Tetraphase Announces Determination of Superior Offer and Notice to AcelRx

Tetraphase Pharmaceuticals, Inc. (Nasdaq:TTPH), a biopharmaceutical company focused on commercializing its novel tetracycline Xerava (eravacycline for injection) to treat serious and life-threatening infections, today announced that its Board of Directors has determined that the latest proposal from Melinta Therapeutics, Inc. (“Melinta”) to acquire the Company is a “Superior Offer” under the terms of the Agreement and Plan of Merger, dated March 15, 2020, to which the Company is a party with AcelRx Pharmaceuticals, Inc. (“AcelRx”) and its merger subsidiary (the “AcelRx Merger Agreement”). In connection with this determination and in accordance with the terms of the AcelRx Merger Agreement, the Company has given notice to AcelRx of such determination and of its intention to consider changing its recommendation of the AcelRx Merger Agreement or terminating the AcelRx Merger Agreement unless AcelRx proposes revisions to the terms of the AcelRx Merger Agreement or makes another proposal on or prior to Friday, May 29, 2020 that, if accepted, would result in the Melinta proposal ceasing to be a Superior Offer.

Under the AcelRx Merger Agreement, Tetraphase stockholders will receive, for each share of Tetraphase common stock, 0.6303 of a share of AcelRx common stock, and one CVR, which would entitle the holders to receive aggregate payments of up to $12.5 million for the achievement of future Xerava net sales milestones starting in 2021. Based on the closing price of AcelRx stock on March 13, 2020, the last trading day prior to execution of the AcelRx Merger Agreement, the stock consideration to be received by Tetraphase equityholders under the AcelRx Merger Agreement was valued at approximately $14.4 million, with approximately $7.4 million of this amount allocated to the Company’s outstanding common stock warrants. Based on the closing price of AcelRx common stock on May 21, 2020, the stock consideration to be received by Tetraphase equityholders under the AcelRx Merger Agreement at closing is valued at approximately $20.4 million, with approximately $10.5 million of this amount allocated to the Company’s outstanding common stock warrants.

Under the latest proposal from Melinta, Melinta has offered to acquire Tetraphase for $27.0 million in cash, plus an additional $12.5 million in cash potentially payable under contingent value rights (“CVR”) to be issued in the proposed acquisition. Under the latest proposal from Melinta, the upfront cash consideration would be as follows: (i) $1.21 per share of Tetraphase common stock (including common stock underlying restricted stock units, performance-based stock units and pre-funded warrants), subject to downward adjustment in the event that the Company’s closing net cash is less than $3.0 million, (ii) $1.75 per share of Tetraphase common stock underlying the common stock warrants issued by the Company in 2019, and (iii) $1.75 per share of Tetraphase common stock underlying the common stock warrants issued by the Company in 2020. The Melinta proposal is not subject to any financing contingencies. The definitive terms and conditions of a merger agreement detailing the Melinta proposal have been fully negotiated. If the Melinta proposal continues to constitute a Superior Offer through Friday, May 29, 2020, the Tetraphase Board will consider terminating the AcelRx Merger Agreement and entering into the merger agreement with Melinta.