Blue Water Acquisition Corporation
PROPOSED BUSINESS COMBINATION: Clarus Therapeutics
ENTERPRISE VALUE: $215.9 million
ANTICIPATED SYMBOL: CRXT
Blue Water Acquisition Corporation proposes to combine with Clarus Therapeutics, a pharmaceutical company dedicated to providing solutions to unmet medical needs by advancing androgen and metabolic therapies for men and women.
Clarus was founded by Dr. Robert Dudley, chairman, CEO and president to develop an oral testosterone replacement therapy (TRT) for appropriate men with testosterone deficiency. Dr. Dudley had previously co-invented and launched AndroGel®, the most successful TRT product to date, worldwide, but was keenly aware of the need for a safe and effective oral TRT for the approximately 2,000,000 men currently on testosterone therapy in the United States. Of these men, 95% receive topical testosterone gel or weekly testosterone injections. Based on research conducted for Clarus by the Harris organization1, more than 75% of men on non-oral TRT therapies are dissatisfied with their TRT and over 80% are interested in learning about an oral alternative.
In March 2019, Clarus’s mission to bring a new, state-of-the-art oral TRT to market was realized with U.S. Food and Drug Administration (FDA) approval of JATENZO® (testosterone undecanoate oral capsules; CIII). Prior to JATENZO’s approval, the only oral TRT product ever approved by FDA over 60 years ago was one associated with potentially serious liver toxicity – a characteristic not observed in clinical studies of JATENZO up to two years in length. Clarus launched JATENZO in February 2020 as the first and only FDA-approved oral softgel for TRT in adult males who have low or no testosterone due to certain medical conditions.2,3,4 JATENZO is available in three softgel strengths so that healthcare professionals can individualize patient testosterone response and adjust dosing, as necessary. Approval of JATENZO addressed a conspicuous void in the TRT market that is currently dominated by topical gels and injections. The funds from these transactions will be invested in growth-driving initiatives for JATENZO and focused R&D to expand the company’s pipeline beyond testosterone replacement. Following the close of the transaction, Dr. Dudley will continue to serve as Clarus’s CEO and President. Frank Jaeger, Clarus’s Chief Commercial Officer, and the architect of AndroGel 1.62%’s sales and marketing efforts that resulted in annual peak sales of over $1 billion, will continue to lead commercialization efforts for JATENZO.
Highlights
- SPAC transaction values Clarus at $379 million on fully diluted basis, assuming no redemptions by Blue Water stockholders.
- Existing Clarus stakeholders, led by H. I. G. Capital, will invest an additional $25 million in Clarus following the announcement of this transaction, which investment will convert into shares of the post-merger company’s common stock at $10.00 per share.
- Proceeds from the transaction to be invested in growth-driving initiatives for JATENZO, including DTC advertising, and to expand Clarus’s R&D pipeline.
TRANSACTION
PIPE
- $25 million common stock at $10.00 per share.
- Existing Clarus stakeholders, led by H. I. G. Capital
LOCKUPS
Stockholder Lock-Up Agreements
- Certain significant Clarus stockholders will enter into a lock-up agreement with the Company where each Clarus stockholder party thereto would agree to a 180-day lock-up of its restricted Company securities following Closing
Lender Lock-Up Agreements
- Certain Clarus noteholders (the “Lenders”) will enter into a lock-up agreement with the Company where each Lender party thereto would agree to a 180-day lock-up of its restricted Company securities following Closing, subject to:
- (i) early release upon certain corporate transactions,
- (ii) limited “leak-out” transfers of restricted securities within specified daily volume caps starting with the 91st day after the Closing
TRANSACTION SUPPORT AGREEMENTS
- The Company, Clarus, and certain Clarus equityholders and noteholders party thereto entered into a Transaction Support Agreement (the “Transaction Support Agreement”) pursuant to which, among other things, the Clarus securityholders party thereto agreed to provide Clarus with up to $35 million in financing, through the purchase of convertible and non-convertible promissory notes (of which approximately $7.2 million was funded prior to April 27, 2021), and to transfer certain royalty rights to Clarus.
UNDERWRITING AGREEMENT AMENDMENT
- Maxim agreed to eliminate, and waive the Company’s previous non-compliance with, certain rights of first refusal under the Underwriting Agreement in exchange for an undertaking by the Company, at its option, either to have Maxim participate as an underwriter or placement agent in future financings by the Company or to engage Maxim as its capital markets advisor in connection with future financings, on the terms and conditions set forth in the Underwriting Agreement Amendment. The Company will also pay Maxim a financial advisory fee in connection with the Business Combination.
