Welcome to your Monday Biotech Deal Review for Monday March 12, 2012. Following a break, the Monday Biotech Deal Review is back with summaries of biotech transactions over the previous weeks. Activity has been impressive over the past month, with pharma-giant Valeant Pharmaceuticals syndicating $600M in senior secured indebtedness under its existing senior credit facility to fund (among other things) future acquisitions, Alexion Pharmaceuticals completing its acquisition of Enobia Pharma for $610M and Futuremed Healthcare Products Corporation was acquired by Cardinal Health Inc. Also of note was the recent $80.5M equity financing by YM BioSciences as well as the reverse takeover of The Atman Co. by Biotonix. Read on to learn more.
YM BioSciences Inc. (NYSE Amex: YMI; TSX: YM) announced a $70M underwritten public offering of 35,000,000 ($2.00) common shares. BofA Merrill Lynch acted as sole book-running manager and Wells Fargo Securities, LLC acted as lead manager. JMP Securities LLC, Collin Stewart LLC, Rodman & Renshaw, LLC and Roth Capital Partners, LLC acted as co-managers. In connection with the equity financing, YM granted the underwriters a 30-day over-allotment option to purchase an additional 5,250,000 common shares. The offering closed with aggregate proceeds raised of $80.5M following the exercise in full of the over-allotment option. Proceeds will be used to fund ongoing drug development activities and for general corporate purposes and working capital.
Sernova Corp. (TSXV: SVA) announced a non-brokered private placement of 19,444,444 ($0.18) units to raise $3.5M, with each unit comprised of one common share and one (3-year) warrant exercisable at $0.20 in the first year and $0.35 in the second and third years. Sernova closed the first tranche of the private placement, and announced that it had increased the placement by $130,120 to accommodate oversubscriptions. In closing the first tranche, the company raised $3,491,120, and announced that it intends to complete a secondary closing of up to 722,222 units. Proceeds will be used for R&D of its proprietary Cell Pouch System™, to fund the upcoming first in man clinical trial for patients with diabetes receiving an islet transplant, and for general and administrative expenses.
Gemoscan Canada, Inc. (TSXV: GES) has closed a $882,000 offering of 2,520,000 units by way of TSXV Short Form Offering Document. Each unit is comprised of one class A share and one (2-year, $0.55) warrant. Canaccord Genuity Corp. acted as agent for the offering and received a cash commission of $74,970 plus a corporate finance fee of $40,000. Canaccord also received 226,800 warrants to acquire class A shares equal to 9% of the units placed at a price of $0.55 per share until February 16, 2014.
Biotonix (2010) Inc. (TSXV: BTX) has announced a $300,000 non-brokered private placement of 4,000,000 ($0.075) units, each comprised of one common share and a one-half (5-year, $0.115) warrant. Proceeds will be used to defray expenses related to the reverse takeover of Biotonix by The Atman Co. (see below).
Biotonix (2010) Inc. (TSXV:BTX) has entered into a final reverse takeover agreement with The Atman Co. Under the agreement, Biotonix will acquire all the outstanding shares of Atman in consideration of the issuance of 15,000,000 consolidated shares and the payment of $150,000, subject to financings by Biotonix and Atman of combined proceeds of $350,000, consolidation of the shares of Biotonix on the basis of one new share for each two shares outstanding, satisfactory due diligence by Biotonix and Atman and approval by disinterested shareholder and regulatory authorities.
Noveko International Inc. (TSX: EKO) has closed the sale of its subsidiary Bolduc Leroux Inc. This transaction released Noveko from the surety bonds and guarantees it had granted to BLI’s secured creditors for a total of $2,700,000.
Abattis Biologix Corporation (CNSX:FLU) has entered into a binding letter of agreement with Animo Wellness Corporation for the acquisition of 100% of the outstanding shares of Animo in consideration for an aggregate of $25,000 and 500,000 ($0.075) Abattis common shares issued to Animo shareholders.
