Epirus Pharmaceuticals Inc.'s all-stock takeover of Zalicus Inc., disclosed on the same day that Epirus put the wraps on a $36 million series B round, will add early stage pain drug candidates to its pipeline of biosimilars and immediately put some joy back into Zalicus' shares (NASDAQ:ZLCS), which closed Wednesday at $1.35, up 32 cents, or 31 percent.

When the all-stock merger deal closes this summer, the remaining single company will operate under the Epirus name and management, with stockholders of Cambridge, Mass.-based Zalicus owning about 19 percent of the publicly traded outfit, subject to adjustment at the closing based on the level of Zalicus' net cash at the closing.

A spokeswoman for Boston-based Epirus said the company was in a quiet period. At the end of a joint conference call with investors about the deal, the scheduled question-and-answer session was silent, too.

Epirus is working on a pipeline that includes BOW015, a biosimilar to the anti-tumor necrosis factor (TNF) therapy Remicade (infliximab, Johnson & Johnson), and BOW050, another for the anti-TNF Humira (adalimumab, Abbvie Inc.), both approved for rheumatoid arthritis (RA), Crohn's disease, and various other indications.

For its part, Zalicus – formerly known as Combinatorx – learned plenty about the anti-TNF market while trying to develop its knee osteoarthritis drug Synavive (prednisolone combined with dipyridamole), which blew up in a phase IIb study in the fall of 2008. A later analysis brought better news, but not enough to revive the compound. (See BioWorld Today, Oct. 7, 2008, and June 15, 2009.)

Mark Corrigan, CEO of Zalicus, said during the conference call that while conducting the worldwide study with Synavive at 79 sites "we developed quite a bit of experience in the RA arena" and "found that some of the criteria for entrants in the study led to quite a difference in enrollment patterns."

Patients who had been treated with anti-TNF drugs were not allowed in the trial. "We saw that In Eastern Europe and Latin America, where patients were denied such medicines, our enrollment figures went off the chart," pointing to the "tremendous global need in those arenas for anti-TNF products," said Corrigan, who will serve as chairman of the merged company's board of directors. Representatives from the existing Epirus and Zalicus boards will be included.

Start-up Epirus sounded like something of an upstart-to-be last year when CEO Amit Munshi outlined plans to take on U.S. heavyweights such as Amgen Inc. and Pfizer Inc., as well as deep-pocketed Korean firms Celltrion Inc. and Samsung Biologics.

With a tightly localized approach in its territories, Epirus hopes to gain an edge with biosimilars in such areas as South Korea, where Celltrion's infliximab biosimilar, Remsima, in 2012 became the first biosimilar monoclonal antibody in the world to win approval.

The market there will continue to grow, adding $2 billion to the gross domestic product by 2015, according to BioWorld's report, The Biosimilars Game: A Scorecard for Opportunities, Threats and Critical Strategies. (See BioWorld Today, Sept. 3, 2013.)

Meanwhile, grabbing Zalicus brings aboard pain candidate Z944, a T-type calcium channel blocker, which has yielded positive results in a phase Ib clinical model of pain, and the preclinical NaV 1.7 sodium channel modulator program. Late last year, high hopes for Zalicus' oral, N-Type calcium channel blocker Z160 were dashed when the compound missed its primary endpoints in two pain indications, lumbosacral radiculopathy and post-herpetic neuralgia, even though the target has been validated nicely by Prialt (ziconatide), the synthetic derivative of a peptide isolated from the venom on the cone snail. Dublin-based Elan Corp. plc won FDA approval of Prialt in 2004. On word of the hard-to-formulate Z160's failure, shares of Zalicus nosedived by more than 72 percent, ending the day at $1.30, a blow from which the stock never recovered. (See BioWorld Today, Dec. 30, 2004, Aug. 5, 2013, and Nov. 12, 2013.)

Enter Epirus, which meant a chance to "reform our company into a fantastic new opportunity," Corrigan said. In the merger, Leerink Partners LLC and Latham & Watkins are acting as financial and legal advisors, respectively, to Epirus. Wedbush Pacgrow Life Sciences and Goodwin Procter are acting as financial and legal advisors, respectively, to Zalicus.

Livzon Mabpharm Inc. led Epirus' series B financing. Other investors included Adage Capital, Greenwoods Investment, Gibralt US Inc., Monashee Capital Partners LP, and an investment affiliate of Mousse Partners, as well as existing investors TPG Biotech, Montreux Equity Partners and 5AM Ventures.