Welcome to your Monday Biotech Deal Review for April 8, 2013! After a hiatus last week due to the holiday, this week we have a lot of activity to cover. Valeant, in particular has been quite busy, being forced to up their bid for Obagi to $24.00 in response to interest from Germany’s Merz Pharma Group. In addition, Valeant’s latest bid is already 70 percent more than Obagi’s average 20-day stock price before the takeover fight began, the highest premium for a U.S. drug-industry deal in four years, according to data compiled by Bloomberg. Further, the Royal Bank fo Canada has said Valeant could be willing to pay as much as $28 a share to top any new offer from Merz, pushing the premium to as high as 99 percent. Valeant has also begun an unrelated note exchange, and has separately engaged a generic manufacturer with a license agreement after Mylan’s regulatory approval of their own anti-viral acyclovir-containing Zovirax® ointment equivalent.
In other news, Stem Cell Therepuetics has signed their merger agreement with Trillium, based on negotiations with Trillium’s debentureholders. There is much more to cover, so follow the break to get up to date on the latest and biggest biotech stories.
M & Eh
Valeant Pharmaceuticals International, Inc. (NYSE: VRX, TSX: VRX) and Obagi Medical Products, Inc. (NASDAQ: OMPI) have executed an amendment to their Agreement and Plan of Merger, dated March 19, 2013. Pursuant to the amendment, Valeant increased its offer to acquire Obagi from $19.75 to $24.00 per share in cash. The offer documents will be amended to reflect the new offer price of $24.00 per share. The expiration date of the tender offer will remain 12:00 midnight, New York City time, on April 23, 2013. The tender offer is conditioned on the tender of a majority of Obagi’s shares calculated on a diluted basis, as well as the receipt of certain regulatory approvals and other customary closing conditions. Following the successful completion of the tender offer, a wholly owned subsidiary of Valeant will merge with Obagi and the outstanding Obagi shares not tendered in the tender offer will be converted into the right to receive the same $24.00 per share in cash paid in the tender offer. Obagi’s board of directors has unanimously approved the amended transaction.
Stem Cell Therapeutics Corp. (TSXV:SSS) has signed a definitive debenture purchase and merger agreement with Trillium Therapeutics Inc. and its debenture holders, who also comprise the preferred shareholders. The debenture holders, who intend to vote in favour of the merger at a meeting of shareholders of Trillium to be held on April 5, 2013, have converted their preference shares to common shares and now hold greater than the two-thirds majority of the common shares required to approve the merger. SCT believes that the merger will be concluded, subject to certain events required by SCT. SCT also announced that it has met the conditions to exercise the option to exclusively license the clinical stem cell program from the University Health Network and MaRS Innovation announced on November 7, 2012, and is proceeding to finalize the corresponding license agreement. In other news, the company has closed its U.S. private placement offering of units. Gross proceeds from the two financings, including the previously announced shelf prospectus drawdown on March 15, 2013, now total $3,185,080. Griffin Securities and Roth Capital Partners served as financial advisors in the U.S.
Angiotech Pharmaceuticals, Inc. (TSX:ANP) has entered into a definitive agreement to sell certain of its subsidiaries, comprising Angiotech’s Interventional Products Business, to Argon Medical Devices, Inc., a portfolio company of RoundTable Healthcare Partners, for $362.5 million in cash consideration. Angiotech expects the transaction will close prior to the end of April 2013.
Investment
Amorfix Life Sciences Ltd. (TSX: AMF) has closed the first tranche of a non-brokered private placement pursuant to which a total of 800,000 units were issued at a price of CDN$ 0.26 per unit for gross proceeds of CDN$208,000. The total amount that can be raised under the offering is $325,000. Each unit consists of one common shares of Amorfix and one common share purchase warrant of Amorfix. Each warrant entitles the holder to purchase one share at a price of CDN$ 0.50 for a period of 24 months following the closing date of the offering, subject to earlier expiry in the event (a trigger event) that, following the expiry of the four month hold period, the volume-weighted average price of Amorfix’s common shares on the Toronto Stock Exchange (TSX) over a period of twenty consecutive trading days exceeds $1.00. On the occurrence of a trigger event, Amorfix may give notice to holders to accelerate the expiry to a date which is not less than 30 calendar days after such notice is sent to the holders.
Sernova Corp. (TSXV: SVA), further to the completion of the non-brokered private placement on February 19, 2013, consisting of 10,000,000 units at a price of $0.20 per unit for gross proceeds of $2,000,000, has issued an additional 285,931 finder’s warrants entitling the warrant holder to purchase one common share of the Company at a price of $0.20 for a period of 24 months from the date of issuance. The finder’s warrants replace 285,931 stock options held by the finder which were cancelled.
Arch Biopartners Inc. (CNSX: ACH) has received approval from shareholders to approve all resolutions that were put forth at its Annual Meeting of Shareholders held on March 29, 2013 in Toronto. Two additional resolutions were put forth before the Meeting and received approval of 100% of the votes cast by shareholders present. The first resolution allows the board of directors of the Company, at its discretion, to delist the Company’s common shares from the Canadian National Stock Exchange. The second resolution authorizes the board of directors, at its discretion, to seek an application to list the Company’s common shares on the Toronto Stock Exchange or TSX Venture Exchange.
Miraculins Inc. (TSXV: MOM) has announced a non-brokered private placement offering of up to 11,111,111 units at a price of $0.09 per unit for gross proceeds of up to $1,000,000. Each unit will be comprised of one common share of the company and one half of one share purchase warrant. Each whole warrant will entitle the holder to purchase one share at a price of $0.11 per share for a period of 12 months from the date the warrant is issued.
