The Cross-Border Biotech Blog

Biotechnology, Health and Business in Canada, the United States and Worldwide

Monday Biotech Deal Review: April 12, 2010

This week deals are back in full force, despite the fact that Tengion’s IPO was less popular than expected and Neovacs scaled back its planned IPO.  Highlights include Patheon raising $280 million from its note placement, Verio Therapeutics getting phagocytosed by Fate (but remaining in Ottawa) and Lorus Therapeutics’ F-1 filing for a $17.5 million unit offering.

Patheon’s $280M debt offering

Patheon Inc. (TSX: PTI) launched a $280 million private placement of senior secured notes due 2017, and priced the offering at 8.625%.  Net proceeds will be used to repay all of the outstanding indebtedness under the company’s existing senior secured term loan and asset-based revolving credit facility as well as other debts and fees, with any remainder to be used for general corporate purposes.  Patheon will also amend and restate its $75 million asset based loan revolver resulting in the maturity date of the facility extending from 2012 to 2014.

M&Eh

Fate Therapeutics, Inc. announced a definitive agreement to acquire private, Ottawa, Ontario-based company Verio Therapeutics Inc., which seeks to develop drug candidates targeting activation of endogenous stem cells.  Under the agreement, Fate Therapeutics has formed a Canadian subsidiary which will continue Verio’s work in Ottawa.  Financial terms were not disclosed.  Because the deal involves stem cell technology, it has attracted considerable attention despite the undisclosed terms.

Angiotech Pharmaceuticals, Inc. (NASDAQ: ANPI) (TSX: ANP) closed its acquisition of certain product candidates and technology assets of Haemacure Corporation, which has been involved in Chapter 11 and Canadian bankruptcy proceedings.  Angiotech has acquired the assets necessary to pursue commercialization of Haemacure’s human biomaterial product candidates, namely fibrin sealant and thrombin haemostat.  The sealant and haemostat market is estimated to be in excess of $500 million annually.  Haemacure announced the purchase by Angiotech of substantially all of its assets, and intends to make a proposal to its creditors in Canada no later than April 19, 2010. 

OICR’s Busy Week

The Ontario-funded independent, not-for-profit corporation Ontario Institute for Cancer Research will distribute $12.6M to scientists throughout Ontario for research and equipment aimed at discovering diagnostic tools and treatments for cancer.  The Cancer Research Fund has already awarded $6M to 11 projects after peer-reviewed competition in November 2009, as well as $6.6M for equipment at Ontario institutions.  Researchers who will receive funding include Dr. Ian Lorimer, senior scientist at The Ottawa Hospital Research Institute, to develop biomarkers that predict the clinical benefit of a new therapy for advanced colorectal cancer.  Dr. Amadeo Parissenti, a clinician-scientist at Hôpital régional de Sudbury Regional Hospital will receive funding to validate his team’s observation that the level of breast tumour ribonucleic acid integrity falls in response to chemotherapy.  Dr. Linda Penn, senior scientist and head of the Division of Cancer Genomics and Proteomics at the Ontario Cancer Institute, part of the University Health Network in Toronto, will explore the use of statins to treat cancer, which preliminary studies show could be effective in treating certain types of cancer.  

OICR also announced the investment of $415,000 toward development of a radio-labelled insulin probe for early detection of breast cancer, awarded to Dr. John Valliant of McMaster University, who developed a form of insulin labelled with the radioisotope technetium.  OICR will participate in commercialization efforts by providing expertise and resources while working with McMaster University and Dr. Valliant.

Licensing

Labopharm Inc. (TSX: DDS) (NASDAQ: DDSS) announced its wholly-owned subsidiary Labopharm Europe Limited has completed a licensing and distribution agreement for once-daily tramadol with Nippon Shinyaki Co., Ltd. of Japan.  The deal will see Labopharm receive an up-front payment on signing as well as additional possible milestone payments.  Nippon Shinyaku has exclusive right to market and sell Labopharm’s once-daily tramadol product in Japan.  Labopharm will supply Nippon with unpackaged tablets and will receive a fixed transfer price as well as royalties on net sales.  Regulatory approval in Japan may require additional clinical trials, the cost of which shall be borne by Nippon.  

