Welcome to your Monday Biotech Deal Review for May 2, 2011. This review is a double feature from last week’s Easter break. Plenty happened in the interim, with Angiotech developments, private placements, licensing and other interesting corporate transactions and announcements. Read on to learn more.
Angiotech Pharmaceuticals, Inc. has applied to the securities regulatory authorities in each of the jurisdictions where it is a reporting issuer for a decision that it is deemed to have ceased being a reporting issuer in such jurisdictions. Angiotech also extended its offer to exchange new senior secured floating rate notes due 2013 for all of its outstanding Senior Floating Rate Notes due 2013 to 12:00 a.m. (NYC time) on May 12, 2011, from 11:59 p.m. (NYC time) on May 9, 2011. As well, Angiotech delivered a supplement to the offering memorandum and consent solicitation statement to holders of existing floating rate notes, which amends certain provisions relating to proposed intercreditor arrangements. Angiotech also obtained another extension with the holders of a majority of the company’s 7.75% Senior Subordinated Notes to extend the date by which the recapitalization transaction must take place, to May 12, 2011.
Cynapsus Acquisition and Private Placement
Cynapsus Therapeutics Inc. (TSXV: CTH) entered an agreement to acquire all the issued and outstanding shares of Adagio Pharmaceuticals Ltd. via a share exchange, which supersedes and replaces the License Option Agreement dated July 22, 2010 with respect to IP owned by Adagio. Cynapsus will issue 26,000,000 common shares to Adagio shareholders at a deemed value of $0.05 per share. As well, Cynapsus will pay $1.5M and $2.5M on completion of certain milestones involving Adagio IP. Since the CEO of Cynapsus is also a director of Adagio, the transaction would be a related-party transaction. A fairness opinion was given by Torreya Capital, a division of Financial West Investment Group, Inc. Closing is subject to typical conditions, as well as the closing of a brokered private placement of units with proceeds being not less than $4M. If the proceeds are less than $8M, certain of the shares issued by Cynapsus will be held in escrow until satisfactory future financings are achieved by Cynapsus. Each unit in the placement will consist of one common share and one share purchase warrant exercisable at $0.10 for 60 months from closing. Closing is expected on or about June 15, 2011.
Valeant Note Redemption
Valeant Pharmaceuticals International, Inc. (NYSE:VRX) (TSX:VRX) will redeem all of its outstanding 4.0% Convertible Subordinated Notes due 2013 and issued by its wholly-owned sub Valeant Pharmaceuticals International on May 20, 2011, at a conversion price of $12.65.
Compass Biotechnologies (OTC: COBI) announced it has received a memorandum of understanding from ARG Vermogensverwaltung AG of Munich, Germany, whereby Compass will be provided up to US$10M in exchange for equity. Compass also entered into a MOU with ARECOR Ltd. of Cambridge, U.K. for the development of a heat stable Hepatitis B vaccine based on acquiring a worldwide exclusive license from ARECOR to use its proprietary Arestat(TM) formulation technology.
Microbix Biosystems Inc. (TSX: MBX) closed a second tranche of a private placement, resulting in the issuance of 1,650,000 units at a price of $0.35 per unit and gross proceeds of $577,500. Each unit consisted of one common share and one-half of one common share purchase warrant. Each warrant is exercisable at $0.45 for two years following closing. A director of the Company purchased 650,000 units. Finders’ commissions amounting to a total of $24,500 and 70,000 finder’s warrants were paid. The finders’ warrants are exercisable into units at $0.42 for two years following closing. Microbix was also granted patent protection for the company’s proprietary VIRUSMAX(TM) technology from the European Patent Office. The patent covers the basis for the Microbix/Hunan joint venture which will result in the construction of Asia’s largest influenza vaccine production facility and the third largest such facility in the world.
Noveko International Inc. (TSX: EKO) closed a first tranche of a private placement for gross proceeds of $595,104, resulting in the issuance of 850,148 Class A shares and up to additional 425,074 Class A shares, which may be issuable on exercise of warrants.
Advitech Inc. (TSXV: AVI) completed bridge financing for an aggregate amount of $400,000 with AgeChem Venture Fund L.P. and Avrio Ventures Limited Partnership, which hold 44% and 30% of the total number of issued and outstanding common shares. The loan is repayable on the earlier of: (i) December 31, 2011; or (ii) 30 days following closing of a proposed transaction between Advitech and Natunola Health Biosciences. The loan bears interest at a rate of 12% per annum, compounded annually.
HTX is providing $248,750 in financing to Baylis Medical Company to support the final development of a novel surgical device. Baylis Medical will partner with Sunnybrook Health Sciences Centre and The University of Waterloo for field evaluation. HTX is also providing $750,000 to PatientOrderSets.com (which is in partnership with Trillium Healthcare and support from the Ontario Hospital Association) to enable integration of their technology with leading Computerized Provider Order Entry and Electronic Medical Record systems.
