Welcome to your Monday Biotech Deal Review for April 11, 2011. Notable events in the Canadian biotech space over the past week included: (i) the filing by Valeant with the SEC of a consent solicitation statement in furtherance of its efforts to replace the board of its hostile target Cephalon; (ii) the approval by creditors of the plan put forward by Angiotech in respect of its restructuring and the sanctioning of the plan by courts in Canada and the U.S.; (iii) the closing of a $34.5M private placement by MethylGene; and (iv) the resignation of the board of directors of Ambrilia and the seeking by Ambrilia to pursue insolvency proceedings under the Bankruptcy statute as opposed to creditor protection under the CCAA. Read on to learn more.
Valeant Takes Aim at Cephalon’s Board
Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) filed with the SEC a preliminary consent solicitation statement in connection with its efforts to remove each member of the board of directors of its take-over target Cephalon Inc. (NASDAQ: CEPH) and elect its own nominees. Valeant is of the view that a new board would act in the best interests of Cephalon’s stockholders and would remove impediments to a tender offer, such as an existing poison pill, and permit Valeant to conduct a due diligence review, which review may lead to a higher offer price.
Angiotech Moving Forward
Angiotech Pharmaceuticals, Inc., announced that its creditors have unanimously approved the second amended and restated plan of compromise or arrangement in respect of its restructuring under the protection of the CCAA. The Supreme Court of British Columbia has issued an order sanctioning the plan, which order has been recognized in the U.S. by the United States Bankruptcy Court for the District of Delaware. The plan is expected to be implemented no later than April 30, 2011 and will eliminate $250 million in debt obligations by Angiotech.
Ambrilia Seeks Bankruptcy
The board of directors of Ambrilia Biopharma have approved the Corporation seeking permission to terminate the protection granted by the CCAA and file for bankruptcy pursuant to the Bankruptcy and Insolvency Act, with Raymond Chabot Inc. designated as trustee in bankruptcy. Following the meeting of the board approving the foregoing, the directors of Ambrilia resigned, effective immediately.
Pursuant to the offer by Pharmagesic (Holdings) Inc. to acquire all of the restricted voting shares of WEX Pharmaceuticals Inc. (TSX: WXI), the board of directors of WEX has approved the execution of an amalgamation agreement with a wholly-owned subsidiary of Pharmagesic, through which WEX will amalgamate to form an Amalco. A special meeting of shareholders will be held May 4, 2011 to consider and, if deemed appropriate, to approve the proposed amalgamation and amalgamation agreement. Under the amalgamation agreement, a WEX shareholder may receive one Class A redeemable preferred share of Amalco for each WEX share held. Following amalgamation, the Class A redeemable preferred shares will be redeemed by Amalco for $0.14 per share. This transaction will constitute the subsequent acquisition transaction whereby Pharmagesic will acquire the remaining WEX shares it did not otherwise acquire pursuant to its previously announced offer.
MethylGene Inc. (TSX: MYG) completed its previously announced (covered here) private placement of 277,494,756 units at a subscription price of $0.1243 per unit. Each unit consisted of one common share and 0.30 of a common share purchase warrant, exercisable for 5 years from date of grant at an exercise price of $0.1492, for gross proceeds of approximately $34.5M. MTS Securities, LLC acted as financial advisor to MethylGene for the offering in the United States.
Critical Outcome Technologies Inc. (TSXV: COT) completed the final tranche of its previously announced (covered here) non-brokered private placement with the issuance of 2,187,500 units at a price of $0.16 per unit for gross proceeds of $350,000. Each unit consisted of one common share and one common share purchase warrant, exercisable at $0.30 for 18 months following date of issue. Finders’ fees were paid to arm’s length third parties in an aggregate cash amount of $13,120 as well as 82,000 compensation warrants, exercisable on the same terms. Gross proceeds raised in aggregate were $1,654,400 though the same of 10,450,000 units. The offering and finders’ fees are subject to final regulatory approval.
Kane Biotech Inc. (TSXV: KNE) has increased its previously announced (covered here) private placement offering from a maximum of 12,500,000 units to 20,000,000 units at a price of $0.12 per unit for total gross proceeds of up to $2,400,000. Each unit will still consist of one common share and one common share purchase warrant, expiring 18 months from date of grant and exercisable at $0.17 per share.
Shares for Debt
BELLUS Health Inc. (TSX: BLU) issued approximately 34.2 million common shares to the landlord of its Laval, Quebec premises, A.R.E. Quebec No. 2, Inc., at a price of approximately $0.125 per share as final payment for deferred rent amounting to approximately $4.2M following the exercise by the Company of its right to terminate its lease as of April 7, 2011. The Company has signed a new lease for the same premises, for less space.
