Welcome to your Monday Biotech Deal Review for September 12, 2011. We hope everyone had a restful labo(u)r day long weekend, both north and south of the border. This week’s biotech deal review is a double feature owing to last week’s holiday. There has been a lot of activity in the past two weeks, including the announcement of a friendly takeover bid of Afexa by Valeant (Afexa is already the target of a hostile bid by Paladin). Read on to learn more.
Valeant Sets Sights on Afexa
Afexa Life Sciences Inc. (TSX:FXA) has entered into a definitive acquisition support agreement with a subsidiary of Valeant Pharmaceuticals International, Inc. pursuant to which the sub has agreed to a cash offering for all of the outstanding Afexa common shares at $0.71 per share. Valeant has mailed the offer and the take-over bid circular to Afexa shareholders.
The Valeant offer represents a 30% premium to the 30-trading day VWAP on the TSX, and a 29% premium to the $0.55 cash consideration/49% premium to the share consideration alternative of the hostile bid from Paladin Labs Inc (TSX: PLB) (covered here).
The transaction, which values Afexa at approximately $76 million, will be structured by way of take-over bid. As part of the Agreement, Afexa has a 30 day “go shop” period during which Afexa may solicit competing acquisition proposals. Valeant has a right of first refusal, and will receive a $3.75 million termination fee in the event that Afexa gives notice to terminate the Valeant offer to enter into a superior proposal. Afexa’s board has given unanimous approval and mailed a circular containing their recommendation, and the directors and officers of Afexa have entered into lock-up agreements with Valeant, pursuant to which they have agreed to deposit all of their Afexa common shares to the Valeant offer, representing in the aggregate 8.8% of the common shares on a fully-diluted basis. Afexa shareholders will have 35 days to accept the offer, which is conditional upon 66 2/3% approval. Remaining outstanding common shares will be acquired pursuant to a subsequent acquisition transaction or compulsory acquisition, as applicable.
Affinium Pharmaceuticals has closed a $15 million financing, the proceeds of which will be used to conduct a phase 2 clinical study of oral AFN-1252 in acute bacterial skin and skin structure infections.
Hamilton Thorne Ltd. (TSXV: HTL) has closed the first tranche of its previously announced non-brokered private placement of common shares, issuing 12,469,500 ($0.20) common shares (11,980,500 of which were issued to insiders) for proceeds of US$2.55 million. US$1.5 million of the proceeds will be used to reduce the outstanding amount on the bank line of credit, an the balance will be used to fund R&D, enhance global distribution channels for its laser product line, and for general corporate purposes.
Sernova Corp. (TSXV: SVA) has closed a non-brokered private placement of 1,510,002 ($0.19) units of for proceeds of $286,900, to be used in development of the Cell Pouch™ and in part for potential university and corporate collaborations, additional preclinical studies and general and administrative activities. This summer Sernova has closed a total of approximately $1,301,100. Each unit is comprised of one common share and one (2-year) warrant at a price of $0.20 in the first year and $0.35 in the second. Sernova also issued 90,410 in (18-month, $0.19) finder’s warrants and approximately $17,178 was paid in finder’s fees.
Pacgen Biopharmaceuticals Corporation (TSXV: PGA) reached an agreement in principle with CurieMed Corporation with respect to a non-brokered $300,000 private placement of 5,376,344 ($0.0558) common shares, subject to shareholder approval. The proceeds are to be used for working capital and general corporate purposes, including ongoing negotiations regarding the potential acquisition of certain CurieMed assets. CurieMed and its parent, General Biologicals Corporation, collectively own 10.15% of the issued and outstanding Pacgen common shares, and will own an aggregate of 20.38% of the issued and outstanding common shares following the private placement.
Allegiance Equity Corporation (TSXV: ANQ) announced that the board has authorized a private placement to raise $250,000 by sale of common shares to be priced within the context of the market. Proceeds will be used to meet ongoing operating and administrative costs.
Securities and Option Grants
Venturi Ventures Inc. (formerly, Urodynamix Technologies Ltd.) (TSXV: URO) will proceed with the consolidation of all of its issued and outstanding shares on the basis of 20 old common shares for one new common share and the name change from “Urodynamix Technologies Ltd.” to “Venturi Ventures Inc.”, after receiving TSXV approval. As of August 26, 2011 there were 137,688,885 common shares issued and outstanding, and 6,884,444 are expected to be issued and outstanding upon completion of the consolidation.
biOasis Technologies Inc. (TSXV: BTI) has granted 2,275,000 (5-year, $0.52) options to officers, employees, consultants and directors.
Pivotal Therapeutics Inc. (CNSX:PVO) has granted incentive stock options to external directors, an employee and an advisor, to purchase a total of 650,000 ($0.30) common shares, subject to the vesting limitations in accordance with the provisions of its 2011 stock option plan.
