Monday Deal Review: April 6, 2009

One complex arrangement, two clinical trial updates, three commercial deals and other bits of Canadian deal and company miscellany

Acquisition:

• Fralex Therapeutics Inc. (TSX: FXI), 2201761 Ontario Inc (“Newco”) and Baylis Medical Company Inc., have entered into an arrangement agreement and certain other agreements, pursuant to which Baylis has agreed to acquire all of the issued and outstanding common shares of Fralex under a plan of arrangement under the Business Corporations Act (Ontario).  Get your whiteboard ready now, because this gets complicated:
  • Newco will acquire certain assets of Fralex, namely all cash on hand, other current assets, short term investments and all “non-core” assets, and will assume all liabilities of Fralex.
  • Fralex will retain all “core” assets, being those assets related to its Complex Neural Pulse (CNP) therapy, and related intellectual property. 
  • Then NewCo will acquire the Fralex shares and will sell them to Baylis (for $900,000) and Fralex will become a wholly-owned sub of Baylis. 
  • NewCo will take the Fralex cash and non-core assets and “pursue other business opportunities as determined by its board of directors.” 
  • The founders of Fralex will get a license to the Fralex IP for research purposes and $50,000 over two years to help do their research.  They will also get $50,000 cash for their 3,200,000 Fralex shares. 
  • The current Fralex shareholders get $0.0001 per share in cash, plus a share in NewCo.  

  Any questions?  Or wait for the Management Information Circular for Fralex’s June special meeting.

• BioSyntech, Inc. (TSX: BSY), a biotechnology company developing biotherapeutic thermogels for regenerative medicine, announced that its Board of Directors has formed a Special Committee to review strategic alternatives.  Also this week, BioSyntech exercised its option to issue 5,227,133 common shares to its debenture holders in payment of the $689,102.46 of interest payable on March 31, 2009 on the $12,430,000 principal amount outstanding 12% subordinated secured convertible debentures.

Sales and Partnerships:

• Wyeth  is using software from Dyadem, a Toronto-area company that works with 85% of the Fortune 500, to enhance and standardize its risk assessments.
  

  “Dyadem’s PHA-Pro, a software solution that identifies, measures and mitigates risk, enables Wyeth to set a new standard in safety for its pharmaceutical products.”

• SemBioSys Genetics Inc. (TSX: SBS) announced that MannKind Corporation declined to exercise its option to license rights to SemBioSys’ proprietary plant-produced recombinant human insulin.  MannKind entered into agreements to purchase an insulin production facility from Pfizer Inc. 
• Mauna Kea Technologies and VisualSonics entered an exclusive distribution agreement. VisualSonics will market and sell Cellvizio LAB high resolution in vivo imaging systems, a probe-based Confocal Laser Endomicroscopy (pCLE) system, to pre-clinical researchers on a worldwide basis.

Clinical Trials:

• Bioniche Life Sciences Inc. (TSX: BNC) completed recruitment in its initial Phase III trial evaluating Urocidin™ in the treatment of refractory non-muscle-invasive bladder cancer.  Full effectiveness results should be available in a year. 
• Labopharm Inc.’s Phase III clinical trial for its twice-daily formulation of tramadol and acetaminophen didn’t work out as hoped:
  

  “Labopharm believes that it is likely that the results of this trial are insufficient to support the acceptance of an NDA by the FDA.”

People:

• Medifocus Inc. (TSX-V: MFS) added Grant Walsh to its Board. Mr. Walsh is the managing partner and Chief Executive Officer of EC Murphy Walsh, a management consulting firm.