Welcome to the Monday Biotech Deal Review for February 14, 2011. Aside from the usual assortment of corporate and regulatory announcements over the week, the highlights include SemBioSys’ proposed $4M secured 7% bond issuance, Angiotech’s fifth extension to deadlines under its recapitalization support agreements (and definitive agreements in respect of up to $28M in DIP financing), Med Biogene is being accused of breaching confidentiality and exclusivity agreements and former biotech Bradmer Pharmaceuticals is migrating to the oil and gas industry via a proposed reverse takeover. Read on to learn more.
Angiotech’s Fifth Extension
Angiotech Pharmaceuticals, Inc. entered a fifth extension agreement in respect of its proposed debt restructuring with certain consenting noteholders of outstanding 7.75% senior subordinated notes as well as holders of floating rate notes, extending the deadline to commence an exchange offer to from February 7, 2011 to February 10, 2011. Angiotech also entered into a definitive agreement with Wells Fargo Capital Finance LLC in respect of the provision of a debtor-in-possession credit facility of up to $28M, to be repaid upon closing of the CCAA recapitalization.
Med Biogene Sued
Med Biogene Inc. (TSXV: MBI) has been charged in the Supreme Court for the County of New York in connection with an agreement between the company and Signal Genetics LLC to grant Signal a ten-year, exclusive worldwide license to use the company’s LungExpress DX technology, pursuant to a term sheet. Signal alleges that, following the execution of the term sheet, which provided a period of exclusivity and confidentiality, Med Biogene reached an agreement with another company to grant it a license of the technology.
Investment
SemBioSys Genetics Inc. (TSX: SBS) has entered a commitment with Concept Capital Management Ltd. respecting the issuance of 7% bonds, issuable in two tranches of $2,000,000 each, for a total of $4,000,000. The company will also issue detachable warrants in connection with the bond offering, which warrants will be convertible into common shares of the company. Concept has also agreed to provide a bridge loan of $300,000 per month at 7% per annum until the bond financing closes. It is expected that twenty bonds at $100,000 each will be issued under the first tranche, secured by certain intellectual property assets of the company, and each bond will be accompanied by one warrant. The maximum maturity will be ten years, and the bonds are expected to contain a call provision which provides Concept with the right to call the bonds after three years, as well as a redemption feature at 120% premium to face value, plus accrued interest, any time at the option of the company. Each warrant will entitle the holder to purchase the equivalent of $100,000 in common shares for ten years after the initial closing, at an initial exercise price of $0.07 per common share, which exercise price will be reset every six months subject to a minimum exercise price of $0.05. The first tranche is expected to close on or about February 28, 2011. The board of directors unanimously approved the proposed transaction, and are seeking an exemption from the TSX from the requirement to obtain shareholder approval, on the basis of the company’s serious financial circumstances.
M&Eh
Bradmer Pharmaceuticals Inc. (TSXV: BMR.H), which suspended operational activities in late 2009, entered a letter of intent which would result in the reverse takeover of private Alberta oil and gas company P1 Energy, with the resulting company carrying on the business of P1 and listed on the TSXV.
Licensing and Collaboration
Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) entered a licensing agreement to license Canadian rights to the acne treatment ACZONE(R) (dapsone) Gel 5% from Allergan, Inc., who will receive a $500,000 upfront payment followed by additional payments based on net sales. Valeant also acquired Canadian rights to Cholestagel(R) (colesevelam), an oral bile acid sequestrant for hypercholesterolemia, from Genzyme Corporation, in exchange for a $2,000,000 upfront payment followed by subsequent milestone payments totalling up to $7,000,000.
PharmaGap Inc. (TSXV: GAP) reached an agreement with Northern Lipids Inc. to develop a liposomal delivery formulation of PharmaGap’s lead cancer drug GAP-107B8.
Securities and Regulatory
Victhom Human Bionics Inc. (TSXV: VHB), at the request of Market Surveillance, has commented on recent and unusual trading activity, stating that it is unaware of specific information not currently disclosed that would account for such trading activity, but that its partner Ossur reconfirmed that the Power Knee Second Generation would become commercially available in 2011.
Imperial Ginseng Products Ltd. (TSXV: IGP) (TSXV: IGP.PR.A) obtained approval from TSXV to consolidate its two share classes on a 10:1 basis for the common shares, and a 20:1 basis for the convertible preference shares, with the post-consolidation shares commencing trading on Friday February 11, 2011 under the same share symbols.
MedX Health Corp. (TSXV: MDX) announced that, in connection with its plans to issue 13,447,539 shares to management, directors and several other parties to settle debts, 5,668,307 shares were issued with TSX approval. The balance were to be issued upon receipt of approval from disinterested shareholders, but approval was not sought at the last AGM, so these shares for debt will not be issued.
Triangle Multi-Services Corp. (CNSX: TMS), which holds the entire Canadian rights to SYNTHETIC CARBIDE LIME US patent 10/841,903, stated that the recent upward swing in the company’s share price is not the result of an undisclosed development.
Other Corporate Announcements
Medicago Inc. (TSX: MDG) received FDA approval to begin a Phase 1 H1N1 influenza vaccine candidate clinical trial in the U.S.
Neovasc Inc. (TSXV: NVC) received the CE mark designation for the use of its PeriPatch-BV(TM) bovine-derived biological tissue patches in surgical implantation procedures, which enable the company to sell the product in Europe.
Stem Cell Therapeutics Corp. (TSXV: SSS) was granted a U.S. patent entitled “Prolactin induced increase in neural stem cell number” covering methods of using an effective amount of prolactin to increase stem cell numbers in mammals suspected of having neurological diseases.
Allon Therapeutics Inc. (TSX: NPC) was granted a Japanese patent covering the composition of matter of davunetide and other peptides in its drug platform. The company was also granted a U.S. patent covering treatment of fetal alcohol syndrome resulting from in-utero exposure to alcohol with davunetide or derivatives.
Kane Biotech Inc. (TSXV: KNE) was granted a New Zealand patent entitled “Antimicrobial Compositions and Uses Thereof” for Aledex biofilm technology for medical device coatings.
ProMetic Life Sciences Inc. (TSX: PLI) achieved a milestone for the manufacture of plasma-derived proteins at commercial scale when its subsidiary Newco entered a long-term lease on favourable conditions with Quebec’s Institut national de la recherché scientifique, for an existing state of the art facility. The Newco will be funded by a $2,500,000 investment, of which $750,000 has been received.
Helix BioPharma Corp. (TSX: HBP) received approval from the FDA to conduct a Phase I clinical study of its lung cancer drug candidate L-DOS47.
