A busy Monday Deal Review is headlined by Labopharm and ProMetric on the securities front, MDS’ final divestiture on the M&Eh front and Biovail and Bioniche on the licensing front, and there’s lots more activity behind those for over $100 million of deals. Check out all the details (and the witty headlines)
Labopharm Inc. (TSX: DDS) (NASDAQ: DDSS) launched and priced a $20 million public offering, with Deutsche Bank Securities as the sole book-running manager and Canaccord Adams, Dundee Capital Markets and Versant Partners as co-managers. Labopharm is offering 11,764,706 units at US$1.70 per unit, each unit comprised of one common share and one half warrant exercisable for US$2.30 per share during the period beginning six months after the date of issuance and ending three years following the date of issuance. There is a 30-day overallotment option for up to 1,764,706 additional units, in which case gross proceeds will be approximately US$23 million.
ProMetric Life Sciences Inc. (TSX: PLI) closed a US$13 million financing deal with California’s Abraxis Bioscience (NASDAQ: ABII) comprised of a US$10 million 5-year loan at 5% with principal amounts due in five annual instalments, plus US$3 million for 17,850,000 common shares at $0.18 per share. Abraxis has the option to take the annual instalments in ProMetic equity at future prevailing market price, subject to disinterested shareholder and TSX approvals. This follows January’s collaboration tie-up between the two companies.
Microbix Biosystems Inc. (TSX: MBX) closed a $1.3 million private placement, issuing 3,714,286 Common Shares at $0.35 per share, including some to a Director. In addition, 211,000 finders warrants (exercisable for 18 months at $0.37) were issued in connection with the private placement.
Osta Biotechnologies Inc. (TSXV: OBI) announced a private placement of a maximum of 17,857,143 units at a price of $0.14 per unit for maximum gross proceeds of $2.5 million. Each unit will consist of one common share and one half of a (2-year $0.22) warrant. Exclusive agent Sherbrooke Street Capital Inc. gets a 7% commission on gross proceeds.
Opsens Inc. (TSXV: OPS) closed the private placement it announced in January, selling 4,287,500 units at $0.85 per unit, for an aggregate gross proceeds of approximately $3.6 million (in range of the $3.5 — $4.5 plan). Each unit is comprised of one common share and one-half of a (24-month $1.15) warrant. Opsens paid a cash commission of $254,404 to M Partners Inc. and to Industrial Alliance Securities Inc. and issued 299,299 non transferable broker warrants (exercisable at $0.85 for 24 months).
iCo Therapeutics (TSXV: ICO) announced that 99% of warrants issued under its 2009 private placement were exercised prior to expiry, including the 1,075,000 warrants held by Isis Pharmaceuticals Inc. (NASDAQ: ISIS). iCo received proceeds of $968,813 and now has 40,987,301 shares outstanding.
TSO3 Inc. (TSX: TOS) announced a $16 million bought deal with a syndicate of underwriters, led by Canaccord Adams, with a 15% overallotment available. Company co-founder and Chief Scientific Officer, Mr. Simon Robitaille, has also agreed to sell to the underwriters 150,000 common shares on the same terms and conditions for $240,000.
Miraculins Inc. (TSXV: MOM), a diagnostic development company focused on non-invasive tests, announced a private placement of up to 7,150,000 units at a price of $0.07 per unit for gross proceeds of up to $500,000. Each unit consists of one common share and one (1-year $0.10) warrant, callable at the option of the company in the event the shares trade at or above $0.14 per share for any of 20 out of 30 consecutive trading days.
Theratechnologies Inc. (TSX:TH) is adopting a shareholder rights plan, though it says it is not aware of interested offerors. The plan will be voted on by shareholders on March 25, 2010. The company also announced its fourth quarter financials.
Spectral Diagnostics’ deal with BioMS Grows With Other Investors
BioMS’ deal with Spectral Diagnostics Inc. (TSX: SDI) has taken an interesting turn. Spectral is increasing the private placement by $5.5M, bringing the total amount to be raised to $19.5M and adding GrowthWorks Atlantic Venture Fund Ltd., GrowthWorks Canadian Fund Ltd. and Mavrix Fund Management Ltd. to the round. BioMS will hold approximately 39.6% of the issued and outstanding shares on a non-diluted basis, instead of 48% as previously planned. The $3M services agreement, whereby BioMS will provide clinical, regulatory and capital market consulting services to Spectral, is still in the plan. Other tidbits: Broker warrants will also be issued to Desjardin Securities Inc.; plus, Spectral will issue an additional 2,890,625 common shares to GrowthWorks Canadian at a deemed price of $0.40 as full repayment and final settlement of a promissory note. The transactions are subject to majority shareholder approval at a special meeting of shareholders scheduled for Friday February 26, 2010, with a record date of December 29, 2009 at close of business. Closing is expected in early March 2010.
