There was a lot of follow-up among Canadian biotech deals this week: letters of intent turning into definitive agreements, merged companies turning to consolidation, bids launched on schedule and wrapped up; as well as an average crop of new M&Eh and securities. Start things off with an interesting (cross-border!) twist to the SIFT/SR&ED deals we’ve seen
Oncothyreon takes SIFT deals cross-border
Oncothyreon Inc. (NASDAQ: ONTY), having moved to the U.S. leaving its Canadian subsidiary behind (presumably with SR&ED credits intact), is using that subsidiary in a SIFT tax deal along the lines of those by SemBioSys, ConjuChem and Vasogen. Oncothyreon will sell all of its (indirect) interest in its subsidiary Oncothyreon Canada Inc. for approximately $8.425 million to Gamehost Income Fund. Prior to sale, Oncothyreon Canada will reorganize into an Alberta ULC and 0811769 will reorganize into a limited corporation and each will distribute its business assets, including intellectual property, to a subsidiary of Oncothyreon Inc. The arrangement will effect Gamehost’s conversion from an Income Trust to a corporation.
If you’re intruiged by these deals, note that there is some political pressure do change the tax treatment of these SIFT/SR&ED deals in the 2010 Canadian budget.
Paladin Labs Inc. (TSX: PLB) and Isotechnika Pharma Inc. (TSX: ISA) announced that Paladin is buying out Isotecknika’s interest in the future net profits of the Isodiagnostika line of diagnostic products for a $1.65 million lump sum and up to a $350,000 earn-out based on 2011 sales. Under the original agreement, Isotechnika was entitled to receive a revenue stream equivalent to 88 percent of the net profits of Isodiagnostika through to June 18, 2016.
DiagnoCure, Inc. (TSX: CUR), which delivers laboratory services and cancer diagnostic tests, announced structural changes coupled with a reduction in personnel to focus on a clinical study of their colorectal cancer staging test on lymph nodes and an effort to grow the U.S. operations into a profitable full service specialty laboratory featuring diagnostic tests for colorectal cancer.
Advitech Inc. (TSXV: AVI), which closed its merger with Botaneco Specialty Ingredients, Inc. last November, is closing its office in Québec City and transferring business operations to Botaneco in Calgary.
Cardiome draws against Merck credit
Cardiome Pharma Corp. (NASDAQ: CRME) (TSX: COM) took a US$25 million advance from Merck & Co., Inc. via a Merck affiliate. The funds are part of the US$100M facility granted to Cardiome as part of the companies’ April 2009 deal for Vernakalant (Oral).
Critical Outcome Technologies Inc. (TSXV: COT) granted 246,808 stock options to eight employees, exercisable immediately at $0.47 per share, which was the company’s closing price on February 11, 2010.
Novadaq Technologies Inc. (TSX: NDQ), developer of real-time medical imaging devices for the operating room, entered into subscription agreements for $7 million at $2.43 per unit. Each unit consists of one common share and one fifth of a (5-year $3.00) warrant.
Neovasc Inc. (TSX: NVC) pulled in over $1.5 million in its private placement, which (as we noted at the time) was planned for $1 million with a $1 million overalotment. In addition, the company announced it has granted a total of 1,220,000 stock options to directors and executive management, at an exercise price of $0.355. The vesting schedule is a bit complicated: 95,000 vest immediately, 525,000 of the options vest over a four-year period, and 600,000 vest in twelve months upon management achieving performance milestones set by the Board of Directors.
As expected (and covered here), MDS Inc. (TSX: MDS) (NYSE: MDZ) announced the company intends to make a substantial issuer bid pursuant to which the company will offer to repurchase for cancellation up to between 40% and 46% of its outstanding common shares for an aggregate purchase price of up to US$450 million, by way of a modified Dutch auction (not less than US$8.10, and not more than US$9.30).
Agrium Inc. (TSX: AGU) (NYSE: AGU) further extended the expiration date of its offer to acquire CF Industries Holdings, Inc. (NYSE: CF). The offer is for $45.00 in cash plus one Agrium share per CF share and it has been extended until midnight, NYC time, on March 22, 2010.
Ambrilia Biopharma receives Notice of Termination of Octreotide License
Ambrilia Biopharma Inc. (TSX: AMB), currently in CCAA proceedings, announced that SurModics Pharmaceuticals, Inc., a wholly-owned subsidiary of SurModics, Inc. (NASDAQ: SRDX), provided Ambrilia with a Notice of Termination of a Product License Agreement dated November 20, 2001 for the development, manufacture and sale of a sustained release formulation of Octreotide. Ambrilia disagrees with the asserted grounds for termination, and is continuing discussions with SurModics to attempt to settle this disagreement.
Thallion and DiaMedica LOIs Become Definitive
Thallion Pharmaceuticals Inc. (TSX: TLN) signed a definitive agreement with LFB Biotechnologies for the development and commercialization of Thallion’s candidate for the treatment of Shiga toxin producing E. Coli infections, based on the December LOI. LFB gets an exclusive license for the commercial rights to Shigamabs(R) in Europe, South America, and other areas of interest to LFB. Thallion retains commercial rights for the rest of the world, including North America. Thallion gets an up-front licensing fee of €1.5 million, plus clinical development costs, milestone payments, tiered double digit royalties based on product sales, all of which could amount to up to €95 million.
DiaMedica Inc. (TSXV: DMA), following its December LOI with Sanomune Inc., has now entered into a entered into a definitive agreement for the deal, which will see DiaMedica acquire all of the issued and outstanding shares of Sanomune on the basis of 0.517 Diamedica shares for one Sanomune common or preference share. 12,806,377 DiaMedica shares will be issued, amounting to roughly 40% of the issued and outstanding DiaMedica common shares post-closing. Sanomune will be a wholly-owned subsidiary of DiaMedica.
Thanks again to Jacob Cawker for help with this week’s Deal Review!