In May of 2015, Jaguar Animal Health ($JAGX) was spun out of Silicon Valley’s Napo Pharmaceuticals with hopes of capitalizing on Wall Street’s enthusiasm for animal health IPOs. Jaguar was developing gastrointestinal products for animals with the active botanical ingredient crofelemer, which was also the basis of a drug for HIV patients that Napo had been marketing.
But Jaguar never quite caught on with investors. In fact, after going public at $7 and raising $20 million--a shadow of the $70 million its executives originally hoped to haul in--the company didn’t get much attention on the Street until this June. That’s when it announced it had formed a $15 million stock purchase deal with Chicago’s Aspire Capital Fund and that it was in discussions with Napo about merging. That was enough to push the company’s depressed stock up 70% to $2.25.
On Thursday, Jaguar announced it had signed a letter of intent to merge with Napo at a three-to-one Napo-to-Jaguar value ratio. Napo currently owns 22.6% of Jaguar’s stock, according to a press release announcing the deal. Jaguar’s shares were up 10% in morning trading after the announcement to $1.26.
“We believe both Jaguar and Napo will benefit from the synergies and economies of scale that a merger should create in manufacturing and commercialization of crofelemer for various human and animal indications,” said Lisa Conte, Jaguar’s CEO in the statement. Conte is also the CEO of Napo.
Rejoining Napo will allow Jaguar to share in the revenues from crofelemer, which is sold for HIV patients under the brand name Mytesi. That will help support Jaguar through late-stage studies of its biggest potential revenue generator, Canalevia, which it is testing as an anti-diarrheal for dogs undergoing chemotherapy. Jaguar is currently running a pivotal trial in 200 dogs. It is also testing Equilevia for treating gastric ulcers in horses.
Jaguar does have two products on the market, Neonorm Calf and Neonorm Foal, but during the most recent quarter, they brought in just $24,143--a huge drop from the $63,142 in sales the company recorded in the same period last year. Meanwhile, Jaguar’s research and development expenses jumped 12% to nearly $2 million, contributing to an operating loss that rose from $3.2 million to $3.4 million.
In September, Jaguar struck an agreement with California-based Integrated Animal Nutrition and Health to distribute Neonorm for dairy cattle and pigs in China. Like crofelemer, Neonorm’s active ingredient is derived from Croton lechleri, a South American plant. Napo will continue to develop crofelemer, according to the statement, and it is currently in trials for four additional human applications, including chemotherapy-induced diarrhea and infectious diarrhea caused by cholera. Jaguar has filed plans with the FDA to develop versions of Neonorm for 6 additional animals.
- here’s the press release
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