Welcome to your Monday Biotech Deal Review for May 16, 2011. Angiotech has completed its second amended and restated plan of compromise or arrangement, cleaning up USD$250M in debt in respect of 7.75% senior subordinated notes, which are now cancelled, and has also resulted in the restructuring of $325M of existing floating rate notes through an exchange transaction. There was also interesting licensing activity, notably involving Paladin Labs. Lastly, Arch Biopartners announced their development achievement of a “bio-steel” material that is approximately 40% harder and 50% less corrosive than regular stainless steel. Read on to learn more.
Angiotech Completes CCAA Restructuring Plan
Angiotech Pharmaceuticals, Inc. successfully implemented the court sanctioned second amended and restated plan of compromise or arrangement under the CCAA resulting in the cancellation of the USD$250M 7.75% senior subordinated notes due 2014 and the issuance of new common shares to holders of such notes. Angiotech also completed its exchange offer to exchange new senior secured floating rate notes due 2013 for all outstanding senior floating rate notes due 201. A total of $324,975,000 aggregate principal amount of existing floating rate notes were tendered and accepted for exchange constituting 99.99% of the outstanding aggregate principal amount of the existing floating rate notes.
Sernova Corp. (TSXV: SVA) announced a brokered private placement of up to 15,800,000 units at a price of $0.19 per unit for gross proceeds up to $3,002,000. Macquarie Private Wealth Inc. will offer the units on a commercially reasonable efforts basis. Macquarie will be granted an over allotment option to offer additional units up to 15% of the units sold, for additional gross proceeds of up to $450,300. Each unit consists of one common share and one common share purchase warrant exercisable for two years following closing at a price of $0.25 in the first year and $0.35 in the second year, subject to a 30-day acceleration if, following four months following closing, the 20 day volume-weighted average trading price is greater than 1.5x the applicable warrant exercise price. Macquarie will receive a commission equal to 8% of the gross proceeds of the offering and over allotment, as well as a corporate finance fee of $25,000 and broker warrants to acquire common shares equal to 10% of the units sold.
Ondine Biomedical Inc. (TSX: OBP) (AIM: OBP) entered a loan agreement with CEO and Chairman Carolyn Cross, as creditor, for $1.5M due October 1, 2011 and secured by the proceeds of any future financing. The loan is interest free until the due date, but thereafter the principal amount accrues interest at 5% per annum payable monthly. The loan is a related party transaction that was considered to be fair and reasonable.
Shares for Debt
PharmaGap Inc. (TSXV: GAP) is converting $170,834 in debt owing by the Company to three directors and founders into common shares at a price of $0.0945 per common share, resulting in the issuance of 1,807,766 common shares. Following the subscription, the subscribers will own approximately 5.3% of the total common shares then outstanding.
Nuvo Research Inc. (TSX: NRI) completed its acquisition of ZARS Pharma, Inc. announced April 18, 2011. Nuvo issued approximately 99.8 common shares and paid approximately $100,000 to ZARS shareholders, representing approximately 19.2% of Nuvo’s shares following acquisition. Nuvo will also issue a $14.9M promissory note to ZARS’ shareholders on achievement of a milestone related to ZARS’ Pliaglis, with additional promissory notes of up to $8M issuable on certain other milestones. At Nuvos’ annual and special meeting of shareholders scheduled for June 21, 2011, shareholders will be asked to approve the issuance of Nuvo common shares at an implied price of $0.02 per share, in lieu of the above-mentioned promissory notes.
Licensing, Collaboration and other Commercial Transactions
Paladin Labs Inc. (TSX: PLB) entered a licensing and distribution agreement under which Paladin was granted exclusive Canadian rights from an affiliate of Elan Corporation, plc to market and sell Elan’s controlled release hydrocodone product for treatment of moderate to severe pain. Elan will receive an undisclosed upfront and milestone payments as well as manufacturing fees and royalty payments based on sales on commercialization. Paladin also announced a licensing and distribution agreement with Takeda Pharmaceutical Company Limited (TSE:4502) whereby Paladin granted Takeda the exclusive right to develop and commercialize fomepizole for the treatment of ethylene glycol and methanol poisoning in exchange for an undisclosed upfront payment and royalties. Takeda has taken responsibility for developing and commercializing fomepizole in Japan.
The Centre for Drug Research and Development signed an affiliation agreement with researchers at the University of Ottawa to access CDRD’s drug development infrastructure and expertise.
Oncolytics Biotech Inc. (TSX: ONC) (NASDAQ: ONCY) entered into a commercial supply agreement with SAFC, a Division of Sigma-Aldrich Corporation for the commercial manufacture of REOLYSIN(R). SAFC will perform process validation of the product and will supply clinical requirements and commercial material upon approval of the product. Financial terms were not disclosed.
iCo Therapeutics Inc. (TSXV: ICO) entered a consulting agreement with Ora Inc. relating to iCo-007 Phase 2 clinical development. Ora’s business is in ophthalmic product development.
Arch Biopartners Inc. (CNSX: ACH) (OTC: FOIFF) reported on their new technology at the University of Alberta in biophysics, consisting of a new “bio-organic stainless steel” material which is approximately 40% harder and has approximately 50% lower corrosion rate compared to regular stainless steel and is created via a previously unreported type of chemical interaction between novel synthetic peptides and stainless steel. The findings are reported in the journal Biomaterials.
Medtronic of Canada Ltd. received Health Canada approval for its Arctic Front(R) Cardiac CryoAblation Catheter System, the first and only Cryoballoon in Canada for treatment of paroxysmal atrial fibrillation.
Amorfix Life Sciences Ltd. (TSX: AMF) received approval for three patents to key targets for misfolded SOD1 by the US Patent and Trademark Office.
Other Corporate Announcements
Apotex announced it will resume shipments of its oral solid dose products to the U.S. market, following an FDA decision to lift an import alert regarding Apotex’ largest solid dose manufacturing facility.