The Cross-Border Biotech Blog

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

Monday Deal Review: January 6, 2014

  Welcome to your Monday Biotech Deal Review for Janary 6, 2014! Happy New Year! Things in 2013 slowed considerably as we approached the holiday season, however January has gotten off to a good start.

Hit the break to see this week’s major biotech news, and thank you to Jennifer Ng of Norton Rose Fulbright Canada LLP for conbtributing to this week’s post.

M&Eh

Paladin Labs Inc. (TSX: PLB) (“Paladin Labs”) announced that the Canadian Competition Bureau issued a no-action letter on December 18, 2013, which constitutes Canadian Competition Act compliance for Endo’s proposed acquisition of Paladin Labs. Pursuant to the acquisition, each of Endo and Paladin Labs will be acquired by a newly-formed Irish holding company (“New Endo”). As previously announced on November 5, 2013, Endo and Paladin Labs entered into a definitive agreement pursuant to which Endo would acquire Paladin Labs in a stock and cash transaction valued at approximately $1.6 billion. The early termination of the HSR waiting period in the United States and the no-action letter obtained from the Canadian Competition Bureau in Canada satisfy conditions to the proposed acquisition. The proposed acquisition remains subject to certain conditions and approvals.

Valeant Pharmaceuticals International, Inc. (NYSE: VRX and TSX: VRX) announced that it has entered into a definitive agreement under which Valeant will acquire all of the outstanding common stock of Solta Medical, Inc. (NASDAQ: SLTM) for $2.92 per share in cash, which represents a 40% premium to Solta’s closing share price on December 13, 2013, the last trading day prior to announcement, or a transaction value of approximately $250 million. The transaction is expected to close in the first quarter of 2014 and Valeant expects the transaction, once completed, to be immediately accretive to Valeant’s cash earnings per share. Under the terms of the agreement, Valeant will commence a tender offer for all outstanding shares of Solta at a price of $2.92 per share in cash. The tender offer will be conditioned on the tender of a majority of Solta’s shares calculated on a diluted basis, as well as the receipt of regulatory approval and other customary closing conditions. Following the completion of the tender offer, a wholly owned subsidiary of Valeant will merge with Solta and the outstanding Solta shares not tendered in the tender offer will be converted into the right to receive the same $2.92 per share in cash paid in the tender offer. Solta’s Board has unanimously approved the transaction. Piper Jaffray & Co. acted as financial advisor to Solta and Fenwick & West LLP acted as legal advisor to Solta. Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to Valeant.

 Concordia Healthcare Corp. announced that it has acquired Pinnacle Biologics, Inc., a U.S.-based biopharmaceutical company specializing in legacy pharmaceuticals which have the potential for development as orphan drugs to treat cancer indications in addition to those for which they have previously been approved.

Concordia Healthcare Corp. (TSX-V: MV.H) (the “Resulting Issuer”), formerly named Mercari Acquisition Corp. announced the completion of its qualifying transaction (the “Transaction”) pursuant to Policy 2.4 – Capital Pool Companies of the TSX Venture Exchange.  In accordance with the previously announced amalgamation agreement dated December 13, 2013 (the “Amalgamation Agreement”), Concordia Healthcare Inc. amalgamated (the “Amalgamation”) with the Resulting Issuer’s wholly-owned subsidiary, Mercari Subco Inc., and the shareholders of Concordia Healthcare Inc. exchanged their common shares of Concordia Healthcare Inc. for common shares of the Resulting Issuer on a one for one basis.  The Amalgamation became effective at 11:59 p.m. on December 20, 2013. Before the effective time of the Amalgamation, Concordia Healthcare Inc. completed a private placement (the “Private Placement”) of subscription receipts (the “Subscription Receipts”). Pursuant to the Private Placement, Concordia Healthcare Inc. issued 5,520,000 Subscription Receipts (which included the exercise in full of the Agents’ 15% option) at a price of $6.25 per Subscription Receipt for total gross proceeds of $34,500,000.

KIK Custom Products Inc. announced it successfully completed its acquisition of the consumer products business of Chemtura Corporation (NYSE/EuroNext Paris: CHMT) on December 31, 2013 for an adjusted purchase price of $300 million. The $15 million reduction reflects the resolution of certain pre-closing matters by the parties. The purchase price is subject to a post-closing adjustment for working capital and assumed pension liabilities. The acquisition included Lawrenceville, Ga.-based BioLab’s pool products businesses in North America, South Africa and Australia/New Zealand; its European division known as Bayrol; as well as its household care business in North America and dedicated manufacturing plants in Conyers, Ga.; Lake Charles, La.; and Atlantis, South Africa.