Pacgen Biopharmaceuticals Corporation (TSXV: PGA) issued 1,873,000 stock options to directors and officers of the Company. Each option is exercisable at $0.06 per share and expires February 14, 2016. The Company also issued 129,125 common shares at an average price of $0.10 per share in satisfaction of approximately $15,000 in debt.
IP for Debt
ProMetic Life Sciences Inc. (TSX: PLI) has entered an agreement with Celgene Corporation (NASDAQ: CELG) for the worldwide rights to a commercial application of ProMetic’s Protein Technologies. Celgene subsidiary Abraxis BioScience, Inc. will forgive US$10M in long-term debt owed by ProMetic since February 9, 2010, which will effectively terminate the loan agreement four years prior to its original term, in return for intellectual property rights for the Protein Technologies for restricted fields of use.
Other Commercial, Collaborative and Licensing Transactions
Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX), through its subsidiary Valeant International (Barbados) SRL, received a commitment in principle to license Elidel (pimecrolimus 1% cream) from Meda Pharmaceuticals Inc. in the U.S., Canada and Mexico, on terms to be disclosed upon the entering into of a definitive agreement. Meda has global rights to Elidel from Novartis.
AlCana Technologies, Inc., The University of British Columbia and Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY) have extended the RNAi therapeutics research collaboration which began in August 2009 for a third year, and which collaboration is focused on the discovery of novel cationic lipids employed in lipid nanoparticles for the systemic delivery of RNAi therapeutics. Alnylam funds the collaboration and the research is conducted by scientists at UBC and AlCana. Alnylam retains exclusive rights to all new inventions. Under the agreement, Tekmira Pharmaceuticals Corporation (NASDAQ: TKMR) (TSX: TKM) has rights to use any new AlCana/UBC inventions for their own RNAi therapeutic programs licensed under Alnylam IP through its InterfeRx™ program.
Medicago Inc. (TSX: MDG) entered a research collaboration agreement for the development of a non-influenza vaccine candidate with a top 10 global pharmaceutical company. Medicago is eligible to receive milestone payments but otherwise terms of the agreement were not disclosed.
MedMira Inc. (TSXV: MIR) (NASDAQ: MMIRF) announced its strategic partner in China, Triplex International Biosciences Co., Ltd. placed an initial order for 400,000 MedMira rapid HIV tests.
BELLUS Health Inc. (TSX: BLU) signed an exclusive license and distribution agreement with Agahan Ayandeye Pars Inc. pursuant to which BELLUS has granted the Agahan Group exclusive distribution rights for VIVIMIND™ in Egypt, United Arab Emirates, Pakistan, Iran and certain other Gulf states. BELLUS retains all rights with respect to Israel, Turkey and Saudi Arabia. Consideration to BELLUS consists of an upfront payment, a regulatory milestone payment, commercial milestone payments based on sales targets, and a tiered royalty rate of 15-17%, depending on sales. The agreement also provides for the supply of VIVIMIND™ by BELLUS to the Agahan Group at a pre-arranged transfer price.
Bradmer Pharmaceuticals Inc. TSXV: BMR.H) has announced the termination of its license agreement with Duke University whereby Bradmer had licensed certain patent rights relating to Neuradiab® for the treatment of glioblastoma multiforme. Bradmer’s Phase III clinical trial was suspended March 2009, and Bradmer has not pursued any activities relating to the drug since that date. Bradmer continues negotiations with P1 Energy Corp., in respect of its previously announced business combination.
Miraculins Inc. (TSXV: MOM) has selected HEI, Inc. as the manufacturer of the PreVu Point of Care Reader, which measures the result of the PreVu Skin Cholesterol Test. Upon execution of a formal agreement, HEI will be responsible for the manufacture and assembly of the PreVu POC Reader at its facilities in Victoria, Minnesota.
Other Corporate Announcements
Cangene Corporation (TSX: CNJ) reduced its workforce to increase efficiency by the termination of approximately 40 positions. This follows the elimination of 60 positions between August 1, 2010 and January 31, 2011. The workforce reduction represents approximately 12% of the Company’s total workforce.
ALDA Pharmaceuticals Corp. (TSXV: APH) has received notification from the Canadian Intellectual Property Office that its patent applications describing the composition, production methods and certain therapeutic uses for ALDA’s T36® formulation has been accepted. As well, the company announced the issuance of two patents in both the US and Australia, as well as one issued in China and one pending in both China and the EU.
Further to the previously announced amalgamation of Immunall Science Inc. (CNSX: GNS) and Altius Edge Ltd. (covered here), Mosaic Limited Partnership owns 8,700,000 common shares of Nautor Progressive Corporation, representing approximately 90% of the total and issued outstanding common shares of Nautor.