Celladon Corp. (NASDAQ: CLDN) was leading the bulls in Thursday’s trading session on news of a merger. The company, along with Eiger BioPharmaceuticals, announced that they have entered into a definitive merger agreement. We can expect Eiger stockholders will become the majority owners of Celladon after the companies have combined operations.

This merger remains subject to customary closing conditions, including the approval of Celladon stockholders. If approved, when the transaction closes, Celladon will be renamed Eiger BioPharmaceuticals.

The proposed merger will create a clinical-stage company with a diversified development portfolio of product candidates addressing novel targets for four distinct orphan diseases: hepatitis delta virus, bariatric surgery-induced hyperinsulinemic hypoglycemia, pulmonary arterial hypertension and lymphedema.

David Cory, president and CEO of Eiger, said:

The proposed merger and concurrent financing are expected to be sufficient to allow the combined company to obtain Phase 2 clinical trial results from at least two of the four planned development programs by late 2016. We have a dedicated, experienced management team in place and executing on these four novel programs, all of which address potentially significant markets with unmet medical needs.

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An investor syndicate has committed to invest $39.5 million in the combined company, including new investors HBM Healthcare Investments, RA Capital Management, Sabby Management, Sphera Global Healthcare, Perceptive Advisors and Monashee Capital Partners, together with existing long-time Eiger stockholders ViVo Capital and InterWest Partners.

So far $6 million of financing already has been funded and the remaining $33.5 million is expected to close simultaneously with the completion of the proposed merger. The total cash balance of the combined company on the closing of the proposed merger and the financing is expected to be greater than $60 million.

Paul Cleveland, departing president and CEO of Celladon, added:

Following an extensive review of strategic alternatives and a thorough process, we have chosen to combine with Eiger because we believe the proposed merger provides Celladon shareholders with an attractive opportunity for value appreciation. I’m also pleased that Mr. Wiklund will assume the President and Chief Executive role at Celladon.

Shares of Celladon were trading up over 15% at $1.28 midday Thursday, with a consensus analyst price target of $3.00 and a 52-week trading range of $1.00 to $28.25.

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