Welcome to your Monday Biotech Deal Review for January 31, 2011. Angiotech has voluntarily entered into CCAA proceedings and will continue its restructuring efforts there. There was also some investment activity involving government agencies in Ontario, Quebec and Prince Edward Island. Read on to learn more, as well as the usual assortment of biotech news reviews from the past week.
Angiotech enters CCAA-protection
The board of directors of Angiotech Pharmaceuticals, Inc. (TSX: ANP), authorized the Company and certain of its subsidiaries to voluntarily file under the Companies’ Creditors Arrangement Act to continue the implementation of its recapitalization transaction. The company executed fourth amendments to the Recapitalization Support Agreement and Floating Rate Note Support Agreement with holders of a majority of the outstanding 7.75% Senior Subordinated Notes and senior floating rate notes respectively. Under the Recapitalization Support Agreement, the consenting noteholders have agreed to exchange their notes for common stock in the Company whereas floating rate noteholders have agreed to exchange existing floating rate notes for new floating rate notes secured by a second lien over the assets and property of the Company. Angiotech and the U.S. Bank National Association (successor trustee under the indenture governing the 7.75% Senior Subordinated Notes) have executed a supplement to the indenture which extends the grace period applicable to certain interest payments from 120 days to 211 days before an event of default occurs. The recapitalization transaction is now intended to take place pursuant to a court-supervised plan of compromise or arrangement, which must be approved by a majority in number of affected creditors (including noteholders) and two-thirds in amount of their claims. Wells Fargo Capital Finance has agreed in principle to provide interim financing over the course of the proceedings. Angiotech also reached a settlement agreement with representatives of former stockholders of Quill Medical, Inc. providing for the full and final settlement of all claims in respect of the Agreement and Plan of Merger, dated May 25, 2006. Angiotech US is required to make a payment of $6M, $2M of which is payable at the earlier of the completion of the CCAA proceeding or May 31 2011, with the remainder payable in equal monthly instalments over 24 months.
Angiotech also received a Notice of Termination from Rex Medical L.P. with respect to the Supply, Marketing and Distribution Agreement between Angiotech US and Rex dated March 13, 2008, whereby Rex alleges Angiotech materially breached its obligations under the agreement, and that the agreement will terminate on April 24, 2011. Angiotech is considering potential arbitration proceedings and considers the allegations to be without merit.
Pursuant to an agreement entered in September 2009 between GE and the Ontario government for the purpose of long-term investment within the province, GE and its digital pathology joint venture, Omnyx™, announced an agreement to establish its first Global Pathology Imaging Centre of Excellence in Toronto, Ontario, with an investment of $7.75M along with a $2.25M grant from the Health Technology Commercialization Program created by HTX and funded by the Ontario Ministry of Research and Innovation. Additional collaborative research and development partnerships will bring an additional $7.2M, for a total of $17.2M over 3 years.
Oncolytics Biotech Inc. (TSX: ONC) (NASDAQ: ONCY) received USD$6.8M in proceeds from the exercise of 1,943,000 warrants issued November 23, 2009. The Company now has 69,873,568 shares issued and outstanding, and cash on hand of approximately $48.7M.
Merck Canada renewed its partnership with the Quebec Consortium for Drug Discovery with a $5M investment over five years so that it can continue its support of biopharmaceutical research in Quebec.
Cynapsus Therapeutics Inc. (TSXV: CTH) arranged financing of secured Series C Debentures in the aggregate principal amount of $300,000, bearing interest at a rate of 8% per annum and secured by the assets of the Corporation equal to the Series A Debentures. The debentures are payable on or before December 30, 2011. The corporation will also pay an 8% capital discount to the debenture holders resulting in net proceeds to Cynapsus of $276,000 and the issuance of 1,104,000 common shares at a price of $0.05 per share.
Innovation PEI has awarded the University of Prince Edward Island and Atlanta Vascular Research Foundation an Innovation PEI Pilot and Discovery Fund grant in the amount of $25,000, to continue research and development in combining nutraceuticals to magnify clinical benefits for the prevention and treatment of cardiovascular and metabolic diseases.
Securities and Regulatory
CCAA-protected Ambrilia Biopharma Inc. (TSX: AMB) consented to a request from the TSX that it will not object to the application by the TSX to de-list the common shares of Ambrilia. The TSX agreed to allow the shares to trade for forty-eight hours before suspending trading. Ambrilia also obtained a seventh order from the Superior Court of Quebec (Commercial Division) extending the initial order issued July 31, 2009, to provide Ambrilia with an opportunity to continue discussions and negotiations relating to monetization of its assets and develop a plan of arrangement for consideration by its creditors to complete a restructuring process.
Neovasc Inc. (TSXV: NVC) granted 1,293,000 options with an exercise price of $1.00, equivalent to the closing price of the company’s shares on January 26, 2011. Of the granted options, 415,000 will vest immediately and 878,000 will vest December 31, 2011, if management achieves certain performance milestones.
Bioniche Life Sciences Inc. (TSX: BNC) (ASX: BNC) joined the official list of the Australian Securities Exchange under the code “BNC”.
Other Corporate Announcements
Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZ) engaged The Investor Relations Group to serve as its investor relations agency. Financial terms were not disclosed.
Health Canada approved DIGIFAB™, by Paladin Labs Inc. (TSX: PLB), for the treatment of patients with life-threatening or potentially life-threatening digoxin toxicity or overdose. Paladin acquired the exclusive Canadian rights to market and sell DigiFab™ from Protherics Inc., a wholly owned subsidiary of BTG plc (LSE: BGC), in February 2010.
Kane Biotech Inc. (TSXV: KNE) announced its DispersinB® wound spray has passed the FDA-recommended sub-chronic toxicity test. The company will now prepare an investigational device exemption regulatory package for the FDA for Q2 2011.