Conatus Pharmaceuticals & Histogen Enter Definitive Merger Agreement

Conatus Pharmaceuticals Inc. and Histogen Inc. recently announced the companies have entered into a definitive agreement under which Histogen will merge with a wholly owned subsidiary of Conatus in an all-stock transaction. The combined company will operate under the name Histogen, Inc., is expected to trade on the Nasdaq Capital Market under a new ticker symbol still to be determined and will focus on advancement of its patented technology for dermatological and orthopedic indications.

“After completing a comprehensive review of multiple strategic alternatives, we determined that the proposed merger with Histogen would provide the best opportunity for Conatus shareholders moving forward,” said Steven J. Mento, PhD, President, Chief Executive Officer and co-founder of Conatus. “We believe that Histogen’s clinical-stage dermatological and orthopedic product development programs, under the continued guidance of the established Histogen senior management team, offer significant potential to drive future value for the combined company.”

Histogen has built a pipeline of novel product candidates with demonstrated clinical activity that target high value markets. Its lead product candidate, HST 001 or Hair Stimulating Complex (HSC), is a minimally-invasive treatment to promote new hair growth in patients with male pattern hair loss, addressing an underserved multi-billion-dollar global market. In addition, Histogen is developing HST 002, a human-derived collagen and extracellular matrix dermal filler, and HST 003, an extracellular matrix scaffold for the treatment of articular cartilage defects. Histogen expects all three product candidates to reach clinical and regulatory inflection points in 2020.

“This merger is transformative for Histogen as we look to advance our novel regenerative medicine pipeline,” said Richard Pascoe, Chairman and CEO of Histogen. “We believe the target product profile of our product candidates combined with their market potential provides an opportunity for Histogen to become a leader in the aesthetics and orthopedic medicine markets.”

Histogen currently anticipates meeting the following upcoming development milestones:

-File an Investigational New Drug Application Amendment in Q2 2020 and initiate a Phase 1b/2a study of HST 001 for the treatment of male pattern baldness in Q2 2020.

-File an Investigational Device Exemption in Q2 2020 and initiate a Phase 1 study of HST 002 as a dermal filler in Q2 2020.

-File an Investigational New Drug Application in Q3 2020 and initiate a Phase 1 study of HST 003 for the treatment of articular cartilage defects in the knee in Q3 2020.

-Announce top-line results from Phase 1 study of HST 002 for the treatment of nasolabial folds in Q3 2020.

-Announce top-line results from Phase 1b/2a study of HST 001 for the treatment of male pattern baldness in Q4 2020.

Histogen’s pipeline is derived from a single patented manufacturing process that yields multiple biologic products from a single bioreactor. Histogen’s first aesthetic application, a naturally secreted cell conditioned media ingredient for topical skin care products, is marketed by leading global biopharmaceutical company Allergan plc within its SkinMedica A+ brand.

Under the terms of the merger agreement, pending stockholder approval of the transaction, Histogen will merge with a wholly-owned subsidiary of Conatus and Histogen stockholders will receive newly issued shares of Conatus common stock. The exchange ratio used to determine the number of shares of Conatus common stock issuable to Histogen stockholders pursuant to the merger was determined using a pre-transaction valuation of $100 million for Histogen’s business, based on its latest priced investment round and clinical pipeline advancement, and $35.135 million for Conatus’ business, an approximately 155% premium to the 20-day volume weighted average closing share price of Conatus prior to the signing date on the Nasdaq Capital Market. As a result, current Conatus stockholders will collectively own approximately 26%, and Histogen stockholders will collectively own approximately 74%, of the combined company on a fully-diluted basis, after taking into account Histogen’s and Conatus’ outstanding options and warrants at the time of closing, irrespective of the exercise prices of such options and warrants, with such ratio subject to adjustment based on each company’s net cash balance at closing.

The combined company, led by Histogen’s current management team, is expected to be named Histogen Inc. and be headquartered in San Diego, CA. After closing, the combined company is expected to trade on the Nasdaq Capital Market under a new ticker symbol. At closing, the combined company’s board of directors is anticipated to consist of eight members, including six members of Histogen’s current board and two members of Conatus’ current board. The merger agreement has been unanimously approved by the board of directors of each company, who have also recommended to their respective company’s stockholders that they approve the merger agreement, the merger and, with respect to Conatus’s stockholders, a reverse stock split. The transaction is expected to close by the end of the second quarter of 2020, subject to approvals by the stockholders of Histogen and Conatus, a reverse stock split being implemented by Conatus, the continued listing of the combined company on Nasdaq and other customary closing conditions.

Canaccord Genuity LLC is acting as financial advisor to Histogen in the transaction. Conatus’ financial advisor in the transaction is Oppenheimer & Co., Inc. Sheppard Mullin Richter & Hampton LLP is serving as legal counsel to Histogen and Latham and Watkins LLP is serving as legal counsel to Conatus.

A more complete description of the terms of and conditions of the transaction can be found in Conatus’ Form 8-K to be filed on January 28, 2020, with the SEC and in the Merger Agreement, which is filed as an exhibit to that Form 8-K.

Histogen is a regenerative medicine company focused on developing patented technologies that replace and regenerates tissues in the body. The Company’s innovative technology platform utilizes cell conditioned media and extracellular matrix materials produced by hypoxia-induced multipotent cells to develop therapeutic products that address underserved, multi-billion US dollar global markets. For more information, visit www.histogen.com.

Conatus is a biotechnology company that has been focused on the development of novel medicines to treat chronic diseases with significant unmet need. For more information, visit www.conatuspharma.com.