Blue Water Acquisition Merges with Clarus Therapeutics

Clarus Therapeutics Inc., a pharmaceutical company dedicated to providing solutions to unmet medical needs by advancing androgen and metabolic therapies for men and women, and Blue Water Acquisition Corp., a special purpose acquisition company (SPAC), announced a definitive business combination agreement that will result in Clarus becoming a publicly traded company. This transaction values Clarus at $379 million on a fully diluted basis, assuming no redemptions by Blue Water stockholders. In addition, current Clarus stakeholders will invest an additional $25 million in Clarus following the announcement of this transaction. Subject to stockholder approval and the satisfaction of customary closing conditions, the business combination transaction is expected to close in the third quarter of 2021.

Clarus Therapeutics Overview

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. Mr. Jaeger has built a team with vast experience in the TRT field.

Investment 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.

• Truist Securities acted as a financial advisor and Needham & Company acted as a capital markets advisor to Clarus.

• Maxim Group LLC acted as financial advisor to Blue Water Acquisition Corp.

• Cantor Fitzgerald & Co. and Oppenheimer & Co., Inc. acted as capital markets advisors to Blue Water Acquisition Corp.

"When I established Clarus, the singular focus of our team was the development and launch of an oral TRT product to address a significant void in treatment options available to appropriate men in need of testosterone therapy. When JATENZO launched in early 2020, it represented not only the culmination of those efforts but also brought our collective vision to life," said Dudley. "Clarus is now ready to enter the public markets and build out its pipeline. The merger with Blue Water Acquisition Corp. is expected to bring fresh capital and exceptional board members to the company so that we can expand our commercialization of JATENZO in the U. S., develop new innovative products, and set a broader course for Clarus beyond men's health."

In addition to monetary value, this transaction brings with it Blue Water's deep expertise in the life sciences and pharmaceutical sectors. We believe this will serve as a complementary asset to Clarus as it expands its footprint in the industry. To this end, Kimberly Murphy, former VP, Global Vaccines Commercialization (Influenza) at GSK will join Clarus's board as Chairperson after close of the transaction.

"We are excited about the prospects for Clarus," said Joseph Hernandez, Chairman and CEO of Blue Water Acquisition Corp. "Clarus's commitment to the success of JATENZO, deep bench of expertise, proclivity for innovation, compelling financial profile and attractive growth prospects are the drivers for our decision to select Clarus as our merger partner after a thorough search. We look forward to working with the impressive team at Clarus to close our merger in a timely manner."