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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 1, 2008
Critical Therapeutics, Inc.
(Exact Name of Registrant as Specified in Charter)
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Delaware
(State or Other Jurisdiction
of Incorporation)
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000-50767
(Commission
File Number)
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04-3523569
(IRS Employer
Identification No.) |
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| 60 Westview Street, Lexington, Massachusetts |
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02421 |
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(Zip Code) |
Registrant’s telephone number, including area code: (781) 402-5700
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement.
On May 1, 2008, Critical Therapeutics, Inc. (the “Company”), Neptune Acquisition Corp., a wholly
owned subsidiary of the Company (the “Transitory Subsidiary”), and Cornerstone BioPharma Holdings,
Inc. (“Cornerstone”) entered into an Agreement and Plan of Merger (the “Merger Agreement”). Under
the Merger Agreement, the Transitory Subsidiary will be merged with and into Cornerstone (the
“Merger”), with Cornerstone continuing after the Merger as the surviving corporation and a wholly
owned subsidiary of the Company.
At the effective time of the Merger, all outstanding shares of Cornerstone’s common stock will be
converted into and exchanged for shares of the Company’s common stock and all outstanding options,
whether vested or unvested, and all outstanding warrants to purchase Cornerstone’s common stock
will be assumed by the Company and become options and warrants to purchase the Company’s common
stock. The Merger Agreement provides for the Company to issue in the Merger to Cornerstone
stockholders, and assume Cornerstone options and warrants that will represent, an aggregate of
approximately 101.5 million shares of the Company’s common stock, subject to adjustment as a result
of a reverse stock split of the Company’s common stock to occur in connection with the Merger.
Immediately following the effective time of the Merger, Cornerstone’s stockholders will own
approximately 70 percent, and the Company’s current stockholders will own approximately 30 percent,
of the Company’s common stock, after giving effect to shares issuable pursuant to Cornerstone’s
outstanding options and warrants, but without giving effect to any shares issuable pursuant to the
Company’s outstanding options and warrants. The exchange ratio per share of Cornerstone’s common
stock will be based on the number of shares of Cornerstone’s common stock outstanding immediately
prior to the effective time of the Merger and will not be calculated until that time.
Following consummation of the Merger, the Company will be renamed Cornerstone Therapeutics Inc. and
its headquarters will be located in Cary, North Carolina, at Cornerstone’s headquarters. Promptly
after the effective time of the Merger, the Company has agreed to appoint directors designated by
Cornerstone to the Company’s Board of Directors, specified current directors of the Company will
resign from the Board of Directors and the Company will appoint new executive officers designated
by Cornerstone.
Immediately prior to the effective time of the Merger, the Company has agreed to effect a reverse
stock split of its common stock whereby each issued and outstanding share of its common stock will
be reclassified and combined into a fractional number of shares of common stock. The reverse stock
split ratio is to be mutually agreed upon by the Company and Cornerstone. The reverse stock split
is necessary so that as of the effective time of the Merger the Company will satisfy the minimum
bid price requirement pursuant to NASDAQ’s initial listing standards.
Consummation of the Merger is subject to a number of closing conditions, including adoption of the
Merger Agreement by Cornerstone’s stockholders, approval by the Company’s stockholders of the
issuance of the Company’s common stock in the Merger, the reverse stock split and the change in the
Company’s name, expiration or termination of any waiting period under the Hart-Scott-Rodino
Antitrust Improvements Action of 1976, approval by NASDAQ of the Company’s application for
re-listing of the Company’s common stock in connection with the Merger, the continued availability
of the Company’s products and other customary closing conditions as set forth in the Merger
Agreement.
The Merger Agreement contains customary representations, warranties and covenants, including
covenants relating to obtaining the requisite approvals of the stockholders of the Company and
Cornerstone, solicitation of competing acquisition proposals by the Company and Cornerstone,
listing of
the Company’s common stock on NASDAQ and the Company’s and Cornerstone’s conduct of its business
between the date of signing the Merger Agreement and the closing of the Merger.
