Monday Deal Review - December 8, 2014

Welcome to your Monday Biotech Deal Review for December 8th, 2014!

The past weeks saw a variety activity, including Knight Therapeutics’ bought deal for an offering of up to about $100 million, their secured loan to CRH Medical Corporation for CRH’s acquisition of Gastroenterology Anesthesia Associates, LLC, and Valeant’s redemption of $445 in senior notes due in 2018.

For more detail on these stories as well as many more, continue reading!

CRH Medical Corporation (TSX: CRH) (OTCQX: CRMMF) (“CRH” or the “Company”) announced the acquisition (the “Transaction”) of the business, assets and interests of Gastroenterology Anesthesia Associates, LLC, (“GAA”). GAA is one of the largest providers of anesthesiology services to gastroenterologists in the southeastern United States. The Company will pay US$58.6 million at closing with up to an additional US$14.6 million payable within 4.5 years based on agreed financial performance requirements of the acquired business. The maximum total purchase price assuming achievement of all performance measures is US$73.2 million. GAA is a provider of anesthesia services and has strong financial performance with more than US$25 million in revenue and US$16 million in EBITDA for the 12 months ending June 2014.

QHR Technologies Inc. (TSXV: QHR) (“QHR” or the “Company”) a leader in Healthcare Information Technology and Solutions, announced the completion of its acquisition of Medeo Corporation (“Medeo”), a Vancouver-based virtual care technology company. The purchase of Medeo was subject to TSX Venture Exchange and Medeo shareholder approval. The TSX Venture Exchange accepted the transaction on November 18, 2014 and the Medeo shareholders unanimously approved it on November 21, 2014. In exchange for all of the issued and outstanding securities of Medeo, QHR paid $2.25 million in cash and it issued 1,000,000 QHR common shares (“Purchase Shares”), all of which will be held in escrow for 12 months (collectively, the “Purchase Price”). Ten percent of the Purchase Price (consisting of both cash and Purchase Shares) has been held back to secure an indemnity against breach of any Medeo representation or warranty discovered within six months of the closing. When the hold-back expires, the balance of the cash portion of the Purchase Price will be distributed to the Medeo stakeholders however all of the Purchase Shares will continue to be held in escrow for the balance of the 12 month escrow.

Valeant Pharmaceuticals International Inc., (TSE:VRX) (NYSE: VRX) announced that its wholly owned subsidiary, Valeant Pharmaceuticals International, will redeem US$445.0 million aggregate principal amount of its outstanding 6.875% Senior Notes due 2018, CUSIP Nos. 91911XAN4, U9098VAF9 (the “Notes”) on December 29, 2014 and has mailed an irrevocable notice of redemption for the Notes. Following the redemption, approximately US$500 million aggregate principal amount of the Notes will remain outstanding.

Knight Therapeutics Inc. (TSX:GUD) (“Knight” or the “Company“) announced that it has entered into a bought deal agreement and subsequently amended that agreement with a syndicate of underwriters, pursuant to which the Underwriters have agreed to purchase 12,882,800 common shares of the Company (the “Common Shares”) at a price of $6.75 per Common Share for gross proceeds to Knight of $87.0 million (the “Offering”). In addition, the Underwriters will have the option, exercisable for a period of 30 days after the closing date, to acquire up to an aggregate of 1,932,420 additional Common Shares ($13,043,835) at the offering price to cover over-allotments, if any (the “Over-Allotment Option”). If the Over-Allotment Option is exercised in full, the total gross proceeds of the Offering shall be $100,002,735. The Common Shares will be offered by way of a short form prospectus to be filed in all of the provinces of Canada. The Offering is scheduled to close on or about December 22, 2014.

Knight also announced that it has entered into a senior secured debt agreement with CRH Medical Corporation (TSX:CRH)(OTCQX:CRMMF) (“CRH”), a North American medical company focused on providing physicians with innovative products and services for the treatment of gastrointestinal diseases. This secured loan will fund CRH’s acquisition of Gastroenterology Anesthesia Associates, LLC and GAA Management, LCC. Knight’s secured loan of USD$30 million will be complemented by (i) a sub-secured loan of CAD$22.5 million from Crown Capital, (ii) an unsecured loan of USD$2 million from the Bloom Burton Healthcare Structured Lending Fund II, (iii) an equity financing of CRH common shares raising USD$5 million, (iv) and CRH cash on hand. The secured loan issued by Knight to CRH will bear interest at a rate of 10% per annum plus other additional consideration. The loan matures on December 1, 2016 and will be extended for one year should CRH meet profitability milestones. The loan is secured by a charge over the assets of CRH and GAA. In addition, Knight has been issued 3,000,000 common shares in the capital of CRH.