Valeant Pharmaceuticals International, Inc. (NYSE: VRX; TSX: VRX) announced Board approval of an increase of $300 million under its previously announced securities repurchase program (covered here).
Origin BioMed will receive $850,000 follow-on investment from the province of Nova Scotia through Nova Scotia Business Inc. (NSBI) Venture Capital, and $650,000 and $500,000 from Avrio Ventures and GrowthWorks Atlantic respectively.
Horizon Sciences & Technologies Inc. has announced the approval by its shareholders of the previously announced proposed merger with 9247-5326 Quebec Inc. The merger was expected to close on or about August 29, 2011.
Labopharm Inc. (TSX: DDS) announced that the Superior Court of Québec has issued an interim order authorizing a special meeting of shareholders to consider approving the previously announced Chimigen Inc. arrangement (covered here), pursuant to which Chimigen, a wholly-owned subsidiary of Paladin Labs Inc. (TSX: PLB), will acquire all of the issued and outstanding common shares of Labopharm at a price of $0.2857 per share in cash. Labopharm’s board will recommend approving the arrangemen, and a notice and information circular has been mailed to all Labopharm shareholders regarding the October 5, 2011 meeting to consider the arrangement.
Spectral Diagnostics Inc. (TSX: SDI) and Medwell Capital Corp. (TSXV: MWC) announced court approval of their previously announced plan of arrangement, scheduled to close on September 9, 2011. Medwell’s voting Class A shares will commence trading on the TSXV on an ex-dividend basis on September 7, 2011.
Ondine Biomedical Inc. (TSX: OBP) has received securityholder approval and court approval for the previously announced plan of arrangement (covered here) pursuant to which 0902337 B.C. Ltd., a private company whose sole shareholder is Carolyn Cross, Chairman, CEO and shareholder of Ondine, will acquire all of Ondine’s issued and outstanding common shares. Ondine shareholders have also approved the delisting on the AIM market of the LSE. The arrangement is expected to become effective on September 6, 2011.
Sales, Licensing and Other Commercial Developments
The Pan-Provincial Vaccine Enterprise Inc., a national Centre of Excellence for Commercialization and Research, has signed an exclusive license with Amorfix Life Sciences Ltd. for the use of their proprietary ProMIS technology in developing vaccines for the treatment of diseases caused by the formation of misfolded prions.
Premier Diagnostic Health Service Inc. (CNSX: PDH) announced that the board has approved a MOU with two hospitals in China. Premier’s joint venture in Beijing is also now distributing profits to the corporate head office in return for past investment to setup the MRI clinic. Premier has also extended to September 14, 2011 its offering to accredited investor shareholders, for 3,125,000 ($0.08) units for a total investment of $250,000. Each unit consists of one common share and one (2-year, $0.10) warrant.
Noveko International Inc. (TSX: EKO) announced that its subsidiary SARL Noveko Algérie, has won a $1.25 million dollar order for the supply of technical walking aids to Algeria. Delivery is scheduled to extend until December 31, 2011.
Covalon Technologies Ltd. (TSXV: COV) announced a 10-year license and distribution agreement with a China-based medical device distributor to market Covalon’s antimicrobial coated catheters throughout China and Hong Kong, which includes a minimum commitment of approximately $7.7 million over the term of the agreement.
Zymeworks Inc. has granted Merck (NYSE: MRK) a worldwide license to develop and commercialize bi-specific antibodies generated through use of the Azymetric™ platform. Zymeworks will receive an upfront fee and is eligible to receive research, development and regulatory milestones with a potential value of up to US $187 million, as well as tiered royalty payments on sales of products. Merck will have exclusive worldwide commercialization rights to products derived from the collaboration.
Paladin Labs Inc. (TSX:PLB) has entered into a distribution agreement with Common Sense Limited, a privately-owned Israeli company, under which Paladin receives the exclusive rights to market and sell the VS-SENSE OTC and AL-SENSE OTC self-test kits to detect bacterial vaginosis or trichomonas infection for women of reproductive age and amniotic fluid leakage during pregnancy.
Bio Solutions Corp. has signed an LOI to acquire all IP of Type 2 Defense, a diabetic supplement drink.
QHR Technologies Inc. (TSXV: QHR) has announced that Healthscreen has waived the notice period under the Demand for Payment with respect to the debentures under which Healthscreen is indebted to QHR’s wholly owned subsidiary, and has allowed a court appointed receiver (since appointed) to manage the transition and transfer of Healthscreen’s assets. As previously announced, QHR will make an offer to acquire the Healthscreen software division.
Other Corporate Announcements
Advitech Inc. (TSXV: AVI) has retained SectorSpeak Inc. for 12 months to provide strategic investor relations and communications services, in return for a monthly fee of $6,000 and 400,000 ($0.10) stock options. The options vest over a one year period and will vest at a rate of 25% per quarter.
Special thanks again to Keldeagh Lindsay for help with this week’s Monday Biotech Deal Review.