The Merger Agreement provides for the payment of a termination fee of $1.0 million by each of the
Company and Cornerstone to the other party in specified circumstances in connection with the
termination of the Merger Agreement. In addition, in specified circumstances in connection with
termination of the Merger Agreement, the Company has agreed to reimburse Cornerstone for up to
$150,000 in expenses and Cornerstone has agreed to reimburse the Company for up to $100,000 in
expenses.
The foregoing description of the Merger Agreement is not complete and is qualified in its entirety
by reference to the Merger Agreement, which is filed as Exhibit 2.1 hereto and is incorporated
herein by reference.
The Merger Agreement contains representations and warranties of the Company, the Transitory
Subsidiary and Cornerstone made to each other as of specific dates. The assertions embodied in
those representations and warranties were made solely for purposes of the contract among the
Company, the Transitory Subsidiary and Cornerstone and may be subject to important qualifications
and limitations agreed to by the Company, the Transitory Subsidiary and Cornerstone in connection
with the negotiated terms. Moreover, some of those representations and warranties may not be
accurate or complete as of any specified date, may be subject to a contractual standard of
materiality different from those generally applicable to stockholders or may have been used for
purposes of allocating risk among the Company, the Transitory Subsidiary and Cornerstone rather
than establishing matters as facts.
Concurrently with the execution of the Merger Agreement, funds managed by Healthcare Ventures and
Advanced Technology Ventures, which own in the aggregate approximately 19 percent of the Company’s
outstanding common stock, have entered into agreements that provide, among other things, that the
stockholders will vote in favor of the issuance of the Company’s common stock in the Merger and
grant to Cornerstone a proxy to vote all of such stockholders’ shares in favor of the issuance of
the Company’s common stock in the Merger. Likewise, holders of a majority of the shares of
Cornerstone’s outstanding common stock have entered into agreements that provide, among other
things, that the stockholders will vote in favor of adoption of the Merger Agreement and grant to
the Company a proxy to vote all of such stockholders’ shares in favor of adoption of the Merger
Agreement. In addition, these Cornerstone stockholders have agreed not to transfer or otherwise
dispose of any shares of the Company’s common stock that they receive in the Merger for 180 days
after the effective time of the Merger. Furthermore, Carolina Pharmaceuticals Ltd., which is the
holder of a promissory note issued to a wholly owned subsidiary of Cornerstone, has entered into an
agreement that provides, among other things, for the conversion of the principal amount of such
note into shares of Cornerstone’s common stock prior to the effective time of the Merger and for
the same voting and lock-up provisions provided for pursuant to the agreements that Cornerstone’s
other stockholders have entered into.
Important Additional Information Will Be Filed with the SEC
The Company plans to file with the U.S. Securities and Exchange Commission (“SEC”) a Registration
Statement on Form S-4 and file with the SEC and mail to its stockholders a Proxy
Statement/Prospectus in connection with the transaction. The Registration Statement and the Proxy
Statement/Prospectus will contain important information about the Company, Cornerstone, the
transaction and related matters. Investors and security holders are urged to read the Registration
Statement and the Proxy Statement/Prospectus carefully when they are available.
Investors and security holders will be able to obtain free copies of the Registration Statement and
the Proxy Statement/Prospectus and other documents filed with the SEC by the Company through the
web site maintained by the SEC at www.sec.gov.
In addition, investors and security holders will be able to obtain free copies of the Registration
Statement and the Proxy Statement/Prospectus from the Company by contacting Critical Therapeutics,
Inc., Attn: Chief Financial Officer, 60 Westview Street, Lexington, MA 02421.
The Company, and its directors and executive officers, may be deemed to be participants in the
solicitation of proxies in respect of the transactions contemplated by the Merger Agreement.
Information regarding the Company’s directors and executive officers is contained in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2007, as amended, and its proxy
statement dated April 25, 2008, which are filed with the SEC. As of April 30, 2008, the Company’s
directors and executive officers beneficially owned approximately 10,334,319 shares, or 22.9
percent, of the Company’s common stock.