BELLUS Health Inc. (TSX: BLU) (“BELLUS Health” or the “Company”), a drug development company focused on rare diseases, announced the sale of its ABCP Notes and settlement of its credit facilities. The Company sold all of its asset-backed commercial paper notes (“ABCP Notes”) for a total consideration of $5.3 million and used the proceeds thereof to settle its credit facilities, which were scheduled to mature in April 2016. Net cash generated from these transactions amounted to $150,000.

Fennec Pharmaceuticals Inc. (the “Company” or “Fennec”) (TSX:FRX)(OTCQB:FENCF), announced that it has completed a non-brokered private placement (the “Offering”) of 732,266 units for gross proceeds of US$2,196,798. Each unit (a “Unit”) was issued at a price of US$3.00 per Unit and consists of one common share of the Company (the “Common Shares”) and one half of a common share purchase warrant (each whole warrant, a “Warrant” and collectively, the “Warrants”). Each whole Warrant will entitle the holder thereof to purchase one common share of the Company during the period ending on the day following the earlier of: (A) the day that is two years from the date of issue or (B) if at any time from the date of issue (i) the Common Shares trade on the Toronto Stock Exchange (the “TSX”) at a price greater than CDN$5.00 per Common Share (subject to customary adjustments) for at least twenty-five (25) trading days within any thirty (30) trading day period (the “Triggering Event”) and (ii) the Company elects to deliver a notice to the holder within 10 (ten) trading days of the Triggering Event, the day that is 30 days after such notice, in either event at a price equal to US$3.60 per whole Common Share. The Warrants contain customary anti-dilution provisions, including adjustments upon the payment of a dividend in Common Shares; subdivision or combination of the Common Shares; or the issuance of rights, options or warrants to all or substantially all holders of the Common Shares. The current number of outstanding Common Shares of the Company, without giving effect to the Offering, is 9,860,442 (the “Undiluted Issued and Outstanding”). The issue price of the Units represents approximately a 22.6% premium on the market price of the Common Shares on the date of a binding agreement, as defined by the TSX. Securities issued will be subject to a hold period, which will expire four months plus one day from the date of closing.

Zecotek Photonics Inc. (TSX-V: ZMS) (Frankfurt: W1I.F) announced that it has closed on the second tranche of the previously announced private placement by selling an additional 5,003,073 units of the Company at a price of $0.35 per unit for gross proceeds of $1,751,076. The Company has sold an aggregate 13,060,213 units for total proceeds of $4,571,075. Each Unit consists of one common share of the Company (“Common Share”) and one common share purchase warrant.   Each common share purchase warrant entitles the holder to acquire one additional Common Share at an exercise price of $0.50 per Common Share for a period of 24 months after the date the private placement closes. Maison Placements Canada Inc. (Maison) is the lead agent for the private placement. Pursuant to the closing of the second tranche of the financing, Zecotek paid finder’s fees and agents commission of $121,473 and issued non-transferable finder’s warrants to purchase 347,063 Common Shares at $0.50 per share before November 28, 2016. All shares and warrants are subject to a four-month hold period expiring on March 29, 2015.

Miraculins Inc. (TSX VENTURE:MOM) (the “Company”), has closed a private placement offering (the “Offering”) with aggregate gross proceeds to the Company of $1,320,000 from the sale of 16,500,000 units (“Units”) at a price of $0.08 per Unit. Each Unit is comprised of one common share of the Company (a “Share”) and one Share purchase warrant (a “Warrant”). Each whole Warrant entitles the holder to purchase one Share at a price of $0.105 per Share for a period of two years from the date the Warrant is issued. The Shares and Warrants will be restricted from transfer for a period of four months and a day from the date hereof in accordance with applicable securities laws. The net proceeds of the Offering shall be used for general corporate purposes. A certain person assisted the Company by introducing potential subscribers for the Offering and was paid a finder’s fee of 10% of the total subscription proceeds received from subscribers introduced to the Company by the person. Additionally, the person was issued compensation warrants (“Compensation Warrants”) equal to 10% of the total number of Units subscribed for by subscribers introduced to the Company by the person. Each Compensation Warrant entitles the holder thereof to purchase one Share at a price of $0.105 per Share for a period of two years from the date of issue.

