Welcome to your Monday Biotech Deal Review. 2011 is off to a fast start in Canadian biotech! Among other things, last week’s highlights included some interesting licensing activity, the completion by Bioniche of its A$12.5 million Australian offering, a $200k SEDA draw-down by Allon Therapeutics, Futuremed’s conversion to a corporation, and some regulatory and litigation updates as well.
Bioniche Life Sciences Inc. (TSX: BNC) completed its Australian offering of 8.6 million CHESS Depositary Instruments at A$1.45 per CDI, for gross proceeds of A$12.5 million, in addition to the $16.7 million raised through a Canadian offering of 11.5 million Common Shares at $1.45 per share that closed December 16, 2010. Total proceeds are approximately $29.4 million. It is expected the company will be admitted to the ASX under the symbol “BNC”, and the CDIs will trade on or about January 10, 2011. Bioniche has 100.3 million Common Shares issued and outstanding, 8.6 million represented by an equal number of CDIs to permit Australian shareholders to trade through the Australian CHESS system. The Australian offering was conducted by Taylor Colison Limited. Bioniche also announced a reorganization of corporate leadership, effective immediately.
Allon Therapeutics Inc. (TSX: NPC) notified YA Global Master SPV Ltd. that it will draw down $200,000 from its $10M standby equity distribution agreement. Here is the link to our coverage of the SEDA last March. As per the terms of the agreement, YA will subscribe for common shares at a 5% discount to the 5-day weighted average price of Allon shares for the period ending on or about January 12, 2011. Allon also announced the initiation of a Phase 2/3 multi-national clinical trial to evaluate davunetide as a potential treatment for progressive supranuclear palsy. The CFO believes the company is in a good financial position to execute the pivotal study with the closing of a $10.2 million investment in the Q4 2010. Allon and the FDA subsequently reached agreement on a Special Protocol Assessment for the study.
As part of the financing of Microbix’ Chinese influenza vaccine manufacturing joint venture, the CEO of Microbix Biosystems Inc. (TSX: MBX), William J. Gastle, sold 250,700 Microbix common shares at a price of $0.405 per share and invested the proceeds in Microbix’ majority-owned subsidiary Crucible International Biotechnologies Corp., which is the entity investing in the joint venture in China.
Theralase Technologies Inc. (TSXV: TLT) closed its previously announced (covered here, with the increase from $500,000 to $750,000 covered here) non-brokered private placement of 1,180,000 units at a price of $0.625 per unit, for gross proceeds of $737,500. Each unit consisted of one common share and one-half of one non-transferable common share purchase warrant, each whole warrant exercisable at a price of $0.75 per warrant for two years following closing.
Shares for Debt
Chemaphor Inc. (TSXV: CFR) announced it has opted to issue 4,721,132 common shares in satisfaction of $380,000 in principal and $24,903 in interest on convertible debentures issued by Chemaphor on April 30, 2009, which issuance will satisfy the obligations under the debentures and result in their cancellation. The price per share was based on 95% of the market price of $0.09, being the last closing price prior to December 31, 2010.
Immunovaccine Inc. (TSXV: IMV) issued 11,843 common shares at a deemed price of $0.76 per share to S.P. Angel Corporate Finance LLP pursuant to a consulting agreement dated November 1, 2010 for services rendered. S. P. Angel is engaged until March 31, 2011 to act as corporate finance and European capital markets consultant and advisor. S.P. Angel is entitled to a monthly fee of $9,000, payable in such number of shares as determined by dividing the amount of monthly fees by the volume-weighted average price of common shares during the last 5 trading days of the relevant month.
Collaboration, Licensing and other Commercial Transactions
BELLUS Health Inc. (TSX: BLU) has sold its Canadian subsidiary OVOS Natural Health Inc. to Advanced Orthomolecular Research Inc. (“AOR”) pursuant to a share purchase agreement, for $1 million, consisting of an up-front payment of $350,000 with the remaining $650,000 contingent upon an undisclosed milestone expected to occur within 18 months of closing. AOR also entered into a Canadian license and supply agreement relating to BELLUS Health’s patented natural health product VIVIMIND(TM), whereby AOR obtains exclusive distribution rights for VIVIMIND(TM) in Canada (BELLUS reserves rights for other jurisdictions) and BELLUS will supply the product at a pre-agreed transfer price. AOR will market, distribute and sell VIVIMIND(TM) in Canada. Sales milestone payments of up to $3 million are potentially payable to BELLUS.