China Health Labs & Diagnostics Ltd. (the “Company”) (TSX-V: CHO) announced that, at the meeting of the Company’s shareholders held on December 18, 2013 (the “Meeting”), the shareholders approved the amendments to the Company’s Articles, the variation to share rights and the share consolidation for purposes of the going private transaction (the “Transaction”) and that on December 28, 2013, the Company received from Century Delight Investment Limited (“Century Delight”) the financing to complete the Transaction by way of a compulsory redemption of shares. As previously announced here, the Company and Century Delight entered into an agreement (the “Agreement”) pursuant to which Century Delight will become the sole shareholder of the Company following the Company taking action to compulsorily redeem for cancellation all of the outstanding shares of the Company not already owned by Century Delight for cash consideration of CAN$0.62 per share (pre-consolidated basis).  The Transaction will be effected by way of a share consolidation and redemption under the Companies Law (2013 Revision) of the Cayman Islands.

Annidis Corporation (TSX-V: RHA) (the “Corporation”) announced that effective January 1, 2014 it has completed a vertical short-form amalgamation pursuant to the Business Corporations Act (Ontario) with its wholly owned operating subsidiary Annidis Health Systems Corp. (“AHSC”). Pursuant to the amalgamation, all of the issued and outstanding shares of AHSC will be cancelled and the assets, obligations and liabilities of AHSC will be assumed by Annidis. No securities of Annidis will be issued in connection with the amalgamation and the share capital of the Annidis will remain unchanged.

Domtar Corporation (NYSE: UFS) (TSX: UFS) announced the closing of the acquisition of privately-held Laboratorios Indas, SAU (“Indas”), pursuant to a definitive agreement announced on November 19, 2013. Indas is Spain’s largest manufacturer and marketer of branded adult incontinence products, with its IncoPack and Indasec® line of products.

Biosign Technologies Inc. (TSX-V: BIO) (the “Company”) announced the execution of a Share Purchase Agreement (the “SPA”) under which it has agreed to acquire 100% of the issued and outstanding shares of Saint John NB based IBL Internet Business Logic (“IBL”). Biosign will operate IBL as a wholly-owned subsidiary. The total purchase price of $1.96 million will be satisfied by way of payment of $75,000 in cash, and by the issuance of 36,000,000 common shares of Biosign at an ascribed price of $0.05 per share, being a premium to the market price at the execution date of the SPA.

Biosign Technologies Inc. (TSX-V: BIO) (the “Company”) announced an investment in Vancouver, British Columbia-based Higher Bracket Online Media Inc, (“Higher Bracket”). The Company is investing $380,000, paid by the issuance of 6,000,000 common shares of the Company at an ascribed price of $0.05/share, being a premium to the market price, as well as $80,000 in cash. In exchange for such payment, Biosign will acquiring 25% of outstanding shares of Higher Bracket and receive an option to acquire an additional 15% of the outstanding shares at any time prior to June 30, 2015 (the “Option Period”) at the same valuation as the original investment.

Financing

Ceapro Inc. (TSX-V: CZO) announced the signing of a Loan Agreement with its major partner, Symrise, a German-based multinational company.

Ceapro Inc. (TSX-V: CZO) announced that it has closed a loan facility with Agriculture Financial Services Corporation (AFSC) which will provide Ceapro with commercial financing of up to $1,600,000 for its new manufacturing facility currently under construction in Edmonton. The loan will be for a five year term at an interest rate of 3.91%.

Kane Biotech Inc. (TSX-V: KNE) (the “Corporation”) announced that the Corporation has closed its previously announced non-brokered private placement offering (the “Offering”) of a single unit (the “Unit”) comprised of a $500,000 principal amount 2 year 10% convertible redeemable unsecured note (the “Note”) and 4,000,000 share purchase warrants (“Warrants”) for gross proceeds of $500,000. The Note has a term of two years from the date of issuance and bears interest at a rate of 10% per annum. The Note is redeemable at any time at the option of the Corporation at an amount equal to the face value of the Note, plus all accrued and unpaid interest, subject to the right of the Note holder to convert the Note into common shares of the Corporation (“Common Shares”) prior to the date of redemption. The Corporation may elect to pay the interest on the Note or the redemption price of the Note in Common Shares, in lieu of cash, at the market price of the Common Shares on such interest payment date or redemption date, subject to the approval of the TSX Venture Exchange. The Note may be converted at the option of the Note holder into Common Shares at a price of $0.15 per Common Share at any time until maturity of the Note. Each Warrant entitles the holder thereof to purchase one Common Share at a price of $0.095 for a period of two years from the date of issuance.