VANC Pharmaceuticals Inc. (“VANC” or the “Company”) (TSX-V:NPH) (OTCMKTS:NUVPF), a pharmaceutical company focused on the Canadian generic drug and over-the-counter (“OTC”) markets, announced that the TSX Venture Exchange (the “TSXV”) has confirmed its conditional acceptance of the private placement announced November 27, 2014 of 7,333,333 units of the Company at a price of $0.15. The Company anticipates the private placement will be oversubscribed. As a result, the Company expects to close the private placement on or about December 10, 2014.

Axcelon Biopolymers Corp. (ABC) announced that a private placement financing of $1 Million has been completed in Axcelon Dermacare Inc. (ADI), a subsidiary of ABC, with an investment from VHealth Scientific Inc. of Toronto.  Proceeds from the nonbrokered private placement will be used primarily for the commercialization of ADI’s lead product Nanoderm™ that recently received Health Canada registration as a Class 2 medical device. Funds will also be used for development and commercialization of ADI’s other advanced products in the wound-care market. Terms of the private placement have not been released.

Critical Outcome Technologies Inc. (TSX VENTURE:COT) (OTCQB:COTQF) (“COTI” or the “Company”) completed the third tranche of its previously announced non-brokered private placement with the issuance of 3,054,000 units (the “Units”) at a price of USD $0.23 per Unit for gross Canadian dollar proceeds of approximately $793,000. In aggregate, the Company raised gross Canadian proceeds from the offering of approximately $2,629,000 through the sale of 10,177,760 Units. Each Unit consisted of one common share and one warrant of the Company. Each warrant is exercisable for one common share of the Company at an exercise price of USD $0.34 per share for a period of 60 months from the date of issue. The Company paid finders’ fees to arm’s length third parties in connection with this tranche in the amount of $31,224 in cash and issued 120,320 compensation warrants. Each compensation warrant is exercisable into one common share of the Company at an exercise price of USD $0.26 per share for a period of 60 months from the date of issue. The expiration dates of the warrants and compensation warrants are subject to acceleration by the Company in certain circumstances.

Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZ) (the “Company”) and Sinopharm A-Think Pharmaceuticals Co., Ltd. (“SinopharmA-Think”) announced the signing of an exclusive license and technology transfer agreement, for the Company’s lead anti-cancer compound, zoptarelin doxorubicin, for the initial indication of endometrial cancer, for the Chinese, Hong Kong and Macau markets (the “Territory”). Zoptarelin doxorubicin, a novel synthetic peptide carrier linked to doxorubicin, is currently in a ZoptEC (Zoptarelin doxorubicin in Endometrial Cancer) Phase 3 trial in endometrial cancer. Under the terms of the Master Collaboration Agreement, Aeterna Zentaris will be entitled to receive a non‑refundable $1 million fee for the transfer of the Company’s technology for zoptarelin doxorubicin to SinopharmA-Think. SinopharmA-Think has also agreed to make additional payments to the Company upon achieving certain pre-established regulatory and commercial milestones. Furthermore, the Company will receive royalties on future net sales of zoptarelin doxorubicin in the Territory. SinopharmA-Think will be responsible for the development, production, registration and commercialization of the product in the Territory.

Trimel Pharmaceuticals Corporation (TSX: TRL) announced the closing of the previously communicated agreement between its subsidiary, Trimel BioPharma SRL, and an affiliate of Endo International plc (NASDAQ:ENDP)(TSX:ENL), of which Endo has been granted the exclusive rights to market NATESTO™ in the United States and Mexico. Trimel has received an upfront payment of US$25 million on closing of the transaction, together with a US$5 million prepaid inventory deposit. NATESTO™ is the first and only FDA-approved testosterone nasal gel for replacement therapy in adult males diagnosed with hypogonadism, which further expands Endo’s Branded Pharmaceutical Men’s Health portfolio. Endo intends to launch the product in the U.S., through its Endo Pharmaceuticals subsidiary, in the first quarter of 2015.

