SOURCE: Celsus Therapeutics

July 13, 2015 07:15 ET

Celsus Therapeutics and Volution Immuno Pharmaceuticals Announce Agreement to Create Orphan Disease Company Focused on Complement C5 Inhibition

Combined Company to Be Renamed Akari Therapeutics Plc

NEW YORK, NY and LONDON, UNITED KINGDOM--(Marketwired - July 13, 2015) - Celsus Therapeutics (NASDAQ: CLTX) and Volution Immuno Pharmaceuticals SA today announced that they have entered into a Definitive Exchange Agreement, pursuant to which privately-held Volution Immuno Pharmaceuticals will become a wholly-owned subsidiary of Celsus in an all-stock transaction. The combined company will focus on development and commercialization of life-transforming treatments for a range of rare and orphan autoimmune and inflammatory diseases caused by dysregulation of complement C5, including paroxysmal nocturnal hemoglobinuria (PNH) and atypical Hemolytic Uremic Syndrome (aHUS). Upon closing of the transaction, Celsus expects to be renamed Akari Therapeutics Plc.

"Following an extensive and thorough review of strategic alternatives, we believe the proposed business combination with Volution Immuno Pharmaceuticals provides the best opportunity for positive returns for Celsus shareholders," said Dr. Gur Roshwalb, Chief Executive Officer. "We expect Akari to become a leading company in C5 inhibition by continuing the successful development of our potential best-in-class drug, Coversin, for the treatment of PNH, aHUS, and other orphan indications. The combined company expects to derive significant advantages from the extensive clinical, commercial and transactional expertise of the combined Board and management teams, and I look forward to continuing as Chief Executive Officer."

Ray Prudo, M.D., Chairman and Chief Executive Officer of Volution Immuno Pharmaceuticals, said, "The enhanced operating capabilities and improved access to public financing markets provided by this merger will provide the resources necessary to accelerate development of Coversin into multiple Phase II clinical trials within the next eighteen months, with data readouts expected from two of these Phase II trials by the end of 2016. We believe that this clinical timing acceleration will help Coversin continue on its current path to become a potential best-in-class C5-Inhibitor for a range of rare and orphan diseases." Dr. Prudo will continue as Executive Chairman of Akari.

Mark Cohen, the current Chairman of Celsus, said, "We are very excited about the combination of Celsus and Volution, and believe the combined management team of the newly merged company will have the expertise necessary to successfully develop its lead anti-complement small protein, Coversin, to treat a range of rare and orphan diseases and deliver enhanced value to our investors." Mark Cohen will continue as Vice Chairman of Akari.

Coversin is a second-generation complement inhibitor that acts on complement component-C5, preventing release of C5a and formation of C5b-9 (also known as the membrane attack complex or MAC). C5 inhibition is growing in importance in a range of rare autoimmune diseases related to dysregulation of the complement component of the immune system, including paroxysmal nocturnal hemoglobinuria (PNH), atypical Hemolytic Uremic Syndrome (aHUS), and Guillain Barré syndrome (GBS).

Coversin successfully completed a Phase Ia fixed dose clinical trial in healthy subjects in 2014, and will be used in a follow-up chronic dosing Phase Ib clinical trial in healthy subjects in the second half of 2015. The combined company plans to initiate a compassionate use program in late 2015 to treat patients resistant to Soliris® (eculizumab), the only currently approved treatment for PNH and aHUS. The combined company will then initiate Phase II clinical trials in several indications during 2016, including PNH, aHUS, and GBS.

Details of the Proposed Transaction

On a pro forma basis and based upon the number of shares of Celsus common stock to be issued in the transaction, current Celsus securityholders will own approximately 8.32% of the combined company and current Volution Immuno Pharmaceutical SA securityholders will own approximately 91.68% of the combined company on a fully diluted basis. The transaction has been approved by the Board of Directors of both companies and by RPC Pharma, the sole shareholder of Volution Immuno Pharmaceutical SA. The transaction is expected to close in the third quarter of 2015, subject to the approval of the shareholders of Celsus as well as other customary conditions.

MTS Health Partners, L.P. served as financial advisors, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. served as legal counsel on US legal matters, and DLA Piper UK LLP on UK legal matters to Celsus. McDermott Will & Emery UK LLP served as legal counsel to Volution Immuno Pharmaceuticals SA with respect to the transaction.

Management and Organization

Following the closing of the transaction, the Akari Therapeutics board of directors will be led by Raymond Prudo, M.D. as Executive Chairman, and Mark Cohen as Vice Chairman. Akari management will be led by Dr. Gur Roshwalb as Chief Executive Officer.