Missed this one at the time, but in March Transition Therapeutics Inc. (TSX: TTH) acquired the rights to a series of diabetes-related preclinical compounds from Eli Lilly and Company under a licensing and collaboration agreement.  Under the agreement, Transition receives exclusive worldwide rights to develop and commercialize a class of compounds that has shown potential to provide glycemic control and weight loss.  Eli Lilly receives an upfront payment of $1M and retains the option to reacquire rights to the compounds at a later time, which would cause Transition to be eligible to receive payments of approximately $250 million and up to low double digit royalties on sales.  Eli Lilly has until the end of Phase II to exercise this right, and if it does not, then Eli Lilly is eligible for low single digit royalties from Transition on sales of products if the products are successfully commercialized. 

Nightingale Informatix Corporation undergoes comprehensive debt refinancing

Nightingale Informatix Corporation (TSXV: NGH), application service provider of electronic medical record software and related services, announced that it is completing a comprehensive debt refinancing in a series of transactions, including:

  • The execution of a senior debt commitment letter with an arm’s length commercial lending institution for a USD$1M revolving line of credit and a USD$2.0M term loan, which each bear interest at a rate of bank prime plus 3%. 
  • The issuance of up to 5,682,364 common shares at a price of $0.22 per share (a 5% discount to the 30 day pre-annoucement VWAP) for gross proceeds of up to $1,250,000, and
  • The issuance of subscription receipts for gross proceeds of up to $2,074,000 on a non-brokered private placement basis.  The subscription receipts will, following satisfaction of escrow release conditions, entitle the holder to receive without payment of additional amounts 12% convertible unsecured subordinated debentures of the company.   The debentures will mature three years following the date of issue, and shall bear interest at a rate of 12% payable monthly.  They will be convertible at the holder’s option at any time prior to maturity or redemption at a conversion price of $0.35 per debenture share, representing a 52% premium to the 30 day weighted average trading price of common shares on March 2, 2010, and a 29% premium to the 30 day volume weighted average trading price established at market close April 5, 2010. 

Gross proceeds of the subscription receipt offering will be held in escrow, released only in conjunction with the repayment of Nightingale’s subordinated debt facility in the amount of $5.25M on July 30, 2010.

The common share and subscription receipt offerings are related party transactions under MI 61-101 as directors and officers propose to participate in the offerings.  The company is exempt from MI 61-101 formal valuation requirements as no securities are listed or quoted for trading on the TSE, NYSE, ASE, NASDAQ, or other stock exchange outside Canada and the U.S.  Nightingale is also exempt from obtaining minority shareholder approval since the fair market value of the offerings do not exceed 25% of the market capitalization of the company.

Other Securities Deals

Lorus Therapeutics Inc. (TSX: LOR), which specializes in researching and developing pharmaceutical products and technologies for managing cancer, announced it has filed a Registration Statement with the U.S. S.E.C. for a U.S. offering of up to US$17,500,000 in units.  Each unit will consist of one common share and one-half of one common share purchase warrant, with an “initial” exercise price of 125% of the unit offering price (TBD), and subsequently at a premium to the unit offering price, rising 5% on each anniversary of the closing date to a maximum exercise price of 145% the unit offering price on the fourth anniversary.  Lorus may require exercise if the closing price equals or exceeds 225% of the unit offering price for five consecutive trading days.  Proceeds will be used to fund development of programs, including the LOR-2040 clinical program.  Global Hunter Securities, LLC is the placement agent for the offering.

Ondine Biopharma Corporation (TSX: OBP) (AIM: OBP) issued 12,530,000 units for gross proceeds of $750,000 under a tranche of a non-brokered private placement to accredited investors.  Each unit has a price of $0.06 and consist of one common share and one common share purchase warrant, with each warrant exercisable at a price of $0.075 for a period of one year from closing.  An application has been made to admit the shares issued under the tranche for trading on AIM.  The company has until April 23, 2010 to complete the remaining 1,270,000 units available under the placement.  Ondine’s Chairman and CEO, Ms. Carolyn Cross, purchased 1,500,000 units (11.97% of total units issued), and Ms. Cross, members of her immediate family, and the Courthill Foundation of which Ms. Cross and her husband are directors, have a beneficial interest in 16.02% of Ondine’s issued and outstanding common shares, following the closing of the private placement.

Osta Biotechnologies Inc. (TSXV: OBI) closed its “bought deal” private placement (covered here) of 8,400,000 units at a price of $0.06 per unit for gross proceeds of $504,000.  Each unit consisted of one common share and one-half of one common share purchase warrant, exercisable at a price of $0.10 for two years from closing.  Sherbrooke Street Capital (SSC) Inc. acted as lead underwriter, and received a fee equal to 7% of the gross proceeds as well as non-transferable broker warrants.