Safe Harbor for Forward-Looking Statements
Statements in this report regarding the proposed transaction between the Company and Cornerstone;
the expected timetable for completing the transaction; future financial and operating results,
including targeted product milestones; benefits and synergies of the transaction; future
opportunities for the combined company; strategy, future operations, financial position, future
revenues and projected costs; prospects, plans and objective of management; and any other
statements about the Company’s or Cornerstone’s management team’s future expectations, beliefs,
goals, plans or prospects constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Any statements that are not statements of historical
fact (including statements containing the words “believes,” “plans,” “could,” “anticipates,”
“expects,” “estimates,” “plans,” “should,” “target,” “will,” “would” and similar expressions)
should also be considered to be forward-looking statements. There are a number of important
factors that could cause actual results or events to differ materially from those indicated by such
forward-looking statements, including: the ability to consummate the transaction; the ability to
successfully integrate operations and employees; the ability to realize anticipated synergies and
cost savings; the ability to develop and maintain the necessary sales, marketing, distribution and
manufacturing capabilities to commercialize the Company’s
products, including ZYFLO CR™ (zileuton) extended-release tablets; the ability
to transition the management teams effectively; patient, physician and third-party payor acceptance
of the Company’s products, including ZYFLO CR, as safe and effective therapeutic products; the
ability to maintain regulatory approvals to market and sell the Company’s products, including ZYFLO
CR; the ability to successfully enter into additional strategic licensing, collaboration or
co-promotion transactions on favorable terms, if at all; the Company’s potential inability to
maintain compliance with NASDAQ listing requirements; adverse side effects experienced by patients
taking the Company’s products; conducting clinical trials, including difficulties or delays in the
completion of patient enrollment, data collection or data analysis; the results of preclinical
studies and clinical trials with respect to products under development and whether such results
will be indicative of results obtained in later clinical trials; the Company’s ability to obtain
the substantial additional funding required to conduct development and commercialization
activities; the Company’s dependence on its strategic collaboration with MedImmune, Inc.; the
ability to obtain, maintain and enforce patent and other intellectual property protection for the
Company’s products, discoveries and drug candidates; and the other factors described in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2007, as amended, filed with
the SEC and other filings that the Company makes with the SEC. If one or more of these factors
materialize, or if any underlying assumptions prove incorrect, actual results, performance or
achievements may vary materially
from any future results, performance or achievements expressed or implied by these forward-looking
statements.
In addition, the statements in this report reflect the Company’s expectations and beliefs only as
of the date hereof. Subsequent events and developments may cause the Company’s expectations and
beliefs to change. However, while the Company may elect to update these forward-looking statements
publicly at some point in the future, the Company specifically disclaims any obligation to do so,
except as expressly required by law, whether as a result of new information, future events or
otherwise. These forward-looking statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, business development transactions, joint ventures or
investments, other than the proposed transaction with Cornerstone. These forward-looking
statements should not be relied upon as representing the Company’s views as of any date after the
date of this report.
Item 1.02. Termination of a Material Definitive Agreement.
On May 1, 2008, in connection with entering into the Merger Agreement, the Company’s Board of
Directors approved the termination of the Company’s Employee Stock Purchase Plan, effective
immediately. While in effect, payroll deductions were made under the Employee Stock Purchase Plan
on behalf of participating employees for the purchase of the Company’s common stock at the end of
the applicable offering period. In connection with the termination of the Employee Stock Purchase
Plan, the balance of funds in each participating employee’s deduction account will be refunded to
such employee.
Item 8.01. Other Events.
On May 1, 2008, the Company issued a press release announcing the execution of the Merger
Agreement, a copy of which is filed as Exhibit 99.1 hereto and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
See Exhibit Index attached hereto.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| Date: May 1, 2008 |
CRITICAL THERAPEUTICS, INC.
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By: |
/s/ Thomas P. Kelly
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Thomas P. Kelly |
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Chief Financial Officer and
Senior
Vice President of Finance and
Corporate Development |
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EXHIBIT INDEX
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| Exhibit No. |
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Description |
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2.1
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Agreement and Plan of Merger, dated as of May 1, 2008, by and
among Critical Therapeutics, Inc., Neptune Acquisition Corp.
and Cornerstone BioPharma Holdings, Inc. |
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99.1
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Press Release dated May 1, 2008. |