Ruthigen, Pulmatrix sign definitive merger agreement

Ruthigen, Inc. (NASDAQ: RTGN), a biopharmaceutical company ("Ruthigen"), and Pulmatrix, Inc., a Lexington, Massachusetts based clinical stage biotechnology company ("Pulmatrix"), announced today that on March 13, 2015, they have entered into a definitive merger agreement. Upon the closing of the transactions contemplated by the merger agreement, Pulmatrix will become a wholly-owned subsidiary of Ruthigen and all of Pulmatrix's debt and equity securities outstanding prior to the consummation of the merger will be exchanged for shares of Ruthigen common stock that will represent approximately 81% of the outstanding common stock of Ruthigen. In connection with Pulmatrix's entry into the merger agreement, certain existing institutional investors in Pulmatrix entered into stock purchase agreements with Pulmatrix to invest an additional $10,000,000 in Pulmatrix upon the closing of the merger. Pulmatrix also raised approximately $4,500,000 in February 2015, in contemplation of entering into the merger agreement.

Upon completion of the merger, Ruthigen will be renamed Pulmatrix, and, pending NASDAQ approval of the merger, the surviving company's common stock will continue to trade on The NASDAQ Capital Market after the merger. It is anticipated that the combined company will focus its resources and efforts on the development of Pulmatrix's next-generation inhaled therapeutic products.

Upon completion of the merger, Dr. Robert Clarke, President and Chief Executive Officer of Pulmatrix, will be appointed as the President and Chief Executive Officer of the combined company and the combined company will be headquartered in Lexington, Massachusetts. Prior to joining Pulmatrix in 2004, Dr. Clarke was a Director of Life Sciences at Alkermes, Inc. (ALKS).

"We believe that a merger with Ruthigen provides a strong financial foundation with enhanced access to capital to further Pulmatrix's mission of innovative inhaled product development for patients with significant unmet needs in respiratory disease," Dr. Clarke said. "This transaction represents an excellent opportunity to advance our novel iSPERSE inhaled dry powder platform and lead CF candidate into clinical development and to meet our long-term growth objective of building a leading company around a robust pipeline for respiratory disease."

Terry McGuire, senior Pulmatrix board member and founding partner at Polaris Partners, Pulmatrix's largest shareholder, noted, "This transaction provides significant momentum for Pulmatrix to achieve its goals in the next stage of its development." Mr. McGuire co-founded several companies including Inspire Pharmaceuticals which was acquired by Merck & Co. (MRK) in 2011 and Advanced Inhalation Research, Inc. which was acquired by Alkermes, Inc. (ALKS) in 1999. He also represented Polaris on the board of numerous life science companies including Decode Genetics, which was acquired by Amgen (AMGN); Transform Pharmaceuticals, which was acquired by Johnson & Johnson (JNJ); and Cubist Pharmaceuticals, which was acquired by Merck & Co.

Dr. Scott Rocklage, the former Chairman and Chief Executive Officer of Cubist Pharmaceuticals, also serves on the board of Pulmatrix. He is currently a managing partner at 5AM Ventures, another lead investor in Pulmatrix. Dr. Rocklage commented, "The Pulmatrix board sees significant opportunities for growth based on the company's novel product pipeline built upon the unique iSPERSE technology." 5AM Ventures was a founding investor in Pearl Therapeutics which was acquired by AstraZeneca (AZN) in 2013.

Hojabr Alimi, Chairman and Chief Executive Officer of Ruthigen, said, "This merger has the potential to provide a significant business growth opportunity for our combined companies. We hope that the introduction of a new team of scientists and management with a proven track record, as well as Pulmatrix's new drug development programs, will catalyze significant growth opportunities in the near future."

The merger, which has been approved by the board of directors of both companies, is subject to certain closing conditions, including NASDAQ approval of an initial listing of the merged entity's common stock on NASDAQ on a post-merger basis, approval of the merger by stockholders of Ruthigen and Pulmatrix, and other customary closing conditions.

Palladium Capital Advisors, LLC is serving as the placement agent and financial advisor to Pulmatrix. Dawson James Securities, Inc. acted as an advisor to Ruthigen.

SOURCE Ruthigen, Inc.