Monday Biotech Deal Review: July 11, 2011

Welcome to your Monday Biotech Deal Review for July 11, 2011.  This week is a double feature, owing to last week’s break due to both Canada Day and Fourth of July holidays.  There was a lot of activity over the past two weeks in the biotech space.   Read on to catch up! 

Licensing

Valeant Pharmaceuticals International, Inc.’s (NYSE: VRX;TSX: VRX) subsidiary, Valeant International (Barbados) SRL, has agreed to acquire rights to both Elidel and Xerese from Meda for the U.S., Canada and Mexico. Valeant will pay initial payments of $76 million and over the next 18 months, will pay a series of potential milestones and royalties totaling approximately $130 million. Valeant will also pay a long term royalty rate on net sales of Elidel, Xerese and Zovirax, which Valeant has exclusive rights to in the U.S. and Canada. In addition, Valeant and Meda have entered into a development agreement for future life cycle management of both Elidel and Xerese.

M & Eh

Advitech Inc. (TSX-V:AVI) and Natunola Health Biosciences Inc. (TSX-V:NHI) have entered into a merger agreement to combine the business of both companies with the intent of creating a leading company in personal care and health food ingredients. Pursuant to the agreement, Advitech will acquire all of the issued and outstanding shares of Natunola by way of an amalgamation. The Natunola shareholders will receive common shares of Advitech based on a ratio of 4.75 common shares of Advitech (or 1.1875 common shares following a proposed 4 to 1 consolidation of Advitech shares) for each common share of Natunola.

Bioniche Life Sciences Inc. (TSX: BNC) has entered into a letter of intent to purchase the business and assets of Plasvacc Holdings Limited, an Australian equine and canine hyperimmune plasma production and distribution company. The assets to be acquired include inventories, property, plant, equipment, and intellectual property owned by Plasvacc and its subsidiaries. The transaction represents one of the stated uses of proceeds for Bioniche’s $28.9 million concurrent financings in Canada and Australia, completed earlier this year.

SQI Diagnostics Inc. (TSX-V: SQD) has entered into an agreement to acquire all of the share capital of Scienion AG, a German-based microarray manufacturing equipment and microarray print and development services company for a purchase price of CDN$15 million in cash and the issuance of 735,294 common shares in the capital of SQI. SQI believes that the acquisition of Scienion will further their entry into the market for providing enabling technologies for multiplexed protein, antibody, antigen and molecular micro arrays.

Investment

SQI Diagnostics Inc. has also filed and received a receipt for a preliminary short form base PREP prospectus with the Ontario Securities Commission and a registration statement on Form F-10 with the U.S. Securities and Exchange Commission in connection with a proposed offering of common shares.  The anticipated amount of the offering is approximately $30.0 million. 

BioExx Specialty Proteins Ltd. (TSX-V:BXI) has closed its bought deal financing. The financing consisted of 20,000,000 units at a price of $1.00 per unit for gross proceeds of $20.0 million. BioExx has also granted the underwriters an over-allotment option to purchase up to an additional 15% of the offered units on the same terms and conditions, exercisable any time, in whole or in part, up to 30 days after the closing of the offering, for additional gross proceeds of up to approximately $3.0 million.

Aeterna Zentaris Inc. (NASDAQ: AEZS; TSX: AEZ) has entered into an “At-the-Market” sales agreement, with McNicoll, Lewis & Vlak LLC under which the company  may, at its discretion, sell up to a maximum of 9,500,000 of its common shares through ATM issuances on the NASDAQ Stock Market.

Warnex Inc. (TSX:WNX) has reached an agreement in principle with the holders of all of its outstanding debentures, totalling approximately US$6.2 million, to extend the maturity date and modify various other terms of their debentures, including adding an option of debenture holders to convert the debentures into common shares of Warnex. 

Microbix Biosystems Inc. (TSX:MBX) announced the closing of a private placement resulting in the issue of 600,000 Units at a price of $0.35 per unit, amounting to $210,000 in funds. Each unit consists of one common share of Microbix and one-half common share purchase warrant. Each whole warrant entitles the holder to purchase one additional common share at an exercise price of $0.45 for 24 months.

BioExx Specialty Proteins Ltd. (TSX:BXI) has completed the sale today of 3,000,000 units at a price of C$1.00 per unit, pursuant to the exercise in full of an over-allotment option by a syndicate of underwriters. The over-allotment option was granted by BioExx to the underwriters in connection with its previously announced public offering which was completed on June 30, 2011.

ProMetic Life Sciences Inc. (TSX:PLI) announced today the receipt of a $ 4 million follow-on purchase order pursuant to a long-term supply agreement entered into with a major global pharmaceutical company in 2009.

