacterial Pneumonia (CABP). We will also
explore additional potential indications including urinary tract infections

In a joint statement made by Paratek's lead investors, Richard Lim, Partner at
Omega Funds and Matthias Fehr, Partner at HBM Partners, said, "This
transaction establishes a well-capitalized public company within which the
management of Paratek may progress its late-stage drug pipeline through its
pivotal studies. We are excited about the prospects for omadacycline to
address the growing need for efficacious, safe and convenient oral and
intravenous antibiotic drugs."

About the Transaction
Paratek stockholders will receive newly issued shares of common stock of
Transcept in connection with the merger contemplated by the merger agreement.
Transcept will issue approximately 167.5 million new shares of its common
stock to Paratek stockholders under the exchange ratio formula defined in the
merger agreement. Upon the closing of the merger, existing Paratek equity
holders are expected to own approximately 37.9 percent of Transcept, the
persons investing in Paratek as of immediately prior to the closing of the
merger are expected to own approximately 51.7 percent of Transcept, and
existing Transcept equity holders are expected to own approximately 10.4
percent of Transcept, each on a fully-diluted basis. The exchange ratio is
defined in the merger agreement and is subject to potential adjustments.

The merger agreement also contains further details with respect to a) the cash
to be reserved for anticipated merger and holdback expenses of Transcept
including patent enforcement expense obligations relating to INTERMEZZO; b)
how further payments or royalty payments, if any, that are received relating
to the sale of INTERMEZZO and TO-2070 assets will be disbursed to Transcept
stockholders of record immediately prior to the Closing; and c) the excess
cash that Transcept will distribute via an additional special cash dividend
also to such Transcept stockholders of record immediately prior to the

The executive officers of Transcept will resign from their positions with
Transcept upon the closing of the merger, and the executive officers of
Paratek will assume their respective positions in Transcept. Paratek
Pharmaceuticals, Inc. today announced that Michael F. Bigham, Partner at
Abingworth LLP, has been appointed as Chairman of the Board of Directors and
Chief Executive Officer. In addition, Dr. Evan Loh, Chief Medical Officer
(CMO) at Paratek, has been promoted to President and CMO and will continue to
serve on the Board of Directors.

Following the closing of the merger, the Board of Directors of Transcept is
expected to consist of a total of seven members, two of whom will be
designated by Transcept prior to the closing of the merger, and five of whom
will similarly be designated by Paratek (and which will include the Chief
Executive Officer of the combined organization).

The boards of directors of both Transcept and Paratek have unanimously
approved the proposed transaction, which is subject to customary closing
conditions, including approval by the stockholders of each of Transcept and
Paratek. Transcept stockholders holding approximately 43 percent of its
outstanding common stock have agreed to vote in favor of the transaction, and
a majority of Paratek stockholders, have also agreed to vote in favor of the
transaction. Subject to regulatory approvals and customary closing
conditions, the transaction is currently expected to close during the second
half of 2014.

If the transaction is consummated, Transcept's name will be changed to Paratek
Pharmaceuticals, Inc., and Transcept intends to apply to change its ticker
symbol on The NASDAQ Global Market to "PRTK". 

Transcept was advised in the transaction by Leerink Partners, LLC and Paratek
was advised by Ladenburg Thalmann & Co. Latham & Watkins LLP served as legal
counsel to Transcept and Pepper Hamilton LLP served as legal counsel to
Paratek. Cooley LLP and Ropes & Gray LLP served as legal counsels to certain

About Paratek
Paratek is a biopharmaceutical company focused on the development, and
commercialization of innovative antibiotics. Paratek's lead product candidate,
omadacycline, is a novel tetracycline-derived, broad-spectrum antibiotic being
developed in both oral tablet and intravenous formulations for use as a
first-line monotherapy antibiotic for acute bacterial skin and skin structure
infections (ABSSSI), community-acquired bacterial pneumonia (CABP), urinary
tract infections (UTI) and other serious community-acquired bacterial
infections, particularly when antibiotic resistance is of concern to
prescribing physicians. Omadacycline has received Qualified Infectious
Disease Product (QIDP) designation by the U.S. Food and Drug Administration
for both the oral and intravenous formulations in all three of these
infectious disease categories. Omadacycline has Special Protocol Assessment
agreements with the U.S. Food and Drug Administration for the phase 3 trials
planned in ABSSSI and CABP.

Paratek's second product candidate, WC 3035, is a novel tetracycline-derived
compound, with dual narrow-spectrum antibacterial and potent anti-inflammatory
activity, for the treatment of acne and rosacea in the community setting.
Paratek has licensed rights to WC 3035 for the treatment of acne and rosacea
in the United States to a subsidiary of Actavis (formerly Warner Chilcott),
while retaining rights in the rest of the world. Actavis is responsible for
the clinical development of WC 3035 for the treatment of acne in the United
States. A phase 3 program in moderate-severe acne is expected to be initiated
in the second half of 2014 for WC 3035.