Medifocus Inc. (TSX-V: MFS) announced the initial closing of a non-brokered private placement of 354 units at a price of $10,000 per unit (the Units). The $3,540,000 is part of the Company’s non-brokered private placement (the Offering) of $6,000,000 previously announced in August 2013. The Company expects to complete the remainder of the Offering on or before January 17, 2014. Each Unit consists of (i) a $10,000 redeemable promissory note (“Note”), bearing 8% annual interest payable on a quarterly basis, which are convertible into Common Shares at a conversion price of $0.25 per Common Share, and which are payable 36 months after the closing of the Offering; and (ii) Common Share purchase Warrants(“Series C Warrants”) to purchase 20,000 Shares at a price of $0.30 per Share a period of 36 months following the completion of the Offering. Any securities issued under the first tranche of the Offering are subject to a hold period until April 19, 2014. Medifocus will pay finder’s fees of $314,100 in cash and issue 1,256,400 Finder’s Warrants to Asset Profits Limited, Shop 204 G/F The Arcade, 100 Cyberport Road, Hong Kong.

Imaging Dynamics Company Ltd. (TSX: IDL) announced that it has closed its previously announced non-brokered private placement (the “Private Placement”) and issued 12,600,000 Common Shares of the Corporation (“Shares”) at price of $0.05 per Share for total gross proceeds of $630,000.  There is a four month hold period on the Common Shares issued which expires on April 20, 2014.  Proceeds of the Private Placement will be used for general working capital and corporate purposes.

Miraculins Inc. (TSX-V: MOM) announced that it has arranged a non-convertible secured loan of up to CDN$1,000,000 (the “Loan”) with a third party lender. Any amounts advanced under the Loan will be evidenced by promissory notes purchased by the lender at a 10% discount to the principal amount of the promissory notes. Assuming full draw down under the Loan, the aggregate purchase price of the promissory notes will be CDN$900,000. Upon receipt of regulatory approval for the Loan, the lender will purchase an initial promissory note with a principal amount of CDN$278,000 for a purchase price of CDN$250,000. All amounts owing under the Loan will be due and payable on December 31, 2014 and will bear interest of 12% per annum, payable quarterly. As consideration for providing the Loan, in connection with each purchase of a promissory note by the lender under the Loan, the lender will receive, subject to regulatory approval, common shares of Miraculins equal in value to 10% of the principal amount of the promissory note based on the closing price of Miraculins’ common shares on the trading day before the purchase of the promissory note.

Ceapro Inc. (TSX-V: CZO) announced the granting of stock options to its employees, directors, and officers for a total of 930,000 stock options, each with an exercise price of $0.10. Each grant vests in three equal instalments, the first of which vests immediately with the second and third instalments vesting on the first and second anniversaries of the date of grant. Each option is exercisable, once vested, for a period of ten years from the date of grant. Of note, a total of 450,000 of the stock options were granted to directors and officers.

AtmanCo Inc. (the “Company”) (TSX-V: ATW) announced that a total of 232 036 share purchase options have been granted to the members of the board of directors of the Company pursuant to the terms of its share option plan (the “Plan”). These options are exercisable at $0.30 per share and expire on January 1st 2019. The Plan provides that options may be exercised on a cumulative basis over a period of five years from the date they are granted, as to one-third after one year, and additional one-third after two years and the balance after the end of the third year.

Commercial & Other Agreements        

Kane Biotech Inc. (TSX-V: KNE) announced the Company has entered into an option agreement with a Global Health Care Company who has been assessing some of Kane Biotech’s antibiofilm and antimicrobial technologies for use in the animal heath market. Under the terms of the agreement, the Health Care Company will now complete their due diligence surrounding Kane’s technology with an option to obtain an exclusive, worldwide license to develop, commercialize and market certain oral care and wound care technologies in the global animal health market. Details of the agreement are confidential.

Nuvo Research Inc. (TSX: NRI) and NovaMedica LLC (NovaMedica) announced that they have signed a supply and distribution agreement providing NovaMedica the exclusive rights to market and sell Nuvo’s Pennsaid 1.5% and Pennsaid 2% products in Russia and some of the Community of Independent States (CIS). Under the terms of the agreement, NovaMedica is responsible for conducting required clinical studies and obtaining regulatory approval for the products in the licensed territories. Sales of Pennsaid 1.5% in Russia are projected to begin in 2015.

SQI Diagnostics Inc. (the “Company”) (TSX-V: SQD) announced that it has entered into a commercial product development and services agreement with an Irvine California-based global pharmaceutical company.  Under the terms of the agreement SQI will be paid to build a customized, 6-plex anti-drug antibody (“ADA”) assay to detect and measure immunogenic responses to a drug in the customer’s extensive drug pipeline.  The agreement also compensates SQI to provide preliminary data using this custom assay on a set of the customer’s pre-clinical samples provided to SQI.  The agreement includes payment for the services for this phase of the project as well as for the consumables used during development and sample testing.