Cannasat Therapeutics Inc. (TSXV: CTH) intends to raise gross proceeds of up to $2.5M through a brokered private placement of units for a price of $0.10 per unit, and each unit consisting of one common share and one-half of a (2-year $0.125) warrant.  Wellington West Capital Inc. will act as lead placement agent.  Proceeds will fund ongoing research and development.

Innovotech Inc. (TSXV: IOT) approved the grant of stock options to directors, officers and employees to purchase an aggregate of 139,000 common shares at a price of $0.78 per share until April 7, 2020, pursuant to its stock option plan.

Yeast research and development company Functional Technologies Corp. (TSXV: FEB) has announced a warrant inventive exercise program to encourage early exercise of 3,333,666 outstanding share purchase warrants due to expire November 12, 2010.  Those warrants, exercisable at a price of $0.60 per warrant, were issued in a private placement in November 2008.  The incentive program is open until May 7, 2010, and allows the exercising party to purchase for the same exercise price one common share of the company and one transferable share purchase warrant, each warrant exercisable at $0.70 for two years from issuance. 

Biosign Technologies Inc. (CNSX: BIO) has revised the terms of its private placement financing (covered here).  Biosign intends to raise gross proceeds of up to $2M (down from $4.5M) through a brokered private placement of units, at a price of $0.65 per unit (down from $0.75.  Each unit is comprised of one common share and one-half of a common share purchase warrant, each whole warrant exercisable at a price of $0.95 for 24 months following closing, subject to acceleration conditions.  Dundee Capital Markets is the lead agent and Canaccord Financial Inc. is co-agent in the placement.

Paladin Obtains Health Canada Approval for SEASONIQUE®

Paladin Labs Inc. (TSX: PLB) has obtained Health Canada approval for SEASONIQUE®, a next generation extended-cycle oral contraceptive for the prevention of pregnancy.  SEASONIQUE® may also reduce the number of menstruations from thirteen to four per year.

Covalon reschedules annual and special meeting of shareholders

The Board of Directors of Covalon Technologies Ltd. (TSXV: COV) has rescheduled the annual and special meeting of shareholders previously scheduled for April 9, 2010 to May 19, 2010.  The rescheduling was made so that the Board could revise the slate of directors to be presented to shareholders, since intended nominee and co-founder Dr. Frank DiCosmo terminated his services arrangement with the company and may make a claim against the company.  Details of the possible claim were not disclosed.

Sonomax expands offerings to medical research field

Sonomax Technologies Inc. (TSXV: SHH) has been selected by Montreal’s International Laboratory for Brain, Music and Sound Research to provide miniaturized real-time, in-ear digital signal processing devices to investigate experience-dependent brain plasticity in humans.  The research is supported by the Canada Foundation for Innovation and the Natural Sciences and Engineering Research Council.  The technology allows the team to modify a test participant’s sound perception over several weeks, which may provide new insights into human sound perception and brain plasticity.

Ambrilia Update

The Board of Directors of Ambrilia Biopharma Inc. (TSX: AMB) have approved a proposed transaction whereby Ambrilia and its subsidiary Cellpep Pharma Inc. would receive additional non-dilutive financing through disposition of a limited partnership interest.  Before expenses to be incurred in connection with the potential transaction, a gain of approximately $4M could be realized by Ambrilia and Cellpep on closing but there is no guarantee the transaction will be completed.  Ambrilia will require an order from the Superior Court of Quebec for an order authorizing it to proceed with the transaction.  Ambrilia’s Court appointed Monitor, Raymond Chabot Inc. has also launched a process aimed at either monetizing Ambrilia’s assets or selling or merging the company or obtaining funding for development of its HIV/AIDS program. 

PROOF Centre of Excellence partners with Luminex Corporation to provide biomarker tests to organ transplant patients

The Multi-sectoral, not-for-profit organization PROOF (Prevention of Organ Failure) Centre of Excellence will partner with Luminex Corporation (developer and manufacturer of proprietary biological testing technologies) to bring biomarker tests to heart and kidney transplant patients with the goal of improving speed and customizing anti-rejection therapy.

Thanks again to Jacob Cawker for his help with this week’s Deal Review!

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4 responses to “Monday Biotech Deal Review: April 12, 2010

  1. Pingback: Monday Biotech Deal Review: April 26, 2010 « The Cross-Border Biotech Blog

  2. Pingback: Monday Biotech Deal Review: May 3, 2010 « The Cross-Border Biotech Blog

  3. Pingback: Monday Biotech Deal Review: May 17, 2010 « The Cross-Border Biotech Blog

  4. Pingback: Monday Biotech Deal Review: June 7, 2010 « The Cross-Border Biotech Blog

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