NEW YORK (TheStreet) -- Celladon (CLDN) stock is surging by 39.64% to $1.55 on heavy volume in mid-morning trading on Thursday, after the company signed a merger agreement with Eiger BioPharmaceuticals.

The merger will create a clinical-stage company focused on four orphan diseases, Hepatitis Delta Virus, bariatric surgery-induced hyperinsulinemic hypoglycemia, pulmonary arterial hypertension, and lymphedema, the company said in a statement on Wednesday.

"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," Eiger CEO David Cory said in a statement. "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."

An investor syndicate has committed to invest $39.5 million in the combined company, Celladon said.

The total cash balance of the combined organization after the merger will be more than $60 million, the company added. 

So far today, 4.57 million shares of Celladon have traded, versus its 30-day average of about 109,000 shares. 

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