Paladin Labs Inc. (TSX:PLB) has entered into a strategic partnership whereby Paladin will accelerate its buy-out of the remaining 55.01% of Pharmaplan (Pty) Limited and merge the Pharmaplan business with the pharma division of Litha Healthcare Group Limited (JSE:LHG). Under the terms of the transaction, Paladin will acquire the 55.01% of Pharmaplan which it does not currently own. Litha will then acquire 100% of the share capital of Pharmaplan from Paladin in exchange for cash and the issuance of 169,090,909 (ZAR2.75) shares in Litha. Paladin has also agreed to acquire an additional 72,989,078 (ZAR2.75) shares of Litha from the Blackstar Group. Paladin will deploy an anticipated $48 million in cash and issue 88,948 shares at $44.97 per share to complete the combined transactions. As a result, Paladin will own 44.52% of Litha, making it Litha’s single largest shareholder upon closing.
CTI Life Sciences Fund has closed its acquisition of Enobia Pharma, a CTI portfolio holding, by Alexion Pharmaceuticals. Pursuant to the terms set out in the merger agreement, Alexion paid out US $610 million upon consummation of the transaction. In addition, a supplementary amount of up to US $470 million in cash, could be paid out based on Enobia’s lead product, ENB-0040, which targets defective bone mineralization, achieving various regulatory and commercial milestones.
Valeant Pharmaceuticals International, Inc. (NYSE: VRX, TSX: VRX) has agreed to acquire Eyetech Inc., a privately-owned ophthalmic biotechnology company dedicated to the treatment of sight-threatening diseases of the retina, for an undisclosed upfront payment and future milestone payments.
Cardinal Health Canada Inc., a wholly-owned subsidiary of Cardinal Health, Inc. (NYSE: CAH), has announced the expiry of its successful offer to acquire all of the outstanding common shares of Futuremed Healthcare Products Corporation (TSX: FMD) for $8.15 per share in cash. 13,985,153 common shares have been deposited, representing approximately 91.5% of the total issued and outstanding common shares on a fully diluted basis. Cardinal Health Canada intends to acquire all of the remaining Futuremed common shares pursuant to the compulsory acquisition provisions of the Business Corporations Act (Ontario). Futuremed will cease to be a reporting issuer and its common shares will be de-listed from the TSX as soon as possible.
Cynapsus Therapeutics Inc. (TSXV: CTH) has arranged a $1,075,865 financing of secured Series E5 Debentures bearing interest at 10% per annum and payable by February 28, 2013. Cynapsus will pay a 13% capital discount to the debenture holders resulting in proceeds of $936,000 and 3,744,000 ($0.05) common shares issued to the debenture holders. Proceeds will be used to fund R&D of the APL 130277 product, partial repayment of Series A and Series B debentures, working capital and general corporate purposes.
Allon Therapeutics Inc. (TSX: NPC) has secured a $2.5 million convertible bridge financing from major shareholder Neuro Discovery II Limited Partnership to ensure financial flexibility as Allon continues to commercialize davunetide. The one-year loan bears interest at 12% and may be converted into common shares at a discount to the 5-day VWAP for a maximum of 12.5 million shares. In addition, the loan amount may convert in full or in part and Neuro Discovery II Limited Partnership may participate in any Allon equity financing prior to the maturity date on the same terms as third parties.
ProMetic Life Sciences Inc. (TSX:PLI) has completed relevant milestones regarding the March 2011 agreement with Celgene Corporation for the worldwide rights to a commercial application of ProMetic’s Protein Technologies within a field of use. As a result, a US$10.0 million long-term debt owed to Abraxis BioScience LLC, a wholly-owned Celgene subsidiary, has been forgiven.