Labopharm Europe Limited, the wholly-owned subsidiary of Labopharm Inc. (TSX: DDS) (NASDAQ: DDSS), has monetized the expected future royalty payment stream for RYZOLT(TM) (once-daily tramadol) through an amendment to the license agreement entered with Purdue Pharma Products, L.P. for RYZOLT for the U.S. Under the amendment, Labopharm will receive a specialty royalty payment of US$4.8M and a one-time royalty payment of US$500k as final settlement of past-due royalties owed to Labopharm. Labopharm is also eligible to receive two additional special royalty payments, US$1M or $2M upon net sales of RYSOLT exceeding US$20M or US$40M, respectively, in any calendar year until 2020. Other than the above, Purdue is not obligated to make any other royalty payments on net sales of RYZOLT. The US$4.8M and US$500k will serve to reduce the US$9.3M litigation costs owed by Labopharm to Purdue incurred while enforcing certain of Purdue’s U.S. patents related to RYSOLT. Under the amended license agreement, Labopharm will no longer be responsible for any further litigation costs incurred by Purdue related to once-daily tramadol patents. Labopharm will continue to supply Purdue with RYSOLT for the U.S. Market until Purdue exercises its option under the amended license agreement to manufacture and package the product itself.
Cynapsus Therapeutics (TSXV: CTH) executed a Definitive License Agreement with former development partner IntelGenx Corp. (TSXV: IGX) whereby IntelGenx will pay a royalty on future sales of INT0010 (formerly Relivar) for the symptomatic management of Multiple Sclerosis induced neuropathic pain and other conditions. As part of the deal, IntelGenx has forgiven debt owed by Cynapsus in the amount of $231,000 and Cynapsus retains worldwide rights to its licensed technology relating to generic THX products for the treatment of nausea/vomiting and appetite stimulation. Cynapsus CEO Anthony Giovinazzo also provided a corporate update of the company by open letter.
Other Corporate Announcements
Angiotech Pharmaceuticals, Inc. (NASDAQ: ANPI) (TSX: ANP) received notice from the Nasdaq Stock Market that its shares are to be delisted on January 13, 2011. According to the release, the Company will not be requesting an appeal of the decision.
On January 1, 2011, Futuremed Healthcare Income Fund completed its conversion to a corporation named Futuremed Healthcare Products Corporation (TSX: FMD), pursuant to a plan of arrangement. The corporation has 15,280,189 common shares issued and outstanding – fund unitholders received one common share for each fund unit.
Helix BioPharma Corp. (TSX: HBP) filed an investigational new drug application with the FDA, seeking approval to perform a Phase I clinical safety and tolerability study of its cancer drug candidate L-DOS47. The review process typically requires 30 days.
Critical Outcome Technologies Inc. (TSXV: COT) confirmed that it is unaware of any material change in the Company’s operations that would account for the recent increase in market activity.
Aquinox Pharmaceuticals Inc., which develops novel and targeted small molecule therapeutics for the treatment of inflammatory disease, initiated a Phase I clinical trial of its lead compound, AQX-1125, to be conducted in Europe.
Ambrilia Biopharma Inc. (TSX: AMB) provided its bi-weekly Default Status Report under National Policy 12-201 – Cease Trade Orders for Continuous Disclosure Defaults. Since its most recent default announcement on November 10, 2010, there have been no material changes.
The United States District Court of Delaware has ruled in favour of IntelGenx Corp. (TSXV: IGX) regarding claim construction for two patent terms at issue in a patent infringement action brought by Biovail Laboratories International SRL under the Drug Price Competition and Patent Term Restoration Act.