Cardiome Pharma Corp. (NASDAQ: CRME) (TSX: COM) announced approval of the proposed consolidation of its issued and outstanding common shares on the basis of one (1) post-consolidation common share for every five (5) pre-consolidation common shares.
Valeant Pharmaceuticals International, Inc. (NYSE: VRX, TSX: VRX) announced that its wholly owned subsidiary Valeant Pharmaceuticals International intends to commence an offer to exchange any and all of its outstanding $500 million aggregate principal amount of 6.375% Senior Notes due 2020 for up to an additional $500 million aggregate principal amount of its 6.375% Senior Notes due 2020 issued pursuant to the indenture, dated as of October 4, 2012, as supplemented, among the company, Valeant Pharmaceuticals International, Inc., the guarantors named therein and The Bank of New York Mellon Trust Company, as trustee.
Spectral Diagnostics Inc. (TSX: SDI) and Toray Industries, Inc. announced the completion of the previously announced $5.6 million private placement, comprised of a total of 18,666,667 common shares in the capital of the company, at a price of $0.30 per common share. Toray acquired 16,666,667 common shares in the private placement, at a price of $0.30 per common share, for $5 million. Following completion of the private placement, Toray’s 16,666,667 common shares represent approximately 12.6% of the issued and outstanding common shares, calculated on a non-diluted basis
Commercial and Other Agreements
Actavis, Inc. (NYSE: ACT), and Valeant Pharmaceuticals International, Inc. (NYSE: VRX, TSX: VRX) have entered into an agreement, effective immediately, for Actavis to be the exclusive marketer and distributor of an authorized generic of Valeant’s Zovirax® ointment (acyclovir 5%) product. Additionally, Valeant has granted Actavis the exclusive right to co-promote Zovirax® cream (acyclovir 5%) to obstetricians and gynecologists in the U.S., and Actavis has granted Valeant the exclusive right to co-promote Actavis Specialty Brands’ Cordran® Tape (flurandrenolide) product in the U.S. This deal was an explicit response to Mylan reciving approval to sell its own generic version of Zovirax.
Welichem Biotech Inc. (TSXV:WBI) has entered into an asset purchase agreement to purchase the exclusive development and commercialization rights to the novel anti-inflammatory agent, WBI-1001, in China, Taiwan, Macao and Hong Kong from Shenzhen Celestial Pharmaceuticals Ltd. and Beijing Wenfeng Tianji Pharmaceuticals Co., Ltd.. Upon entering into the agreement, Welichem paid the sum of Cdn$10 million to the vendors, which sum has been held in escrow since the previously disclosed closing of Welichem’s sale to Stiefel, a GSK company, of the exclusive development and commercialization rights to WBI-1001 outside of China, Taiwan, Macao and Hong Kong, on July 31, 2012. Completion of the sale of the rights under the agreement remains subject to certain third party and Chinese regulatory approvals, including but not limited to Ministry of Health of the People’s Republic of China.
Trimel Pharmaceuticals Corporation (TSX: TRL) has announced that Trimel BioPharma SRL, its wholly owned subsidiary, has entered into a letter agreement with M&P Patent AG with respect to a milestone payment owing to M&P under the intellectual property rights and product development agreement between Trimel SRL and M&P relating to CompleoTRT™. Pursuant to this letter agreement, M&P has agreed that the US$2.0 million milestone payment otherwise payable by Trimel SRL on March 31, 2013 may instead be paid by Trimel SRL in two equal instalments on or before April 25, 2013 and May 7, 2013, respectively. As noted in the amended and restated preliminary short form prospectus filed by the company on April 3, 2013, it is intended that a portion of the proceeds from the equity offering described therein will be used to make these payments. In addition, the company has entered into a formal amendment of its loan agreement with General Electric Capital Corporation to provide for a temporary reduction of the amount of cash holdings required to be maintained by the company from US$3.75 million to US$1.0 million until May 1, 2013. This amendment is expected to allow the company to raise funds through the offering while remaining in compliance with its loan agreement.
Calyx Bio-Ventures Inc. (TSXV: CYX) has announced that its majority-owned subsidiary, Agrisoma Biosciences Inc. and PGF Biofuels Inc. have entered into a long term strategic agreement for marketing and distribution. PGF is a wholly owned subsidiary of Paterson GlobalFoods Inc., owner of Paterson Grain. Paterson is a private family-owned group of companies active in Europe, Asia, Australia, and the Americas. The new long-term agreement appoints PGF as Agrisoma’s exclusive partner for Resonance® carinata, a non-food oilseed crop, in North America and Australia, and establishes a framework through which PGF and Agrisoma will coordinate expansion into additional regions. Under the original agreement in 2012, Paterson was the exclusive contracting partner for the production of Resonance® in Western Canada.
Bioniche Life Sciences Inc. (TSX: BNC) announced that sponsorship of its Phase III bladder cancer product – Urocidin™ – has been returned to the company from former development/marketing partner, Endo Pharmaceuticals (a subsidiary of Endo Health Solutions).
ReSearch Pharmaceutical Services Inc, a leading global contract research organization (CRO), and Asklep Inc., one of Japan’s largest CROs, announced the creation of a Joint Venture Company (JVC) to deliver leading-edge R&D outsourcing solutions in Japan to the biopharmaceutical and medical device industries.
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