NOTABLE CONDITIONS TO CLOSING
- Clarus’s indebtedness at the Closing shall not exceed $43.125 million and there shall be no obligation of Clarus to make any post-Closing payment in the nature of a royalty
NOTABLE CONDITIONS TO TERMINATION
- By either the Company or Clarus if the Closing has not occurred by October 27, 2021
- Clarus shall have consummated a “Permitted Financing” (as described in the Merger Agreement) with gross proceeds to Clarus of at least $15 million.
- Certain litigation in which Clarus is involved shall not have been adjudicated or settled, and no offer of settlement shall have been made by Clarus, that would have a Material Adverse Effect on the Company
ADVISORS
- Truist Securities acted as a financial advisor and Needham & Company acted as a capital markets advisor to Clarus.
- Cantor Fitzgerald & Co. and Oppenheimer & Co., Inc. acted as capital markets advisors to Blue Water Acquisition Corp.
- Maxim Group LLC acted as financial advisor to Blue Water.
- Goodwin Procter served as legal counsel to Clarus.
- Ellenoff Grossman & Schole LLP served as legal counsel to Blue Water.
- Mayer Brown LLP served as legal counsel to the capital markets advisors.
MANAGEMENT & BOARD
Executive Officers
Joseph Hernandez, 47
Chairman, Chief Executive Officer, & Chief Financial Officer
Mr. Hernandez is an entrepreneurial leader with over 25 years of experience in the healthcare field. He has a background in company creation, early stage technology development, as well as private and public market financing. He brings leadership to the team, backed by a strong educational foundation in biology, medicine, molecular genetics, microbiology, epidemiology, marketing, and finance. Over the course of his career, he has founded or led eight entrepreneurial companies in cutting edge areas of healthcare and pharmaceuticals. After years of building his career at Merck & Co. (NYSE:MRK) from to December 1998 to January 2001 and Digene (acquired by Qiagen (NYSE:QGEN)) from 2005 to 2009, Mr. Hernandez founded and became the President and CEO of Innovative Biosensors from 2004 to 2009. Later, Mr. Hernandez served as the Founder and Chairman of Microlin Bio Inc. from August 2013 to January 2017 and as Chairman of the Board of Ember Therapeutics (OTCMKTS:EMBT) from April 2014 to January 2019. He was also the Chairman of Sydys Corporation from May 2016 to January 2019. In 2018, Mr. Hernandez founded Blue Water Vaccines, an early stage biotechnology company focused on manufacturing a universal influenza vaccine in partnership with the University of Oxford in England. He has served as Chairman of Blue Water Vaccines, Inc. since January 2019. Most recently, in January 2020, he founded and in May 2020 sold Noachis Terra, Inc. (acquired by Oragenics (NYSE:OGEN)) a company developing a vaccine for COVID-19. Mr. Hernandez brings experience in managing and interacting with diverse cultures, high level executives, and elected officials, to the team. Mr. Hernandez received a B.S. in Neuroscience, M.S. in Molecular Genetics and Microbiology from the University of Florida and a MBA from the University of Florida, and is currently pursuing a MSc in Chronic Disease Epidemiology and Biostatistics from Yale University.
Board of Directors
Kimberly Murphy, 57
Director
Ms. Murphy has more than 25 years of experience at leading pharmaceutical companies including Novartis (NYSE:NVS) and Merck & Co (NYSE:MRK). In her distinguished career at Merck, she rose through various public affairs and business roles to leadership positions as Region Marketer for U.S. Commercial Operations, U.S. Marketing Leader for Adult Vaccines and Director of the HPV/Gardasil Franchise. Most recently, Ms. Murphy served as currently the Vice President of Global Vaccines Commercialization Leader, Influenza Franchise, at GlaxoSmithKline (NYSE:GSK). Ms. Murphy has been with GSK since 2011, initially serving as VP of US Vaccines Customer Strategy from October 2012 to June 2014, then VP of the North America Vaccines Integration Planning from June 2014 to May 2015, followed by VP and Global Marketing Head for the Shingles Vaccines from May 2015 to February 2016, before transitioning to the Global Vaccines Commercialization Leader for the Influenza Franchise. Kim has Board and Advisory experience that includes serving on the boards of Oragenics, Inc. (NYSE: OGEN) and Blue Water Vaccines, Inc., as well as the GSK Representative to the Biotechnology Industry Organization’s Biodefense Advisory Council, and on the St. Joseph’s University Pharmaceutical & Healthcare Marketing MBA Program’s Advisory Board. Ms. Murphy received a B.A. in English from Old Dominion University, a M.B.A. in Marketing from St. Joseph’s University, and the Marketing Excellence Program from the Wharton School of University of Pennsylvania.
