In July, we covered the deal ConjuChem Biotechnologies Inc. (TSX: CJB) made with Colabor Income Fund (TSX: CLB.UN), where ConjuChem got $5 million and the Income Fund got a public corporate shell. ConjuChem had $8.7 million in the bank in April, but was burning it fast (pdf).
Noting at the time that ConjuChem shareholders did not react well to the deal (they still haven’t), we wondered whether future income trusts would find biotech partners willing to try the structure again. Well, the answer is “yes.”
Vasogen Inc. (NASDAQ: VSGN; TSX: VAS), which has been trading under $0.20 since releasing its Q2 results and cutting back to one employee in July, is giving its shell to Cervus LP (TSXV: CVL.UN) unit holders in exchange for $7.5 million. Cervus is a public LP, but it’s caught by the same Canadian tax change — the SIFT tax — as income trusts, which is what is driving these entities to seek the shells of public corporations. Vasogen shares have doubled so far today.
What does the Vasogen deal have that the ConjuChem deal lacked? Two things: more cash and a brighter future.
- More Cash: ConjuChem got $5 million for its shell but Vasogen is getting $7.5 million.
- A Brighter Future: Unlike ConjuChem, which planned to use its windfall to continue its existing programs, Vasogen leveraged its cash into a deal for 14% of IntelliPharmaCeutics (IPC).
IntelliPharmaCeutics has: a lead product (a generic version of Focalin XR®) that is partnered with Par Pharmaceutical and has an ANDA filed; a generic version of Coreg CR, a high blood pressure medication, that is ready for entry into bioequivalence studies, and a platform for abuse- and alcohol-resistant drug delivery technology that can build a nongeneric product pipeline.
Now IntelliPharmaCeutics will also have extra cash and access to public markets. Everybody wins (though I assume that if Vasogen is not successful in its conversations with NASDAQ, there will be some problems).
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Monday Deal Review: August 24, 2009 « The Cross-Border Biotech Blog // August 24, 2009 at 7:02 am |
[...] · Leave a Comment This week saw a few headline deals that we covered at the time, including the Vasogen-Cervus-IntelliPharmaCeutics deal, the move by Takeda Canada to take back ACTOS rights from Lilly, and the Lonza offer for [...]
Monday Biotech Deal Review: October 25, 2009 « The Cross-Border Biotech Blog // October 26, 2009 at 12:33 pm |
[...] impressed with the IntelliPharmaCeutics-Vasogen-Cervus deal when it was announced in August, and so were shareholders. Following their approval of the plan of arrangement and merger, the [...]
Monday Biotech Deal Review: November 2, 2009 « The Cross-Border Biotech Blog // November 3, 2009 at 4:06 am |
[...] Genetics Inc. (TSX: SBS) has signed up a SIFT tax plan of arrangement with Cathedral Energy, along the lines of earlier deals by ConjuChem (with Colabor) and Vasogen (with Cervus and IntelliPharmaCeutics). SemBioSys [...]
Monday Biotech Deal Review: January 25, 2010 « The Cross-Border Biotech Blog // January 25, 2010 at 7:03 am |
[...] share price unmoved and didn’t drive unusual volume. Maybe now that ConjuChem, Vasogen and SemBioSys paved the way, the market is truly viewing these as [...]