Welcome to your Monday Deal Review. The Canadian biotech sector was fairly busy this week, with approximately $17M in investment money flowing into biotech companies reviewed below. Valeant is certainly raking the leaves this fall following the Biovail merger, settling lawsuits, entering a $1.5bn securities repurchase program, and entering strategic agreements this week after ending a collaboration last week. Read on to learn more, as well as the usual assortment of biotech news.
Valeant Cleaning House
Valeant Pharmaceuticals International, Inc., (formerly known as Biovail Corporation) (NYSE: VRX) (TSX: VRX) and Kadmon Pharmaceuticals LLC concluded strategic agreements for the development and commercialization of Valeant’s taribavirin, and the marketing of Kadmon’s ribavirin. Under the first agreement, Valeant granted Kadmon an exclusive, worldwide license (excluding Japan) to commercialize and develop taribavirin, in exchange for an up-front payment of $5M, development milestones, and royalty payments of future net sales in the range of 8-12%. Under the second agreement, Valeant paid Kadmon $7.5M for exclusive rights to Kadmon’s ribavirin in Poland, Hungary, Czech Republic, Slovakia, Romania and Bulgaria.
Valeant also announced a $1.5bn securities repurchase program of its outstanding convertible notes, senior notes, and/or common shares. The board of directors also approved a normal course issuer bid for the purchase of up to 16 million Valeant common shares. The repurchase program will terminate November 7, 2011 or at such time as Valeant completes its purchases. As at November 2, 2010, Valeant had 299,988,251 common shares outstanding.
Further, Valeant settled litigation with S.A.C. Capital Advisors, LLC, resulting in the payment of $10M by Valeant to S.A.C. Valeant also settled litigation with Gradient Analytics, Inc. No settlement terms were disclosed in respect of the Gradient settlement.
Therapeutic Discovery Project Program
Biotech companies are taking advantage of the Therapeutic Discovery Project program under the U.S. Patient Protection and Affordable Care Act of 2010 (the Health Reform Bill). In addition to those noted earlier this week, another recipient — Stellar Biotechnologies, Inc. (TSXV: KLH) received two grants totalling US$488,985 that will provide supplemental funding for Stellar’s diagnostic development and Stellar KLH/IMG platforms.
Fyi, Ondine Biomedical Inc.‘s (TSX: OBP) (AIM: OBP) grant was for a total of US$244,479, which will support continuing research and development for Ondine’s MRSAid™ product; and Allon Therapeutics Inc. (TSX: NPC) got US$500,000 for the development of its clinical-stage neuroprotective drug candidate davunetide and preclinical-stage drug candidate AL-309.
Allon Therapeutics, Inc. (TSX:NPC) assigned to Isar Pharma K/S (a limited partnership organized under the laws of Denmark and wholly owned by Nordic Biotech Venture Fund II K/S), for US$10M, the right to receive certain royalties (convertible into common shares of Allon) to Allon’s davunetide, pursuant to a convertible revenue and royalty interest agreement. At the election of Allon or Isar anytime before October 29, 2017, Isar’s interest under the agreement is convertible at a conversion price of US$0.44 (subject to adjustment), representing a 10% premium to the 10-day volume weighted average price of Allon prior to closing. Assuming full conversion, Isar would hold (i) an aggregate of 19,515,446 common shares of Allon (representing approximately 19.999%) and (ii) subject to Allon shareholder approval obtained before August 1, 2011 (in accordance with the agreement), an additional 3,211,826 common shares representing an additional 3.187%.
Biotonix (2010) Inc. (TSXV: BTX) announced two closings of first tranches, one for proceeds of $295,999 (493,332 common shares and 246,666 warrants) as part of a $1.4M non-brokered private placement announced October 21, 2010 (covered here) and the other for proceeds of $651,201 (1,085,335 common shares and 542,668 warrants), as part of a $1M brokered private placement (Industrielle Alliance Securities Inc.), announced October 5, 2010 (covered here). Each unit was priced at $0.60 and consisted of one common share and one-half of a common share purchase warrant exercisable at $1.00 per whole warrant for two years following closing. Finder’s fees were paid in the amount of $24,599 under the non-brokered closing, and a cash commission was paid amounting to $58,608 in connection with the brokered private placement.