M Pharmaceutical Inc., formerly First Sahara Energy Inc. ( the “Company”) (CSE:FSE) announced that it has changed its name to M Pharmaceutical Inc. in conjunction with its decision to pursue interests in pharmaceuticals and biomedical devices. The Company has signed an arms-length binding letter of intent with M Diagnostics Inc., a Calgary company that holds the rights to a biomedical device that the Company will work to develop for the self monitoring of blood glucose, primarily by diabetics. The letter of intent calls for a perpetual, worldwide, exclusive license to all the rights to the technology in return for the payment of US$ 150,000, the issuance of 8,066,770 common shares from treasury at a deemed price of $0.05 per share and a 3% royalty on the sale of any device based on the Technology.

BIOREM Inc. (TSX-V: BRM) (“Biorem” or “the Company”) announced that it has received a patent (US 8,772,015 B2) for its innovative biological air purification media.  Biorem additionally announced that it has retained Questrade, Inc. to provide market-making services, in accordance with TSX Venture Exchange (“Exchange”) guidelines. Questrade will buy and sell shares of the Company on the Exchange for the purpose of facilitating trading or providing liquidity in the Company’s common shares. The term of the agreement is one year, beginning December 1, 2014, at a cost of $5,000 per month. Questrade will not receive shares or options as compensation. The Company and Questrade are unrelated and unaffiliated entities, but Questrade and its clients may have or may acquire a direct interest in the Company’s securities.

Lotus Ventures Inc. announced that it has been approved for listing on the Canadian Securities Exchange. (“CSE”) and will begin trading on the CSE on Monday December 8, 2014. Lotus has also completed all necessary filings to be delisted from the TSX Venture Exchange (“TSXV”) and will be delisted from the TSXV at the close of business on December 8, 2014.

Regen BioPharma Inc. (OTCBB: RGBP) announced the acquisition of patent application # US 13/652,395 with a priority date of November 2008 which covers a novel gene target essential for the survival of cancer stem cells. Inventors of the intellectual property on which this patent application was filed are University of Toronto Hematologist Dr. Richard Wells and Dr. Christine Ichim, Senior Research Consultant for Regen BioPharma.

Cynapsus Therapeutics Inc. (TSX-V: CTH) (OTCQX: CYNAF) a specialty pharmaceutical company focused on Parkinson’s disease, announced that its common shares will commence trading on the Toronto Stock Exchange (TSX) as of the opening of trading on Friday, November 28, 2014. The Company’s common shares will continue to trade under the symbol “CTH,” with its common shares to cease trading on the TSX Venture Exchange concurrent with the commencement of trading on the TSX. This change does not affect the trading of the Company’s shares on the OTCQX International in the United States.

Immunovaccine Inc. (“Immunovaccine”, or the “Company”) (TSX VENTURE:IMV), a clinical stage vaccine and immunotherapy company, announced it has received final approval from Toronto Stock Exchange (“TSX”) to graduate from TSX Venture Exchange and list its common shares (the “Common Shares”) on TSX. The Common Shares will commence trading on TSX effective as of the opening of markets on November 26, 2014. Upon listing on TSX, the Common Shares will continue to trade under the symbol “IMV”. In conjunction with the listing of the Common Shares on TSX, the Common Shares will be delisted from TSX Venture Exchange upon commencement of trading on TSX on November 26, 2014.

Bioniche Life Sciences Inc. (the “Company”) (TSX:BNC), announced that effective immediately, the Company will begin operating under its new corporate name and identity, Telesta Therapeutics Inc. Along with this name change, the Toronto Stock Exchange (TSX) will be initiating a ticker in the next week to TSX:TST from TSX:BNC.  This ticker change will be automatic and will be seamless for all current and future investors.  All previously issued securities remain fully legal and valid.

Trimel Pharmaceuticals Corporation (TSX: TRL) announced that its technology partner Mattern Pharma AG has been granted an additional United States Patent in respect of NATESTO™ and its proprietary nasal gel technology. Trimel expects one or more claims in such patent to be eligible for listing in the Food and Drug Administration (FDA) Orange Book in connection with NATESTO™. The Orange Book is the FDA’s database of Approved Drug Products with Therapeutic Equivalence Evaluations. This patent further enhances the patent protection available to NATESTO™ and should represent the fourth Orange Book-listed patent with claims covering the product until 2024.

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