Pivotal Therapeutics Inc. (CNSX:PVO) has granted incentive stock options to purchase 3,449,306 common shares at an exercise price of $0.10 per common share, and an additional total of 1,600,000 common shares at an exercise price of $0.45 per common share. The stock options were granted to certain of its directors, officers, employees and consultants.

CardioComm Solutions, Inc. (TSX-V:EKG) has closed its debt settlement under which it issued 1,000,000 common shares to Anglo German Progressive Limited. The shares issued are subject to a four month hold period expiring October 28, 2011. CardioComm Solutions also announced that it has settled an aggregate of $59,198.00 of outstanding debt owed to its legal counsel in exchange for the issuance of common shares.

Other Corporate Announcements

RepliCel Life Sciences Inc. (OTCBB:REPCF) has been redomiciled from the Province of Ontario to the Province of British Columbia under the new name of “RepliCel Life Sciences Inc.”. The Financial Industry Regulatory Authority (FINRA) has approved the name change and redomicile and, effective July 1, 2011, the Company’s stock will begin trading under the symbol “REPCF”.

Commercial Agreements

Arch Biopartners Inc (CNSX:ACH) and its subsidiary Arch Cancer Therapeutics have entered into an Agreement for research services with the National Research Council of Canada. Under the agreement, the NRC will combine ACT’s brain tumor initiating cell (BTIC)-targeting peptide technology with paramagnetic nanoparticles to develop prototype BTIC diagnostic imaging agents for use in magnetic resonance imaging (“MRI”). It is expected that this development contract will be completed within nine months.

Cipher Pharmaceuticals Inc. (TSX: DND) has entered into a definitive distribution and supply agreement with Vertical Pharmaceuticals, Inc. under which Cipher has granted Vertical the exclusive right to market, sell and distribute CIP-TRAMADOL ER in the United States. CIP-TRAMADOL ER is a patent-protected, extended-release formulation of tramadol, which is used for the treatment of moderate to moderately severe chronic pain in adults.

Merus Labs International Inc. has entered into a support services agreement with Methapharm Inc., where Methapharm has agreed to provide Merus with CDN $500,000 in working capital in consideration for: (i) being appointed the exclusive provider of certain distribution services of Merus’ products in Canada, and (ii) payment of certain fees based on net sales of Merus products, and service fees in line with market rates customary to such services.  The Agreement is for a term of five years with automatic renewal terms of two years until terminated.

BioExx Specialty Proteins Ltd. (TSX:BXI) is pleased to announce that it has concluded a Product Development and Sales License Agreement with Hormel Foods Corporation and its Century Foods International division. Under the agreement, which covers the United States and Canada, the companies will co-develop BioExx proteins in various new products which will be manufactured and marketed by Century to the sports nutrition industry.

Arch Biopartners Inc.’s (CNSX:ACH) subsidiary Arch Biotech Inc. has extended its overhead agreement with the University of Calgary. In addition, a similar overhead agreement has been signed with Arch Biopartner Inc.’s subsidiary Arch Cancer Therapeutics Ltd. Both overhead agreements are valid until July 1, 2012.

Medicure Inc.’s (TSX-V:MPH.H) subsidiary, Medicure International Inc., and Iroko Cardio, LLC have entered into an agreement to advance AGGRASTAT (tirofiban HCl) in Barbados and the U.S. Under the terms of the agreement, Medicure International will transfer to Iroko Cardio the tirofiban drug substance and the rights to purchase additional quantities from a third party, and Iroko Cardio will make available to Medicure International certain analytical methods for testing tirofiban and, if requested, certain data related to high dose bolus use of the drug. Iroko Cardio will pay to Medicure International US$1.91 million within 6 months from the date of the agreement, and up to US$3.5 million on future US sales of AGGRASTAT.

Going-Private

Ondine Biomedical Inc. (TSX:OBP) has entered into a definitive arrangement pursuant to which Acquireco has agreed to acquire all of the issued and outstanding equity of Ondine. Acquireco is a private company whose sole shareholder is Carolyn Cross, Chairman, Chief Executive Officer and a shareholder of Ondine. The transaction will be implemented by way of a court-approved plan of arrangement under British Columbia law. Holders of Ondine common shares will receive Cdn.$0.33 in cash per Common Share for an aggregate purchase price of approximately Cdn.$3.19 million. The acquisition price represents a premium of approximately 65% over the closing price of $0.20 per Common Share on the Toronto Stock Exchange on June 28, 2011 and also represents a premium of approximately 37.5% over the volume weighted average trading price of $0.24 per Common Share on the TSX for 20-trading days ending on June 28, 2011.

 

A very special thanks to Steven Zuccarelli for help with this deal review.