Miraculins Inc. (TSXV: MOM) announced a non-brokered private placement offering of up to 8,333,334 units for gross proceeds of up to $1M. Each unit will consist of one common share and one-half of one share purchase warrant, exercisable at $0.18 per whole warrant for twelve months from the date the warrant is issued. The warrants are callable at the option of the company six months from the close of the offering, in the event Miraculins’ shares trade at or above $0.25 for any five out of ten consecutive trading days. Finder’s fees will be payable to persons assisting with finding potential subscribers.
Zecotek Photonics Inc. (TSXV: ZMS) (FRA:W1I) closed a non-brokered private placement for gross proceeds of $1,469,999.52, and has sold 2,773,584 units of the company. Each unit consisted of one common share and one-half of one common share purchase warrant, exercisable at a price of $0.70 per whole warrant, for two years following closing. The warrants are subject to acceleration if the shares of the company trade above $1.25 for ten consecutive trading days. The company will also pay a finder’s fee of 5% of the gross proceeds, in addition to 124,811 non-transferable finder’s warrants.
Shareholders and brokers of Stem Cell Therapeutics Corp. (TSXV: SSS) exercised 12,210,000 warrants resulting in proceeds to the Company of $1,822,000. The warrants were part of a financing completed October 29, 2009.
GeneNews Limited (TSXV: GEN) won a seed capital grant from the Malaysian Biotechnology Corporation for approximately $625,000 to support the commercial launch of ColonSentry™ in Malaysia, through GeneNews Diagnostics Sdn. Bhd.
Licensing and Collaboration
Further to our previous post regarding the collaboration of IMRIS Inc. (TSX: IM) and Varian Medical Systems (NYSE: VAR), IMRIS and Varian signed an agreement with the Saudi Arabian National Guard Health Affairs based in Jeddah, Saudi Arabia, to develop and build a facility for magnetic resonance-guided radiation therapy. Varian and IMRIS will supply a cancer treatment solution using IMRIS’ movable magnetic resonance imaging technology with Varian’s TrueBeam™ system. The National Guard Health Affairs will participate in aspects of the development and will consult with Varian and IMRIS on the clinical implementation of the technology.
Tekmira Pharmaceuticals Corporation (TSX: TKM) has been granted a license to develop and commercialize an RNAi therpauetic (TKM-Ebola) for the treatment of Ebola infection, by Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY). Financial terms were not disclosed, but include royalties on sales of resulting products. TKM-Ebola will utilize Tekmira’s lipid nanoparticle delivery technology. Pre-clinical results indicate administration of TKM-Ebola results in 100% protection from the fatal virus.
In addition to the licensing deal described above, Tekmira Pharmaceuticals Corporation (TSX:TKM) also announced that it filed the requisite documentation with the SEC and is expecting to list its common shares on the NASDAQ the week of November 15, 2010. To meet the listing requirements of a minimum share price of US$4.00 per share, Tekmira will undergo a 5:1 share consolidation. Following the consolidation, Tekmira wil have 10,337,414 common shares outstanding. Tekmira’s common share CUSIP number will be 87911B209 and the company will continue to trade on the TSX under the symbol “TKM”.
Medicago Inc. (TSX: MDG) received clearance from Health Canada to commence a Phase II human clinical trial with its H5N1 Avian Influenza vaccine. Interim-results are expected in less than three months.
Cangene Corporation (TSX: CNJ) announced its wholly-owned subsidiaries Mid-Florida Biologicals, Inc. and Biotherapeutic Laboratories, Inc. merged, effective November 1, 2010. Mid-Florida Biologicals, Inc., as the successor corporation, has been renamed Cangene Plasma Resources, Inc.
PharmaGap Inc. (TSXV: GAP) completed a conversion of debt owed to the National Research Council of Canada in the amount of $219,888.62 into 1,293,462 common shares of PharmaGap.
Med BioGene Inc. (TSXV: MBI) announced that, due to unfavourable market conditions, it has been unable to complete its previously announced U.S. IPO. The company has taken steps to reduce costs to preserve its cash, and estimates it has enough cash-on-hand to continue with current operations for 60 to 90 days. In addition, four of eight directors have resigned their directorships. The company is evaluating strategic alternatives to maximize shareholder value, and a number of investment funds are investigating the company for a possible financing.
Adherex Technologies Inc. (TSX: AHX) has restated its interim unaudited condensed consolidated financial statements for the period ending June 30, 2010 and Interim MD&A. The restatement increases the company’s net loss and comprehensive loss for the three and six months ended June 30, 2010 by $2,135,000. Cash and cash equivalents reported at June 30, 2010 remained the same at $7,152,000.