MDS: Mostly Done Selling
MDS signed agreements to divest its remaining MDS Pharma Services Early Stage business to Ricerca Biosciences LLC for a 15% minority equity interest and $45 million consisting of a $25 million 4% five year note and $20 million in cash, subject to adjustment. Under the terms of the deal, the divestiture to Ricerca does not include the Early Stage Development facility in Montreal, which will be closed (eliminating approximately 225 jobs), nor does it include the sale of MDS Pharma Headquarters in King of Prussia, Pensylvania. Cost of wind down is estimated at $7-$12 million, and the cost of employee severance is estimated at $18-$21 million. MDS retains pension obligations of approximately $3 million. MDS will also retain litigation claims, certain U.S. FDA related costs, and lease obligations amounting to approximately $9 million. MDS may also assume additional contingent liabilities resulting in future cash payments.
MDS Inc. (TSX: MDS) (NYSE: MDZ) completed its divestiture of MDS Analytical Technologies to Danaher Corporation (NYSE: DHR) for $650 million in cash, which the company intends to return between $400-$450 million to its shareholders within thirty days by way of a share buyback through a Substantial Issuer Bid. MDS plans to terminate its undrawn CDN$500M revolving credit facility and retire all outstanding Senior Unsecured Notes for a cost of approximately $223M by February 3, 2010, and has deposited approximately $20M in cash collateral to support existing letters of credit.
Following these transactions, MDS will have completed its strategy of focusing on the MDS Nordion business, which specializes in medical imaging, radiotherapeutics and sterilization technologies. MDS currently expects to hold between $85M and $135M in cash to support ongoing operations and obligations of the company.
YM Biosciences Inc. (TSX: YM) (AMEX: YMI) announced that its merger with Cytopia Limited under an Australian scheme of arrangement has been concluded, bringing Cytopia’s two lead clinical candidates (CYT387 and CYT997) and pre-clinical library into YM’s fold. YM issued 7,276,688 shares to former Cytopia shareholders in consideration for all issued and outstanding Cytopia shares. In addition, Mr. Robert Watson, former Cytopia Chairman, has been appointed to YM’s Board of Directors.
The Westaim Corporation (TSX: WED) announced that, as planned, following approval by the shareholders of NUCRYST Pharmaceuticals Corp. (NASDAQ: NCST) Westaim’s wholly-owned subsidiary 1499642 Alberta Inc. has amalgamated with Nucryst to form Westaim Holdings Limited. Nucryst shareholders received one redeemable preferred share in Westaim Holdings for each share of Nucryst, immediately redeemed upon completion of the amalgamation for US$1.77 per preferred share in cash. In total, 4,633,665 Westaim Holdings preferred shares were redeemed for proceeds to Nucryst shareholders of US$8,201,587.05. The amalgamation follows the sale by Nucryst of substantially all of its assets in November 2009 to Smith & Nephew.
Bioniche Life Sciences Inc. (TSX: BNC) received $8 million from licensee Endo Pharmaceuticals (Nasdaq: ENDP) for achieving two milestones under their 2009 license agreement. Endo Pharmaceuticals has also elected to exercise its option for exclusive rights to develop and market the licensed product globally. As a result of the decision, Endo will all assume all external development expenses for the product.
California based Alexza Pharmaceuticals, Inc. (NASDAQ: ALXA) has struck a development and marketing deal with Biovail Corporation (TSX: BVF) (NYSE: BVF) for $40M upfront and a possible $90M in milestones payable to Alexza for the development of Alexza’s inhaled agitation therapy. The deal covers the development of AZ-004, which Biovail will market in the U.S. and Canada, while Alexza collects 10% – 25% in royalties on net sales.
Where are they now?
Speaking of Biovail, Eugene Melnyk’s new company Trimel BioPharma Holdings Inc., closed an initial round of private financing, placing over $4.5 million with friends and familyand other exempt investors. Trimel also provided an update on its technology platforms, pipeline and facilities, noting a December 2009 asset purchase from private Danish company Direct Haler A/S comprising inhaled delivery technologies and three product candidates.
Chemaphor to receive $2M in federal funding
Chemaphor Inc. (TSXV: CFR) won approximately $2 million over three years in federal funding from the Atlantic Innovation Fund, administered by the Atlantic Canada Opportunities Agency, to be used for the development of OxBC, an animal immune system enhancer which may reduce the need and use of antibiotics in the global agricultural industry. Chemaphor also announced positive results of a pilot canine clinical trial of an oral supplement, which was supported by an NRC-IRAP grant.
Thanks again to Jacob Cawker for this help with this week’s Deal Review.