Monday Biotech Deal Review: October 25, 2009
October 26, 2009
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A very busy deal week coincided with a very busy work week (for those of us with day jobs), so allow me a particularly grateful thank-you to Jacob Cawker, who’s been an invaluable help with the Deal Review this and the last several weeks. After the jump, licenses both inbound, outbound and just tied up (optioned); securities extended and accelerated (plus an actual common share offering, with the word “units” banished for one special week); and last but not least, a good volume of Canadian M&A (M&Eh?) from private to public to “just browsing.”
Licensing and Commercial Deals
- Sonomax Hearing Healthcare Inc. (TSXV: SHH) announced the signing of a five-year renewable license agreement with Hearing Coach Africa (Pty). The agreement specifies minimum quarterly commitments over five years for V3 hearing protectors, totalling a minimum of $1,000,000. Mining giant BHP Billiton is the first to buy into Sonomax hearing protection under this agreement.
- Cangene Corporation announced an agreement with Apotex, its largest shareholder, under which Cangene will acquire all U.S. commercialization rights for HepaGam B®, which is approved for treating two Hepatitis-B-related indications in the U.S. Cangene will pay Apotex a US$7.0 million fee as well as royalties on sales from November 1, 2009 through June 2016. Cangene manufactures HepaGam B® in its Winnipeg facility.
- Apotex Corp signed a deal with Hisamitsu Pharmaceutical to bring Hisamitsu’s FDA approved transdermal Fentanyl to the U.S., which they say is a $1.2 billion market.
- Oncolytics Biotech Inc. (TSX: ONC) (NASDAQ: ONCY) took an option in a Phase II oncology product currently being developed by privately-held British Biosciences Corp. Oncolytics bought all the convertible preferred shares of British Biosciences in exchange for 200,000 common shares of Oncolytics –at about $3.50 per share leading up to closing, that’s around $700,000 and about 0.4% of Oncolytics. If Oncolytics converts the pref shares, it would own about 10% of British Biosciences’ commons.
- Covalon Technologies Ltd. (TSXV: COV), which engineers biomaterials, signed a License Agreement and Services and Supply Agreement with a division of C.R. Bard Inc., permitting the use by Bard of Covalon technology on “certain” products and delivery by Covalon of “various” services. A bit hard to assess this one, since no financial terms or operational details were provided.
- QLT Inc. (NASDAQ: QLTI) (TSX: QLT), which just sold its U.S. subsidiary to manufacturing partner TOLMAR, is re-arranging its Visudyne deal with Novartis. QLT will have exclusive U.S. sales and marketing rights, including rights to all end-user revenue derived from Visudyne sales in the U.S., and Novartis will have marketing and sales rights in all countries outside of the U.S. subject to a 20% royalty until December 31, 2014, and 16% after that through December 31, 2019. QLT will continue to manufacture Visudyne for Novartis for ex-US distribution.
- Amorfix Life Sciences (TSX: AMF) announced the acceleration of the expiry of warrants issued on April 29, 2009. A 10-day VWAP over $1.20 per share triggered the acceleration. If all outstanding warrants are exercised, Amorfix will receive $2,524,189 of additional proceeds.
- Æterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZ) followed June’s $10 million offering with another $5.5 million this week: 4.58 million common shares at $1.20 per share plus 5-year warrants to acquire approximately 1.83 million common shares at an exercise price of US$1.25 per share. Net proceeds of $5.1 million will be used for general corporate purposes, presumably including the Phase III clinical program it took back from its insolvent partner Ardana this week.
- iCo Therapeutics Inc. (TSXV: ICO) launched a private placement of up to 8.3 million common shares (yep, not units, just actual common shares) this week. Loewen, Ondaatje, McCutcheon Limited and Versant Partners Inc. are the co-lead agents (no LOM-BioQuest angle here?). The offering is priced at $0.48 per share, for gross proceeds to iCo of $4,000,000, if fully subscribed. The Agents get a cash commission of 8%, as well as $0.60 12-month options equal to 4% of the number of shares sold.
- Theralase Technologies Inc. (TSXV: TLT) got a 30-day extension from the TSX Venture Exchange to close its $1.2 million private placement. No word on how it’s been doing so far.
- Maxxam Analytics International Corporation, an OMERS private equity portfolio company, expanded its British Columbia operations 7-fold (50 to 350 employees) by acquiring CANTEST Ltd. The deal also takes Maxxam to 1,800 employees across Canada, which according to them is “Canada’s largest independent analytical laboratory services company.” Financial terms of the deal were not disclosed.
- MDS Inc. (TSX: MDS) (NYSE: MDZ) announced that over 99% of the Common Shares were voted in favour of the sale of its MDS Analytical Technologies business to Danaher Corporation (NYSE: DHR) for $650 million in cash. MDS is also intent on selling its MDS Pharma Services business, which when complete, will leave MDS focused solely on its MDS Nordion business, which is a leading provider of medical isotopes for molecular and diagnostic imaging, radiotherapeutics and sterilization technologies.
- We were 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 transactions closed, et voila, IntelliPharmaCeutics is a public, dual-listed company (NASDAQ:IPCI; TSX:I) with $7.5 million extra cash (less what must have been some significant fees on this complex deal).
- Advitech Inc. (TSXV: AVI) announced that it will acquire all the issued and outstanding shares of Botaneco Specialty Ingredients Inc., held by Avrio Ventures Limited Partnership and (a little, still by) SemBioSys Genetics Inc. (TSX: SBS) (SemBioSys’ release here). Under the terms of the deal, Advitech will issue to Avrio and SemBioSys 28,099,003 post-Consolidation common shares of Advitech (representing 49% of all the issued and outstanding shares of Advitech), at a deemed issuance price of $0.02 per share. Concurrently with the above, Advitech will also complete a $2.5 million private placement, to be shared equally between Avrio and AgeChem Venture Fund L.P., with each acquiring 7,812,500 units of Advitech at a price of $0.16 per unit. Each unit consists of one post-Consolidation common share, and one common share purchase warrant, exercisable on the terms and conditions agreed to by the parties at the time of closing. In connection with the above-mentioned transactions, Advitech and AgeChem agreed to have 58,083,333 common share purchase warrants currently held by AgeChem redeemed through the issuance of 6,250,000 pre-Consolidation common shares at a deemed price of $0.02 per share. Following the transactions, Advitech’s largest shareholders will be Avrio (41.76%) and AgeChem (21.73%). SemBioSys Genetics Inc. (TSX: SBS) also announced an exclusive license agreement with Argentina’s Instituto de Agrobiotecnologia Rosario S.A. (INDEAR) for the commercialization and supply of SemBioSys’ safflower-produced chymosin, a protein used in the manufacture of food products. INDEAR signed an option agreement with SemBioSys in January 2008 that seems to have borne fruit.
- Prism Medical Ltd. (TSXV: PM) put itself on the block, appointing Raymond James & Associates to look for “strategic alternatives” [following an undersubscribed placement in August].