About Omadacycline
Omadacycline is a novel tetracycline-derived, broad-spectrum antibiotic being
developed for use as a first-line empiric monotherapy for patients suffering
from serious community-acquired bacterial infections, such as ABSSSI, CABP,
and other community-acquired bacterial infections, particularly when
antibiotic resistance is of concern to prescribing physicians. Omadacycline
was designed to provide broad spectrum activity, and possibly shorter hospital
stays by allowing for the completion of therapy at home with an oral
formulation, thereby potentially positioning omadacycline to become the
primary antibiotic choice of physicians for the treatment of
community-acquired bacterial infections. Omadacycline was designed with the
following characteristics:

  oAvailable in both once-daily IV and oral formulations: to enable reliable
    step-down therapy so that a patient could be discharged from the hospital
    more quickly to recover at home using an oral formulation of the same
  oActive against a broad-spectrum of bacteria, with projected coverage
    against nearly every type of community-acquired bacterial infection
  oWell tolerated: based on clinical studies in more than 700 patients and
    subjects to date the drug candidate has demonstrated a favorable safety
    and tolerability profile
  oAble to overcome bacterial resistance: omadacycline has demonstrated in
    vitro and in vivo activity against a wide spectrum of common bacterial
    pathogens resistant to currently used antibiotics.

About Transcept
Transcept Pharmaceuticals, a specialty pharmaceutical company focused
on the development and commercialization of proprietary products that address
important therapeutic needs in the field of neuroscience. Trancept's
remaining product development candidate is TO-2070, a novel rapidly absorbed
treatment for acute migraine incorporating dihydroergotamine (DHE) as the
active drug, which Transcept has developed through the completion of
preclinical safety studies but has not initiated a Phase 1 human
pharmacokinetic study. Transcept developed Intermezzo^®from concept to its
approval by theFDAin 2011.Purdueholds commercialization and development
rights for Intermezzo in the United States. For further information about
Transcept, please For information about Intermezzo,

Safe Harbor

Additional Information about the Merger and Where to Find It
In connection with the merger, Transcept and Paratek intend to file relevant
materials with the Securities and Exchange Commission, or the SEC, including a
registration statement on Form S-4 that will contain a prospectus and a joint
proxy statement. Investors and security holders of Transcept and Paratek are
urged to read these materials when they become available because they will
contain important information about Transcept, Paratek and the merger. The
proxy statement, prospectus and other relevant materials (when they become
available), and any other documents filed by Transcept with the SEC, may be
obtained free of charge at the SEC web site at In addition,
investors and security holders may obtain free copies of the documents filed
with the SEC by Transcept by directing a written request to: Transcept
Pharmaceuticals, Inc., 1003 W. Cutting Blvd., Suite #110, Point Richmond,
California 94804, Attention: Investor Relations. Investors and security
holders are urged to read the proxy statement, prospectus and the other
relevant materials when they become available before making any voting or
investment decision with respect to the merger.

This communication shall not constitute an offer to sell or the solicitation
of an offer to sell or the solicitation of an offer to buy any securities, nor
shall there be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended.

Participants in the Solicitation
Transcept and its directors and executive officers and Paratek and its
directors and executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of Transcept in connection with
the proposed transaction. Information regarding the special interests of these
directors and executive officers in the merger will be included in the proxy
statement/prospectus referred to above. Additional information regarding the
directors and executive officers of Transcept is also included in Transcept
Annual Report on Form 10-K for the year ended December 31, 2013, which was
filed with the SEC on March 14, 2014. This document is available free of
charge at the SEC web site ( and from Investor Relations at
Transcept at the address described above.

Note Regarding Forward-Looking Statements

This press release contains forward-looking statements that involve
substantial risks and uncertainties. All statements, other than statements of
historical facts, included in this press release regarding our strategy,
future operations, future financial position, future revenue, projected
expenses, prospects, plans and objectives of management are forward-looking
statements. Examples of such statements include, but are not limited to,
statements relating to the structure, timing and completion of our merger with
Paratek, including any dividend in connection therewith; our continued listing
on NASDAQ after the merger; our expectations regarding the capitalization,
resources and ownership structure of the combined organization; the timing and
nature of the planned equity investment and bridge loan in connection with the
merger; possible future royalties on INTERMEZZO sales and potential proceeds
from any sale of INTERMEZZO and TO-2070 assets; the nature, strategy and focus
of the combined organization; the development and commercial potential of any
product candidates, including Omadacycline; the executive and board structure
of the combined organization; and expectations regarding voting by Transcept
and Paratek stockholders. Transcept and/or Paratek may not actually achieve
the plans, carry out the intentions or meet the expectations or projections
disclosed in our forward-looking statements and you should not place undue
reliance on these forward-looking statements. Actual results or events could
differ materially from the plans, intentions, expectations and projections
disclosed in the forward-looking statements. Various important factors could
cause actual results or events to differ materially from the forward-looking
statements that Transcept makes, including the risks described in the "Risk
Factors" section of Transcept periodic reports filed with the SEC.
Forward-looking statements do not reflect the potential impact of any future
in-licensing, collaborations, acquisitions, mergers, dispositions, joint
ventures, or investments Transcept may enter into or make. Transcept does not
assume any obligation to update any forward-looking statements, except as
required by law.

Conference Call Information
A conference call and webcast will be held on July 1, 2014, 8am ET to be led
by Dr. Loh and Mr.Oclassen, to discuss the proposed transaction.
Dial-in (U.S.): (877) 638-4558
Dial-in (International): (914) 495-8537
The webcast can be accessed on the Investors page of the Transcept website at and will be available for replay until close of business on
September 30, 2014.

Paratek Pharmaceuticals, Inc.
Evan Loh
President and Chief Medical Officer
(617) 275-0040 x223

Transcept Pharmaceuticals, Inc.
Leone Patterson
Vice President, Chief Financial Officer
(510) 215-3500

SOURCE Transcept Pharmaceuticals, Inc.

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