James Sapirstein, 59
Director
Mr. Sapirstein has over 35 years of experience leading, founding, growing, and selling healthcare companies, specifically in the pharmaceutical space. Mr. Sapirstein is currently the President and CEO of AzurRx BioPharma (NASDAQ:AZRX), where he has been since October 2019. His career began in sales at Eli Lilly, eventually rising to Director of International Marketing at Bristol Myers Squibb from July 1996 to June 2000, and later led the launch of Viread (tenofovir) at Gilead Sciences, Inc. (NASDAQ:GILD), where he served as Global Marketing Lead from June 2020 to June 2002. From November 2006 to January 2011, he served as founding CEO of Tobira Therapeutics (NASDAQ:TBRA), then a private company, and later acquired by Allergan (NYSE:AGN). Since then, he has served as CEO of Alliqua Biomedical (NASDAQ:ALQA) from September 2012 to February 2014 and CEO of Contravir Pharmaceuticals (NASDAQ:CTRV from March 2014 to October 2018. He has been part of almost two dozen drug product launches and specifically either led or has been a key member of several HIV product launches into different new classes of therapeutics at the time. Additionally, Mr. Sapirstein holds board positions on Marizyme (OTCMKTS:MRZM) (Executive Chairman) since December 2018 Enochian Biosciences (NASDAQ:ENOB) since April 2018, and Leading Biosciences since March 2016. He previously served as a director of BioNJ from February 2017 to February 2019, an association of biopharma industries in New Jersey, from February 2017 to February 2019, RespireRX (OTCBB:RSPI) from April 2014 to January 2020, and NanoViricides Inc. (NYSE: NNVC) from November 2018 to January 2020. He is also a Board Director for BIO, the leading Biopharma Industries Organization promoting public policy and networking in the healthcare space, where he sits on both the Health Section and Emerging Companies Section Governing Boards. Mr. Sapirstein received a B.S. in Pharmacy from Rutgers University and his MBA from Fairleigh Dickinson University.
Michael Lerner, 62
Director
Mr. Lerner has over 30 years of experience providing strategic judgment and practical advice regarding diverse matters for pharmaceutical, life sciences, and health care companies. Mr. Lerner has a background in product acquisitions and divestitures, technology licensing, sales and marketing practices, mergers and acquisitions, intellectual property, corporate compliance, employment law, and regulatory matters. Mr. Lerner is currently a partner at Lowenstein Sandler LLP, where he chairs the Life Sciences Group. Prior to joining Lowenstein Sandler, from August 2008 to December 2010 Mr. Lerner was a Senior Vice President and General Counsel of EKR Therapeutics, a specialty pharmaceutical company focusing on acute care hospital products. That position followed six years (from September 2000 to August 2006) as Vice President and General Counsel at Reliant Pharmaceuticals Inc., which Mr. Lerner helped grow into one of the nation’s largest privately held pharmaceutical companies before it was acquired by GlaxoSmithKline in 2007. As part of Reliant’s senior management team, he was named lead inside lawyer on product acquisitions and dispositions. He currently serves on the board of directors of the Blanche and Irwin Lerner Center for the study of Pharmaceutical Management Issues at Rutgers Business School. Mr. Lerner brings valuable expertise in legal considerations of the life science industry, as well as a documented track record of public speaking and professional presentations to the team. Mr. Lerner received a J.D. from Hofstra University School of Law in and a B.A. from Boston University.
Yvonne McBurney, 56
Director
Ms. McBurney has over 30 years of business leadership experience in the healthcare field. Ms. McBurney has successfully developed and executed strategic business plans to drive consistent above-plan performance by optimizing group synergies, building high-performing diverse teams, and driving cultural change. During her career, she has acquired a reputation for working with the highest level of integrity. Since March 2020, Ms. McBurney has been VP of Operations at Alivia Specialty Pharmacy. That position followed ten years at GlaxoSmithKline (NYSE:GSK), beginning in January 2010 where she was ultimately appointed to lead the US Commercial and Medical Affairs integration of TESARO, an oncology focused biopharmaceutical company. She also held the Puerto Rico General Manager role for six years and delivered significant revenue and margin growth. Prior to GSK, Ms. McBurney was the General Manager of Wyeth Puerto Rico from April 2006 to November 2009. Ms. McBurney received an MBA and B.A. from Interamerican University of Puerto Rico and is fluent in Spanish and English.