Warnex Inc. (TSX: WNX) has announced that Persistence Capital Partners LP has agreed to extend the maturity date of $1,425,630 in outstanding convertible debentures from February 29, 2012, to March 19, 2012. In addition, Warnex announces that the Toronto Stock Exchange has agreed to extend the date of delisting of the common shares of Warnex from the TSX to the close of business on March 19, 2012.
ProMetic Life Sciences Inc. (TSX:PLI) has restructured the repayment of $4 million worth of secured loans previously provided by some of its long term stakeholders, effectively rescheduling the repayment of secured debt from July 1, 2012 to July 1, 2013. As consideration for the restructuring, stakeholders will collectively receive 12,930,909 ($0.115) and 2,857,140 warrants.
Valeant Pharmaceuticals International, Inc. (NYSE: VRX, TSX: VRX) has syndicated a $600 million senior secured Tranche B Term Loan facility under its existing senior secured credit facilities to fund repayment of certain outstanding amounts under its existing revolving facility and for general corporate purposes, including acquisitions. The Tranche B Term Loans will mature in 2019 and have terms that are customary for this type of financing. The Tranche B Term Loans bear interest at a rate per annum equal to, at Valeant’s option, a base rate or a LIBO rate plus an applicable margin. The initial interest rate for the Tranche B Term Loans is the LIBO rate plus 2.75% per annum.
Shares for Debt
Medifocus Inc. (TSXV: MFS) has completed a shares for debt transaction, settling $1,663,532 in debt with the issuance of 2,787,070 common shares at a VWAP of $0.60.
Licensing and Other Commercial Developments
Merus Labs International Inc. (TSX:MSL) has acquired the North American product rights for FACTIVE® (Gemifloxacin Mesylate) tablets from Cornerstone Therapeutics Inc. (NASDAQ:CRTX), including the license to the FACTIVE® trademark and patent, inventory on hand, and certain related intellectual property and other information and materials required to continue marketing the brand in the North American market. In exchange, Merus will pay a multiple of product cash flow, fully paid on closing. Merus has also entered into a sales and promotion agreement for FACTIVE® with Vansen Pharma Inc. to market the product in the United States.
Medicago Inc. (TSX: MDG) has executed a master research collaboration agreement with Mitsubishi Tanabe Pharma Corporation to develop and commercialize three new vaccines. Medicago will develop a Rotavirus Like Particle vaccine target, which Mitsubishi may license and assume global development, regulatory and commercialization responsibilities while Medicago will be eligible to receive up to $33 million in upfront and milestone payments as well as royalties. Medicago will receive an upfront payment of $3 million to begin the initial research. Work on an RLP vaccine target will begin immediately, and additional targets under the agreement are to be selected by the parties at a later date.
ProMetic Life Sciences Inc. (TSX:PLI) has signed an agreement with an existing client to proceed to the next stage of an ongoing commercial development program that will provide ProMetic with $2.5 million of service revenues. An upfront payment of $0.8 million is also triggered on the signing of the agreement. These activities should result in the scaling up of the manufacturing process of the multinational biopharmaceutical product in 2012 and lead to a subsequent long-term agreement for the manufacture and supply by ProMetic of the relevant affinity resin in 2013 onward.
SiREM and Tersus Environmental have signed a sales agency agreement, whereby Tersus Environmental will market, promote and sell SiREM’s bioaugmentation cultures – KB-1® and KB-1® Plus and Gene-Trac® molecular testing services and treatability studies.
Theratechnologies Inc. (TSX:TH, NASDAQ:THER) has entered into a supply, distribution and licensing agreement with Actelion Pharmaceuticals Canada Inc. providing Actelion with the exclusive commercialization rights to tesamorelin in Canada. Actelion will be responsible for all ongoing regulatory and future commercialization activities in connection with tesamorelin in Canada. Theratechnologies will be responsible for the manufacture and supply of tesamorelin to Actelion, who will purchase tesamorelin at a predetermined transfer price.
Special thanks to Keldeagh Lindsay for help with this week’s Monday Biotech Deal Review!