(News Bulletin 247) – The Lyon-based company has a cash position offering it financial visibility until the second half of the 2024 financial year. Erytech Pharma is taking the opportunity to provide an update on the merger project with Pherecydes, contested by a new shareholder.

Life sciences companies are popular this Tuesday on the Paris Stock Exchange. As Theranexus surges more than 60% hailed for hitting a major milestone for its flagship product, Erytech Pharma also has favor with investors.

Its title still soars by 37% on Tuesday to 1.11 euros around 2:15 p.m. This outbreak of stock market fever allows Erytech Pharma to leave the unflattering status of penny stock (those companies that quote less than one euro), while the company has reassured on its level of cash, an indicator closely watched by the markets for measure the health of societies in this universe.

The Lyon-based biotechnology company, which specializes in the development of innovative therapies by encapsulating therapeutic medicinal substances inside red blood cells, has indeed provided information on its activities and its financial position for the first quarter of 2023. Erytech Pharma indicates that At the end of March, it had cash and cash equivalents totaling 30.5 million euros, enabling it to finance its current activities and operating expenses planned until the second half of 2024.

The company also specifies that it will not provide interim quarterly information on the income statement for the first quarter of 2023. Erytech is in fact in the process of a merger with the company Pherecydes Pharma.

An ongoing merger with Pherecydes

The company thus took advantage of this communication on its cash position to take stock of this merger project with Pherecydes Pharma, which has also been listed on the Paris Stock Exchange since February 2021.

The latter develops treatments to fight against infections resistant to antibiotics. The company headed by Guy-Charles Fanneau de la Horie (who also headed Neovacs between 2006 and 2013 and piloted its IPO) first decided to attack three bacteria, considered by the WHO to be the most dangerous and which alone are responsible for more than two thirds of resistant nosocomial infections: Staphylococcus aureus (staphylococcus aureus), Pseudomonas aeruginosa and Escherichia coli (E. coli).

The merger of the two French companies thus aims to create a world leader in extended phage therapy and to accelerate the development of a portfolio of phage candidates targeting pathogenic bacteria.

An offensive fund

But the marriage of Erytech Pharma with Pherecydes is not unanimous. Akkadian Partners, for example, opposes this union. The Luxembourg-domiciled fund launched hostilities and declared that it had crossed upwards the threshold of 5% of the company’s capital, with 5.06% of the capital and 4.83% of the voting rights of the company.

On May 1, the new shareholder of Erytech Pharma informed the board of directors of the Lyon-based company of his intention “to oppose the proposed merger with Pherecydes Pharma and to take de facto control of Erytech with a view to pursue alternative acquisition projects with the cash available to the company”.

The fund does not intend to let go of its prey anytime soon and is committed to increasing its stake to 15% of the share capital in the short term and approximately 25% in the medium term. According to the Lyon biotech, Akkadian’s maneuvers are akin to “an attempt to take de facto control of Erytech without filing a takeover bid. The fund does not intend to cross the 30% threshold which it would require triggering a takeover bid on Erytech Pharma.

To influence Erytech’s strategy, Akkadian Partners is also requesting the appointment of 4 directors – involving the resignation of 5 current directors – who would represent the majority of the board of directors. Despite these attempts to destabilize the Luxembourg fund, the biotech confirms that it wants to merge with Pherecydes Pharma and will oppose “any project of financial predation that would not be in the interest of society and its stakeholders”. Erytech Pharma will submit its proposed merger with Pherecydes to the general meeting of shareholders scheduled for June 23.