Finnish healthcare company Biohit Oyj is restructuring its distribution regarding Acetium products in Canada and therefore has signed a distribution agreement with Canadian company Medical Futures Inc. The agreement is effective immediately and will replace the previous distribution agreement. Within the agreement, Medical Futures Inc. gains exclusive rights for the distribution of Acetium capsules and lozenges in Canada.

Response Biomedical Corp. (TSX: RBM) (the “Company”) announced that its existing Chinese Distribution Agreement with O&D Biotech Co., Ltd. (“O&D”) dated February 21, 2011, as amended, has expired effective December 31, 2013. The Company is currently in discussions with O&D regarding a new agreement whereby O&D could continue to market Response’s cardiovascular products under their own brand labels and registrations; however, there can be no assurance that a new agreement will be executed. The Company recently announced that it has entered into two agreements to distribute its cardiovascular portfolio of RAMP® products with two new distributors in China. These new distribution agreements follow the approval of Response’s RAMP® branded cardiovascular Point of Care Testing portfolio by the China Food and Drug Administration.

Other

iCo Therapeutics (TSXV: ICO) announced that its common shares will begin trading on OTCQX International, a segment of the OTCQX marketplace in the U.S., under the symbol “ICOTF.” iCo’s common shares will also continue to trade on the TSX Venture Exchange under the symbol “ICO”. iCo expects to benefit from trading on OTCQX by gaining greater exposure and increasing liquidity in the United States, the location of all clinical sites for its ongoing Phase 2 iDEAL study for diabetic macular edema (DME).

Bayer Inc. announced that Bayer HealthCare has joined the Structural Genomics Consortium (SGC), a not-for-profit, public-private partnership with active research facilities at the Universities of Toronto and Oxford, UK. Bayer will support funding the consortium to accelerate precompetitive drug research in the areas of protein sciences and epigenetics. Furthermore, Bayer will provide a subset of its compound library for screening to the SGC and will also conduct the chemical work to identify probes. The joint research efforts within the consortium may open up new possibilities for the development of novel therapies – particularly in oncology. The SGC and Bayer HealthCare will collaborate on different research projects in Toronto and Oxford with the goal to identify small molecules that can interfere with the activity of proteins involved in epigenetic control to unravel disease mechanisms.

Medworxx Solutions Inc. (“Medworxx”) (TSX-V: MWX) announced that TELUS Health will now offer customers the Medworxx Patient Flow Platform, enabling health care practitioners to better analyze and monitor patient health in an acute care environment. Comprised of Medworxx Clinical Criteria, Bed Management System, and Forms and Assessments, the platform is available as part of TELUS Health’s suite of technology solutions. Medworxx Patient Flow is a natural complement to Clinical Information Systems (CIS) such as TELUS’ OACIS.

Trimel Pharmaceuticals Corporation (TSX: TRL) announced that its subsidiary, Trimel BioPharma SRL (“Trimel SRL”), has amended its intellectual property rights and product development agreement (the “Rights Agreement”) with M&P Patent AG (“M&P”) relating to the Company’s licensed bioadhesive intranasal gel technology. In connection with this amendment, all outstanding matters under dispute between Trimel SRL and M&P with respect to CompleoTRT™ and Tefina™ are now resolved and all arbitration proceedings will be terminated. The parties have agreed to settle these matters in consideration of a payment of US$4.25 million by Trimel SRL to M&P, representing a portion of the approximately US$5.0 million milestone payments that were the subject of existing arbitration proceedings. In addition, Trimel SRL has been granted non-exclusive commercialization rights to Brazil and Russia for CompleoTRT™ (previously Trimel SRL had no rights to these markets) and has granted to M&P limited, non-exclusive rights to commercialize alternative male products in certain jurisdictions around the world subject to certain terms and conditions. The parties have also agreed on a revised model intended to best facilitate the prosecution of intellectual property related to CompleoTRT™ and Tefina™. Finally, under this amendment Trimel SRL has abandoned any right to rely on M&P’s technology in connection with any dopamine-based products.

RepliCel Life Sciences Inc. (the “Company”) (CNSX: RP) announced that it has received conditional approval from the TSX Venture Exchange (the “TSXV”) for the listing of its common shares on the TSXV. In connection with the Company’s listing on the TSXV, the Company anticipates that 23,509,682 shares of its common stock (each, a “Share”), which represents approximately 49% of the Company’s issued and outstanding shares, will be escrowed, with 25% of the escrowed Shares being released upon listing and a further 25% every six months. In addition, stock options to acquire upto1,400,000 Shares will also be subject to escrow under the same release schedule.

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