Warnex Inc. (TSX: WNX) entered a credit support agreement with Persistence Capital Partners (its largest shareholder) whereby Persistence has guaranteed Warnex’ obligations under existing banking facilities in exchange for guarantee and standby fees as well as reporting, governance and operations covenants by Warnex in favour of Persistence. As a result of this arrangement, Warnex’ line of credit with its lenders will increase from $1M to $1.25M.
Indel Therapeutics Inc. closed a round of financing raising over $1.4M. The financing included investors such as Morningside Ventures, MAD Ventures and Quantum Pacific Capital.
Critical Outcome Technologies Inc. (TSXV: COT) completed the final tranche of its non-brokered private placement resulting in the issuance of 2,160,000 units at a price of $0.16 per unit for gross proceeds of $345,600. Each unit consisted of one common share and one warrant of the Corporation, exercisable into one common share at an exercise price of $0.30 for 18 months from date of issue. Finders’ fees were paid to arms’ length third parties in the amount of $6,400 cash and 40,000 compensation warrants on the same terms. In aggregate, gross proceeds from all tranches was $2M through the sale of 12,500,000 units.
GeneNews Limited (TSX: GEN) announced an early warrant exercise incentive program to encourage exercise of approximately 17.2 million common share purchase warrants prior to expiry dates. The transaction is subject to disinterested shareholder approval. The program will be for 22 days commencing May 17, 2011. During this period, warrant-holders who exercise warrants will receive incentive compensation consisting of one common share and one incentive warrant exercisable into a common share for $0.25 until July 31, 2012. If all warrants are exercised the company will receive gross proceeds of up to approximately $4.1M and will issue approximately 17.2M common shares and 17.2 incentive warrants.
Licensing, Collaborations and other Commercial Transactions
Labopharm Inc. (TSX: DDS) (NASDAQ: DDSS) provided an update on its strategic review process. Labopharm has entered discussions with its OLEPTRO(TM) JV partner Gruppo Angelini, to restructure its agreement to further preserve capital.
Merus Labs International Inc. (CNSX: MR) signed a binding letter of intent with an undisclosed multinational pharmaceutical company to acquire their branded pharmaceutical products for the Canadian market. The transaction is expected to close on or before June 1, subject to typical approvals.
Functional Technologies Corp. (TSXV: FEB), through its subsidiary Phyterra Inc., renewed its distribution agreement with Beverage Supply Group (a division of Brewer’s Supply Group), providing for an increase of more than 350% in the minimum purchase volume of Phyterra(TM)-branded hydrogen sulphide preventing wine yeast in the U.S. market for the 2011 crush.
AbCelex Technologies Inc. entered an exclusive worldwide licensing and collaboration agreement with the National Research Council Institute for Biological Sciences to access their Pentabody platform technology, which provides AbCelex with the exclusive worldwide license to develop and commercialize the Pentabody platform for all in vitro clinical diagnostic applications, in exchange for up-front and milestone payments as well as royalties on future sales.
Med BioGene Inc. (TSXV: MBI) closed its commercialization license and research reimbursement agreement with Precision Therapeutics, Inc., which provides Precision with the exclusive global rights to develop and commercialize LungExpressDx.
Other Corporate Announcements
Response Biomedical Corporation (TSX: RBM) received product registration from China’s State Food & Drug Administration to sell RAMP(R) 200 Reader in the Chinese market. The market for in vitro diagnostics in China is estimated to be approximately $2bn per year.
Pulse Health announced a new device called Revelar, which is a non-invasive breathalyser technology that detects and measures the presence of aldehydes, which are indicators of free radical damage.
SQI Diagnostics Inc. (TSXV: SQD) received a license from Health Canada permitting it to market its IgX PLEX(TM) Celiac Panel, which will run on SQI’s automated SQiDworks(TM) Diagnostics Platform.
Bioniche Life Sciences Inc. (TSX: BNC) (ASX: BNC) opened its new Animal Health and Food Safety Vaccine Manufacturing Centre in Belleville, Ontario, which facility is the largest livestock vaccine manufacturing facility in Canada.
Protox Therapeutics Inc. (TSX: PRX) opened a new office in San Diego, California, and expects to complete transition of operations to the new office by the end of Q2 2011.
Innovotech Inc. (TSXV: IOT) announced its MBEC Assay(TM) was approved as an ASTM International standard.
Shareholders of Thallion Pharmaceuticals Inc. (TSX: TLN) approved a special resolution at its annual and special meeting to enable Thallion to implement a normal course issuer bid.
Ceapro Inc. (TSXV: CZO) announced patent offices in Europe, Japan and the USA issued patents in respect of certain of Ceapro’s intellectual property.
Paladin Labs Inc. (TSX: PLB) announced the Canadian launch of SEASONIQUE(TM), a new birth control designed to provide only 4 menstrual periods per year.