About Coversin

Coversin is a recombinant small protein (16,740 Da) derived from a native protein discovered in the saliva of the Ornithodoros moubatatick, where it plays an important role in modulating the host immune system to allow the parasite to feed without alerting the host to its presence or provoking an immune response. Coversin is under development to treat complement-C5 disorders in several therapeutic areas, including hematology, nephrology, and neurology. Coversin, at 17 kDa, is much smaller than an antibody and can be self-administered by subcutaneous injection, which should provide considerable patient benefit over the current standard of care in several diseases. Volution believes that Coversin is on track to become the best-in-class second generation C5 inhibitor therapy for multiple rare and orphan diseases.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this communication regarding the proposed business combination transaction and other contemplated transactions (including statements relating to satisfaction of the conditions to and consummation of the proposed transaction, the expected ownership of the combined company, the alternatives to the proposed transaction, and plans with respect to financing for the combined company) constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are usually identified by the use of words such as "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "seeks," "should," "will," and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are making this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control.

Risks and uncertainties for Celsus and Volution and of the combined company include, but are not limited to: inability to complete the proposed business combination transaction; liquidity and trading market for ADSs prior to and following the consummation of the proposed transaction and any proposed financing; costs and potential litigation associated with the proposed transaction; failure or delay in obtaining required approvals by the SEC or any other governmental or quasi-governmental entity necessary to consummate the proposed transaction, including our ability to file an effective proxy statement in connection with the proposed transaction, which may also result in unexpected additional transaction expenses and operating cash expenditures on the parties; an inability or delay in obtaining required regulatory approvals for product candidates, which may result in unexpected cost expenditures; risks inherent in drug development in general; uncertainties in obtaining successful clinical results for product candidates and unexpected costs that may result therefrom; failure to realize any value of certain product candidates developed and being developed in light of inherent risks and difficulties involved in successfully bringing product candidates to market; inability to develop new product candidates and support existing products; the approval by the FDA and EMA and any other similar foreign regulatory authorities of other competing or superior products brought to market; risks resulting from unforeseen side effects; risk that the market for the combined company's products may not be as large as expected; inability to obtain, maintain and enforce patents and other intellectual property rights or the unexpected costs associated with such enforcement or litigation; inability to obtain and maintain commercial manufacturing arrangements with third party manufacturers or establish commercial scale manufacturing capabilities; unexpected cost increases and pricing pressures; failure to obtain the necessary shareholder approvals or to satisfy other conditions to the closing of the proposed transaction; uncertainties of cash flows and inability to meet working capital needs; cost reductions that may not result in anticipated level of cost savings or cost reductions prior to or after the consummation of the proposed transaction; and risks associated with the possible failure to realize certain benefits of the proposed transaction, including future financial, tax, accounting treatment, and operating results. Many of these factors that will determine actual results are beyond Celsus's, Volution's, or the combined company's ability to control or predict.

Other risks and uncertainties are more fully described in periodic filings with the Securities and Exchange Commission (the "SEC"), including the factors described in the section entitled "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 filed with the SEC, and in other filings that Celsus makes and will make with the SEC in connection with the proposed transactions, including the proxy statement described below under "Important Information and Where to Find It." Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The statements made in this press release speak only as of the date stated herein, and subsequent events and developments may cause our expectations and beliefs to change. Unless otherwise required by applicable securities laws, we do not intend, nor do we undertake any obligation, to update or revise any forward-looking statements contained in this news release to reflect subsequent information, events, results or circumstances or otherwise. While we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, whether as a result of new information, future events or otherwise, except as required by law.

Important Information and Where to Find It

Celsus and Volution and certain of their directors and executive officers may become participants in solicitation of proxies from Celsus shareholders in connection with the proposed transaction. Additional Information regarding persons who may, under the rules of the SEC, be deemed to be participants in the solicitation of the Celsus shareholders in connection with the proposed transaction, and who have interests, whether as security holders, directors or employees of Celsus or Volution or otherwise, which may be different from those of Celsus shareholders generally, will be provided in the proxy statement and other materials to be filed with the SEC.

Each member of Celsus's board of directors and Celsus's executive officers, and Volution's board of directors and Volution's executive officers may be deemed "participants" in the solicitation of proxies from the Celsus shareholders in connection with the proposed transaction.

Information regarding the special interests of these directors and executive officers in the transaction will be included in the proxy statement referred to above. Additional information regarding Celsus's directors' and executive officers' respective interests in Celsus by security holdings or otherwise is set forth in Celsus's proxy statement relating to the 2015 annual meeting of stockholders filed with the SEC on May 28, 2015.

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. A definitive proxy statement and a proxy card will be filed with the SEC and will be mailed to Celsus's shareholders seeking any required shareholder approvals in connection with the proposed transaction. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT CELSUS MAY FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Shareholders may obtain, free of charge, copies of the definitive proxy statement and any other documents filed by Celsus with the SEC in connection with the proposed transaction at the SEC's website (http://www.sec.gov), at Celsus's website or by writing to Dov Elefant, CFO, Celsus Therapeutics Plc. at 24 West 40th Street, 8thFloor, New York, NY 10018.

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