Monday Biotech Deal Review: September 26, 2011

Welcome to your Monday Biotech Deal Review for September 26, 2011.  Noteworthy news from last week included a hint that Labopharm will enhance its offer for the shares of Afexa Life Sciences if its two shareholder rights plans are waived or cease-traded by the ASC.  As well, Medicago announced a significant private placement for proceeds of up to $24.5M, and Valeant has announced its intention to refinance its secured credit facilities with a new $1.7bn facility. 

Investment

Medicago Inc. (TSX: MDG) has entered into an best-efforts agency agreement with a syndicate of agents co-led by Bloom Burton & Co. Inc., Desjardins Capital Markets and Paradigm Capital Inc. to complete a private placement of up to 37,693,500 ($0.65) shares for proceeds of $24.5 million. The proceeds will be used for continued clinical development of plant-based manufactured influenza VLPs vaccines, to fund the development of additional product candidates and for other general corporate and working capital purposes. Thus far the agents have signed subscription agreements representing the proposed entire amount of the offering, which is expected to close on or about September 27^th, 2011.

Allon Therapeutics Inc. (TSX: NPC) announced that GMP Securities L.P. will carry out Allon’s $7.5 million offering of ($0.25) units on behalf of a syndicate of agents. Each unit is comprised of one common share and a one-half (5-year, $0.40) warrant. An insider has committed to subscribing for $3 million. The offering is being made pursuant to a short-form prospectus in each province of Canada except for Quebec, in the United States on a private placement basis, and certain international jurisdictions. The agents have been granted an over-allotment option to purchase additional units or warrants for up to 15% of the units sold during the offering, which is scheduled to close on or about October 11, 2011. Proceeds will be used for Davunetide clinical trials and as working capital and for general corporate purposes.

Easton Pharmaceuticals (OTC:EAPH) has entered into discussions regarding two financing proposals from private investment and accredited investors, on the condition that Easton becomes a reporting issuer with the Securities and Exchange Commission. Financing is required to fulfil its objectives and business plan.

Premier Diagnostic Health Services Inc. (CNSX:PDH) has closed its previously announced non-brokered private placement, raising $210,000 in proceeds through the sale of 2,625,000 (2-year, $0.08) units, to be used to implement Premier’s business plan and enter into joint ventures with hospitals in China.

Zymeworks Inc. has completed its $8.1 million financing, consisting of a follow-on round of institutional investment by CTI Life Sciences Fund, L.P. and a new investment by Advanced Biotechnologies Venture Fund, to be used to develop its Azymetric™ and AlbuCORE™ platforms, and anti-cancer and autoimmune disease protein therapeutics.

Seprotech Systems Incorporated (TSXV: SET) has completed its previously announced non-brokered private placement of 12,000,000 ($0.05) shares for proceeds of $600,000 (covered here), to be used to fund production of new contracts, funding overhead and repayment of normal course trade and bank debt.

PharmaGap Inc. (TSXV: GAP) has completed the conditional closing of a private offering of 6,250,000 ($0.08) units for proceeds of $500,000. Each unit is comprised of one common share and one (3-year, $0.12) warrant. 2,190,125 units have been subscribed in this conditional closing for proceeds of $175,210. A finder’s fee of $10,513 was paid and 131,400 warrants were issued on the same terms as above.

Pivotal Therapeutics Inc. (CNSX:PVO) has raised $2,679,098 through the exercise of 10,716,392 warrants that had been issued pursuant to a private placement on November 30, 2010 and February 2, 2011, and were set to expire this month. The proceeds will be used for the commercialization of its lead therapeutic, VASCAZEN™.

Debt Finance

Valeant Pharmaceuticals International, Inc. (TSX: VRX; NYSE: VRX) intends to refinance the existing senior secured credit facilities of its wholly owned subsidiary, guaranteed by Valeant. The proposed $1.7 billion senior secured credit facility is expected to consist of a $200 million revolving facility and a $1.5 billion Term Loan A facility, which includes a $500 million delayed draw term loan, comprised of 4.5 year tranches. The facility is expected to close in October 2011.

Noveko International Inc. (TSX: EKO) has finalized the terms and conditions of its previously announced $6 million financing, comprised of a two-year senior secured revolving credit facility and ($0.60) debentures, convertible into Class A shares. Noveko has the right to terminate the facility after one year. Both the facility and debentures bear interest at an annual rate, compounded monthly.

Securities

GeneNews Limited (TSX:GEN) intends to seek shareholder approval at the October 31, 2011 meeting, to complete a 6:1 share consolidation, to improve marketability of its shares and position for future financing and development.

Immunovaccine Inc. (TSXV: IMV) has announced that its Board and the TSXV has approved amendments to its stock option plan, increasing the number of common shares reserved for issuance from 4,500,000 to 5,300,000 and to include a definition of “change of control” and specify the rights of the Board of Directors upon the occurrence of same.

M&Eh

Paladin Labs Inc. (TSX:PLB) intends to enhance its offer for Afexa Life Sciences Inc. (TSX: FXA) in the event that Afexa’s two shareholder rights plans are waived by Afexa or cease-traded by the Alberta Securities Commission.

Labopharm Inc. (TSX: DDS) announced that the independent proxy research firms of Glass Lewis & Co. and Institutional Shareholder Services Inc., have both recommended shareholders vote for a special arrangement, pursuant to which Chimigen Inc., a wholly-owned subsidiary of Paladin Labs Inc. will acquire all of Labopharm’s common shares at $0.2857 per share in cash. The meeting to consider the arrangement will occur on October 5, 2011.

Sales, Licensing and Other Commercial Developments

Warnex Inc. (TSX: WNX) announced that its has signed an exclusive agreement with Sorenson Forensics, a forensic DNA testing company based in Utah, to offer PRO-DNA® Lead, a new investigative DNA testing service, in Canada. Warnex also announced that its subsidiary, Warnex PRO-DNA Services has signed a $49,200 contribution agreement with the National Research Council of Canada Industrial Research Assistance Program to develop a pre-screening method for forensic mitochondrial DNA testing.

ProMetic Life Sciences Inc. (TSX:PLI) has won a first order from a leading Chinese biopharmaceutical company for the purchase of a proprietary Mimetic Ligand™ affinity adsorbent, scheduled for the fourth quarter of 2011. Once the product has been validated within this specific manufacturing process, a long-term supply agreement is anticipated.

Miraculins Inc. (TSXV: MOM) has completed an exclusive manufacturing and supply agreement with Thermo Fisher Scientific Inc. whereby Thermo Fisher will supply the PreV Non-Invasive Skin Cholesterol Test reagents and testing kits.

Allegiance Equity Corporation (TSXV: ANQ) has engaged Investor Cubed Inc. to provide investor relations and shareholder communications services for twelve months. Investor will receive $5,000 per month and 120,000 ($0.62) share options, vesting quarterly over one year.

Special thanks to Keldeagh Lindsay for help with this week’s Monday Biotech Deal Review!