Monday Deal Review: July 12, 2009

The highlights of this week were definitely the Bioniche-Endo deal and Allostera’s $17 million raise, but that was just the tip of the iceberg as Canadian deal activity heated up along with the weather.  A novel deal with an income trust swapping cash for a biotech’s public shell starts things off

Here’s an Interesting One:

ConjuChem Biotechnologies Inc. (TSX: CJB) entered into an agreement with Colabor Income Fund (TSX: CLB.UN), a Québec-based income trust, that will provide gross proceeds of approximately $5 million to ConjuChem.  The end result of the Plan of Arrangement is that current ConjuChem shareholders transfer their ownership to a NewCo with all of ConjuChem’s assets and liabilities (plus $5 million) and the Colabor unitholders will have converted the income trust into a corporation (aka the shell of the original ConjuChem).

Is this a one-off, or the start of a flood of income trust-biotech deals? One indicator:  Colabor is trading up about 5% since the announcement, but ConjuChem is down 20% (even with $5 million of non-dilutive cash on offer).

NRC-IRAP:

Opsens Inc. (TSX-V: OPS) picked up a $498,500 grant, along with the promise of technical advice, from the NRC-IRAP program.  Nice to see NRC-IRAP using some of that $170 million in Canadian stimulus money for some bio projects.

M&A:

Cangene Corporation (TSX: CNJ) acquired privately-held Twinstrand Therapeutics Inc. for $1.5 million (subject to post-closing adjustments) in a cash-for-shares deal that gives Cangene access to Twinstrand’s products, technologies and tax attributes. Twinstrand has a modified ricin in Phase I, and has also begun developing anti-ricin, antibody-based therapeutics.  Cangene will also pay a royalty on certain commercial sales or licensing fees to some of Twinstrand’s former investors.

Securities, from Smallest On Up:

GeneNews Limited (TSX: GEN) closed the first tranche of a non-brokered private placement, issuing 6,810,964 common shares at a price of CDN$0.25 per share for total gross proceeds to the Company of CDN$1,702,741.

Welichem Biotech Inc. (TSX-V: WBI) got shareholder approval for its 10:1 share consolidation and will proceed as soon as it gets TSXV approval.  It has also lined up a private placement following the consolidation, raising $3,750,000 through the issuance of 25,000,000 units at $0.15 per unit. Each unit will consist of one post-consolidation common share and half a $0.15 24-month warrant.  Welichem may pay 10% finder’s fees for the private placement.

BELLUS Health Inc. (TSX: BLU) filed a preliminary short form prospectus for a $12 million rights offering to holders of its common shares. One right will be issued for each common share outstanding (record date TBD). Each 0.80 of a right will entitle shareholders, for at least 21 days after the final prospectus is mailed, to purchase one common share of BELLUS Health at $0.185, representing a 25% discount off the VWAP during the five trading days immediately preceding the announcement.  BELLUS has standby commitments for $8 million of the offering.  Here’s where the proceeds will go: $3 million to fund the international commercialization of VIVIMIND™ (homotaurine); $5.1 million to fund current clinical development programs, and one-third of that to NC-503, a Type II diabetes candidate, $2 million for the development of NRM8499, an Alzheimer’s candidate, and the rest for other R&D projects and SG&A.

MedMira and the Magic Porridge Pot its Equity Line of Credit:

MedMira Inc., (NASDAQ: MMIRF, TSX-V: MIR) closed its previous equity line draw-down for net proceeds of $142,500.00 (2,343,160 shares at a discounted 10-day VWAP of $ 0.064 per share).