The Cross-Border Biotech Blog

Biotechnology, Health and Business in Canada, the United States and Worldwide

Monday Biotech Deal Review: January 9, 2012

Happy New Year and welcome back to your Monday Biotech Deal Review for January 9, 2012, following a holiday hiatus.  Link below to our review of transactions that have occurred over the previous three weeks.  Noteworthy transactions include various acquisitions by Valeant as well as a refinancing of its existing debt facilities.   Read on to learn more. 


Response Biomedical Corporation (TSX:RBM) has completed its previously announced $6.7 million rights offering (covered here) of 90.1 million units each comprised of one common share and one (5-year, $0.0746) warrant. Pursuant to the terms of a standby purchase agreement, OrbiMed Private Investments III, LP, OrbiMed Asia Partners, LP, and OrbiMed Associates III, LP subscribed for 67 million units for $5 million.

Protox Therapeutics Inc. (TSX: PRX) has closed the previously announced additional investment of $8.3 million by Warburg Pincus pursuant to the terms of an investment agreement dated September 28, 2010 whereby Warburg agreed to purchase an additional 20,833,333 ($0.40) units comprised of one common share and a 0.6 (5-year, $0.50) warrant. Under the agreement, Warburg Pincus Private Equity X, L.P. and Warburg Pincus X Partners, L.P. have the right to invest up to $35 million in Protox.

Medicago Inc. (TSX: MDG) has closed the second tranche of the $22.5 million private placement, consisting of the issuance of 17,200,000 ($0.65) common shares to Phillip Morris Investments B.V. for gross proceeds of $11,180,000. Phillip Morris now holds 40% of the outstanding common shares of Medicago after this tranche.

Pacific Therapeutics Ltd. (CNSX:PT) has closed the previously announced $50,000 non-brokered private placement of 357,142 ($0.14) common shares (covered here). Proceeds will be used for general working capital.

Gemoscan Canada, Inc. (CNSX:GES) has closed the third tranche of its previously disclosed $143,000 non-brokered private placement of 408,571 units (covered here), comprising one Class A share and one half of a (1-year, $0.55) Class A warrant. Proceeds will be used to enhance Gemoscan’s cash position and strengthen its working capital position. Finder’s fees of $10,010 and 28,600 units will be paid in connection with the closing.

Amorfix Life Sciences Ltd. (TSX: AMF) has announced a non-brokered private placement of between 2,222,222 – 4,444,444 units priced at $0.225 per unit, which would result in proceeds of between $500k – $1M.  Each unit will consist of one common share and one (3-year, $0.50) warrant with a 20-day, $1.00 trigger. Proceeds will be used for R&D and general corporate purposes. Finder’s fees of 8% of proceeds and broker’s warrants equal to 8% of the placement will be paid in connection with the placement.


Valeant Pharmaceuticals International, Inc. (NYSE: VRX; TSX: VRX) has completed its previously announced acquisition of Dermik, a dermatology unit of Sanofi (NYSE: SNY) and its previously announced acquisition of iNova (covered here). Valeant has also successfully syndicated $500 million of incremental term loans maturing in April 2016 under its existing senior secured credit facilities in connection with its acquisition of iNova. Valeant has also offered to acquire ISTA Pharmaceuticals Inc. (Nasdaq: ISTA) for $6.50 per share in cash, or a 68% premium, for a total of $314 million. ISTA has net debt of approximately $13 million, bringing the total enterprise value to approximately $327 million.

Warnex Inc. (TSX:WNX) has entered into a binding agreement with Gamma-Dynacare Medical Laboratories to sell its wholly-owned Analytical Services division, which provides pharmaceutical and biotechnology companies with a variety of quality control services, for $400,000 and a cash payment equal to the working capital of the division on the closing date, a 15% passive equity
interest in the purchaser and other valuable consideration. Proceeds will be used to further reduce long-term debt and for working capital purposes.

Merus Labs International Inc. and Envoy Capital Group Inc. (TSX: ECG, NASDAQ: ECGI) have completed their previously announced amalgamation (covered here). In connection with the closing of the arrangement, Envoy closed its $8,393,000 private placement of 4,196,500 ($2) units. Each unit comprises of one Merus common share and a one-half (3-year, $3) warrant, with a $4, 20-day trigger. Envoy also issued 197,700 (2-year, $2) options as a finder’s fee. The Merus shares will trade on the TSX under “MSL” and on NASDAQ under “MSLI”.

