Welcome to the Monday Deal Review for November 1, 2010. This week’s review contains the news of a possible recapitalization of Angiotech, following its deferral of interest payments on 7.75% Senior Subordinated Notes due October 1, 2010. Read on to learn more, as well as other happenings from last week’s biotech scene.
Angiotech’s Proposed Recapitalization
Angiotech Pharmaceuticals, Inc. (NASDAQ: ANPI) (TSX: ANP) entered confidentiality agreements and NDAs with certain holders of 7.75% Senior Subordinated Notes to facilitate discussion of a possible recapitalization, in connection with Angiotech’s failure to make interest payments totalling approximately $9.7M on October 1, 2010 (covered here).
The material terms of such a recapitalization were agreed upon, and Angiotech subsequently announced that it had entered into a Recapitalization Support Agreement with consenting noteholders of approximately 73% of its 7.75% Senior Subordinated Notes providing for a recapitalization of the company that would result in reduction of $250M in indebtedness. The consenting noteholders have agreed to exchange their notes for new common shares resulting in participating noteholders receiving 90% of the new common shares of Angiotech issued and outstanding following the transaction, subject to potential dilution.
Angiotech also entered into a support agreement with holders of approximately 51% in principal amount of existing floating rate notes providing for the exchange of such floating rate notes for new floating rate notes, secured by a second lien. The new floating rate notes will be issued on substantially the same terms and conditions as the original floating rate notes, aside from amendments to certain covenants pertaining to indebtedness, liens and change of control. The support agreement transaction is conditional on the completion of the 7.75% noteholder transaction.
The recapitalization also contemplates a refinancing, amendment or replacement of an existing credit facility with Wells Fargo Capital Finance LLC, providing new liquidity of between $25 and $35 million.
Holders of Angiotech common shares on completion of the recapitalization will hold 2.5% of the issued and outstanding common shares of Angiotech. It is possible that the transaction may proceed by way of Plan of Arrangement, or under the Companies’ Creditors Arrangement Act, and there is no assurance the transaction will be completed.
Noveko International Inc. (TSX: EKO) closed a second tranche of a previously announced private placement for $900,000 following $4,440,000 closed September 30, 2010. The private placement offering is extended to December 10, 2010. 1,500,000 Class A shares were issued for the second closing at $0.60 per share.
Chemaphor Inc. (TSXV: CFR) completed a private placement of units for gross proceeds of $184,500, resulting in the issuance of 1,845,000 common shares and 922,500 common share purchase warrants. Each warrant entitles the holder to acquire one common share at an exercise price of $0.10 for two years from closing, subject to accelerated expiry if, any time after the four month hold period, the closing price of Chemaphor’s common shares exceeds $0.20 for any 20 consecutive trading days, in which case the warrants expire 30 days following date of notice of accelerated expiry. Bloom Burton & Co., Raymond James Ltd. And Macquarie Private Wealth acted as agents/finders.
Quest PharmaTech Inc. (TSXV: QPT) reported a final issuance of 3,500,000 common shares to Paladin Labs Inc. (TSX: PLB) pursuant to a technology purchase agreement from September, 2009. Total issued shares to Paladin under the agreement is 5,000,000, providing Quest with complete control over the purchased late-stage immunotherapy product candidates.
Licensing and Collaboration
Following the recent merger of Biovail and Valeant Pharmaceuticals International, Inc. (NYSE: BVF) (TSX: VRX), ACADIA Pharmaceuticals Inc. and Biovail Laboratories International SRL (a wholly-owned subsidiary of Valeant) agreed to conclude their collaboration to develop and commercialize pimavanserin in the U.S. and Canada. ACADIA regained its rights to pimavanserin, which it will continue to develop, and will also receive a one-time cash payment of $8.75M from Biovail. Pimavanserin may be useful for the treatment of Parkinson’s disease psychosis.
CCAA-protected Ambrilia Biopharma Inc. (TSX: AMB) reported that it entered an exclusive worldwide licensing agreement with Tournoux Biotech SAS of France for development and commercialization of MTX and OSK1 technologies, which could result in Ambrilia receiving future milestone and royalty payments. Ambrilia also provided its bi-weekly Default Status Report under NI 12-203 – Cease Trade Orders for Continuous Disclosure Defaults. Ambrilia reports that there have been no material changes to the information contained in its most recent default announcement on August 4, 2010.
Critical Outcome Technologies Inc. (TSXV: COT) announced board approval for the grant of 1,182,171 stock options to its seven directors under the company’s stock option plan as a retainer for service on the board and its committees for the next year. The exercise price is $0.165, representing the closing price of the company’s shares on October 27, 2010, and vest 25% each quarter from the date of grant. The options expire in five years.
Stem Cell Therapeutics Corp. (TSXV: SSS) issued 2,500,000 stock options to officers at an exercise price of $0.10 per share, pursuant to the company’s stock option plan. The options will expire October 22, 2015 subject to vesting conditions.
Financial Results and other Announcements
Cangene Corporation (TSX: CNJ) reported their financial results for the year ended July 31, 2010. Nuvo Research Inc. (TSX: NRI) announced its third quarter financial and operational results for the quarter ended September 30, 2010. Cipher Pharmaceuticals Inc. (TSX: DND) reported Q3 financial and operational results for the three and nine months ended September 30, 2010. Helix BioPharma Corp. (TSX: HBP) (AMEX: HBP) (FRA: HBP) announced financial results for the year ended July 31, 2010. IBEX Technologies Inc. (TSXV: IBT) reported financial results for year ended July 31, 2010.
Response Biomedical Corporation (TSX: RBM) (OTC: RPBIF) COO Duane Morris has resigned, effective October 29, 2010, in connection with the restructuring and refocusing of Response Biomedical, which has concluded that the role of COO is no longer appropriate.
Sirius Genomics Inc. was issued a U.S. patent entitled “Protein C polymorphisms”, relating to a novel use of a a SNP located in the Protein C gene to predict the outcome or prognosis of sepsis and related conditions.