Bradmer Pharmaceuticals Inc. (TSXV: BMR.H) has entered into a non-binding letter of intent to complete a business combination with Epic Production Technologies International Inc. by way of a three-cornered amalgamation, share exchange or similar arm’s length transaction between Bradmer and Epic that will constitute a reverse take-over and change of business. Epic will also complete a brokered private placement of subscription receipts convertible or exchangeable into freely tradeable common shares of the resulting issuer.

Biotonix (2010) Inc. (TSXV: BTX) has entered into an arm’s length letter agreement  with The Atman Co., a Quebec non-reporting issuer, pursuant to which Biotonix will, subject to a number of conditions, acquire all of the issued and outstanding securities of Atman in a reverse take-over of Biotonix. Prior to the closing of the RTO, Atman will issue a $200,000 convertible debenture, which will be converted on closing into 1 million shares at $0.20 per share. Proceeds will be used to restructure existing Atman debt. Biotonix will make a private placement of its pre-consolidation common shares prior to closing the RTO at $0.10 each, for maximum proceeds of $150,000 to be used to finance the RTO and related transactions. Biotonix will also make a prospectus offering to raise proceeds of at least $500,000to be used for working capital purposes.

Cynapsus Therapeutics Inc. (TSXV:CTH) has completed the previously announced acquisition of Adagio Pharmaceuticals Ltd. by way of share exchange (covered here). This transaction terminates the License Option Agreement dated July 22, 2010 entered into between Cynapsus and Adagio with respect to the intellectual property owned by Adagio concerning theAPL-130277 patent rights and know-how. Adagio shareholders will be entitled to the following payments pursuant to the transaction: 26,000,000 ($0.05) common shares; a $1,500,000 payment conditional upon the successful completion of theAPL-130277 phase 1 bioequivalence studies; and a payment of $2,500,000 conditional upon the successful completion of theAPL-130277 final safety study, to be satisfied by the issuance of common shares at a deemed value equal to the 30 day volume weighted average trading price immediately prior to the first public announcement of the results of such studies;

Debt Financing

Ceapro Inc. (TSXV: CZO) announced that holders of $370,000 of the convertible debentures due December 31, 2011 have elected to convert their debentures into common shares at a conversion price of 10 cents per share. This will result in the issuance of 3,700,000 new common shares of Ceapro. The remaining $130,000 of convertible debentures as well as the interest due, was paid out in cash.

Cynapsus Therapeutics Inc. (TSXV:CTH) has arranged a second closing financing of $155,172 in secured Series E-3 Debentures. The debentures bear interest at 10% per year. Cynapsus will pay a 13% capital discount to the debenture holders resulting in net proceeds of $135,000 and issue 540,000 ($0.05) common shares to the debenture holders. Proceeds will be used to fund ongoing research and development activities of the APL 130277 product, repayment of the Series B debenture, working capital and general corporate purposes. Cynapsus has also arranged a financing of $229,885 in secured Series E-4 Debentures bearing interest of 10% per annum and secured by a security interest in company assets. The debentures are payable on or before December 30, 2012. Cynapsus will pay a 13% capital discount to the debenture holders resulting in net proceeds of $200,000 and issue 800,000 common shares to the debenture holders at a price of $0.05 per share. Proceeds will be used to fund ongoing research and development activities of theAPL 130277 product, repayment of the Series B debenture, working capital and general corporate purposes. A $16,000 cash comission is due to Summer Street Research Partners as the placement agent in connection with the secured debentures.

Licensing and Other Commercial Developments

Microbix Biosystems Inc. (TSX: MBX) and Zydus Cadila have signed a LOI to market the thrombolytic drug, Urokinase in North American markets. Zydus will provide funding to re-launch the drug in the US and Canada, including an initial commitment, plus milestone based payments.  Microbix will also receive a milestone payment upon reaching a certain sales target and will be guaranteed a margin plus earn a sales royalty. Zydus will receive an option on the rights to all future indications including in the areas of oncology and ophthalmology.

Aeterna Zentaris Inc. (NASDAQ: AEZS, TSX: AEZ) has entered into a collaboration agreement with Ventana Medical Systems, Inc. to develop a companion diagnostic for the immunohistochemical determination of luteinizing hormone-releasing hormone receptor expression, for the Aeterna’s cancer treatment compound, AEZS-108.

Bioniche Life Sciences Inc. (TSX: BNC) has entered into two distribution agreements. The first agreement is with MedTrade Products Limited and provides a number of equine and companion animal health products based on MedTrade’s CeloxTM technology for exclusive distribution by Bioniche in Canada. The second agreement is with Mueller Medical International LLC and provides an equine product – Equine Gastrafate® – for exclusive distribution in Canada and the U.S. by Bioniche.

Special thanks again to Keldeagh Lindsay for help with this week’s Monday Biotech Deal Review!

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