Monday Deal Review - April 14, 2014

Welcome to your Monday Biotech Deal Review for April 21st, 2014!

This week saw Cynapsus announce its intention to raise between $15 and $25 million after filing a short form prospectus with Ontario, Alberta and B.C. securities regulators.  In addition, a number of companies, including Miraculins, Lorus, Knight and SQI, have closed offerings of their own. Keep reading to get details on the week’s major news.

Prism Medical Ltd.(TSX-V: PM) announced that it has completed the sale of its UK operations for cash consideration of £30.0 million, or C$54.9 million at current exchange rates. The sale occurred pursuant to a Sale and Purchase Agreement (the “Purchase Agreement”) entered into and completed today with a new company (the “Purchaser”) backed by LDC (Managers) Limited, a UK mid-market private equity firm that is a subsidiary of Lloyds Banking Group. Pursuant to the Purchase Agreement, the Purchaser acquired all of the shares of the Company’s UK holding company, Prism UK Medical Limited. Local management of Prism UK Medical Limited, led by Stuart Meldrum, will continue to run the UK operations. The UK operations manufacture and supply safe patient handling products as well as related services directly to the UK healthcare market. They also deposit to dealers throughout Europe and the Middle East. The C$54.9 million all cash consideration paid today at closing is expected to result in C$49.5 million in net cash proceeds after deducting transaction expenses, related taxes and head office restructuring costs. The net cash consideration represents approximately C$5.35 per share on a fully diluted basis.

Knight Therapeutics Inc. (“Knight”) (TSX-V: GUD) announced that it has completed its previously announced offering through a syndicate of underwriters co-led by GMP Securities L.P. and Cormark Securities Inc. (collectively, the “Underwriters”), and including Bloom Burton & Co. as a selling group member, pursuant to which the Underwriters have purchased or arranged for the purchase of, on a private placement basis, 34,300,000 special warrants (the “Special Warrants”) of the Company at a price of $5.25 per Special Warrant for aggregate gross proceeds to Knight of $180,075,000 (the “Offering”). Each Special Warrant is exercisable into one common share in the capital of Knight (the “Common Shares”) for no additional consideration. The Special Warrants will be deemed to be exercised upon the expiry of the hold period applicable thereto, being the earlier of: (i) a date that is no later than the fifth business day after the date of issuance of a receipt for a final prospectus qualifying the issuance of Common Shares underlying the Special Warrants; and (ii) August 11, 2014.

Lorus Therapeutics Inc. (TSX: LOR) (“Lorus”) announced that it has completed its previously announced public offering (the “Offering”) of common shares of Lorus (the “Offered Shares”). Lorus issued a total of 50,000,000 Offered Shares at a price of $0.50 per Offered share (the “Offering Price”) for aggregate gross proceeds of $25,000,000. The Offering was sold to a syndicate of underwriters led by RBC Capital Markets and including Roth Capital Partners and Cormark Securities Inc. (collectively, the “Underwriters”), upon the terms of an underwriting agreement entered into among Lorus and the Underwriters. In addition, Lorus has granted to the Underwriters an over-allotment option to purchase up to 7,500,000 additional Common Shares at the Offering Price (the “Over-Allotment Option”) for a period ending 30 days following the closing of the Offering.

Cynapsus Therapeutics Inc. (TSX-V: CTH) announced that it has filed with the securities regulatory authorities in the Provinces of British Columbia, Alberta and Ontario, its final short form prospectus (the “Prospectus”) in connection with an offering of common shares and warrants of Cynapsus for gross proceeds of $15 million to $25 million (the “Offering”). The Prospectus will qualify the distribution of a minimum of 23,076,923 units and a maximum of 38,461,538 units (each, a “Unit”, and collectively, the “Units”) of the Corporation at a price of $0.65 per Unit (the “Offering Price”). Each Unit consists of one common share (a “Common Share”) in the capital of the Corporation and one common share purchase warrant (a “Warrant”) of the Corporation. The Units will immediately separate on closing into Common Shares and Warrants.Each Warrant will entitle the holder to purchase one Common Share (a “Warrant Share”) at a price equal to $0.81 per Warrant Share for a period of 60 months after the closing of the Offering, except that, subject to certain exceptions, the Warrants will be cancelled if they are not exercised within 30 days after prior written notice from the Corporation that the closing price of its Common Shares on the principal stock exchange of the Corporation has been $1.95 per Common Share for 20 consecutive trading days. Provided that the minimum Offering is subscribed for, it is expected that the closing of the Offering will occur on or about April 16, 2014, or such later date as the Corporation and the Agent may agree (the “Closing Date”). The Offering will be discontinued if the minimum Offering has not been subscribed for on or prior to April 28, 2014, unless the Agent and each of the persons or companies that have subscribed for Units during that period consent to a continuation of the Offering.

SQI Diagnostics Inc. (the “Company”) (TSX-V: SQD) announced that it has closed its previously announced public offering (the “Offering”). Pursuant to the Offering, SQI issued 8,400,000 units of the Company (“Units”) at a price of C$0.50 per Unit for gross proceeds of C$4.2 million. Each Unit is comprised of one Common Share of the Company (a “Common Share”) and one Common Share purchase warrant (a “Warrant”).  Each Warrant is exercisable at a price of C$0.65 and entitles the holder thereof to acquire one Common Share until April 10, 2016. The Units were issued pursuant to an agency agreement the Company entered into with Euro Pacific Canada Inc. (the “Agent”).  H.C. Wainwright & Co., LLC and Kingsdale Capital Markets Inc. formed part of the selling group, and H.C. Wainwright & Co., LLC acted as lead U.S. placement agent.

Miraculins Inc. (TSX-V: MOM) (the “Company”) announced the first closing of a private placement offering (the “Offering”) with aggregate gross proceeds to the Company of $116,000 from the sale of 464,000 units (“Units”) at a price of $0.25 per Unit. Each Unit is comprised of one Common Share of the Company (a “Share”) and one Share purchase warrant (a “Warrant”). Each Warrant entitles the holder to purchase one Share at a price of $0.35 per Share for a period of 12 months from the date the Warrant is issued. The Warrants are callable, at the option of the Company (at any time after four months following their issuance, in the event that the closing price of the Shares is at or above $0.50 per Share for any five out of 10 consecutive trading days). 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. Insiders of the Company participated by purchasing 40,000 Units of the Offering.

Medifocus Inc. (Medifocus) (TSX-V: MFS) announced that it has received approval from the TSX Venture Exchange (the Exchange) to extend the expiry date of 2,449,997 outstanding common share purchase warrants issued pursuant to the private placement announced April 9, 2010 (the Warrants) by one year. The expiry date of the Warrants was extended to April 24, 2014 in April of 2013 after having been extended to April 24, 2013 in April of 2012. Each Warrant entitles the holder to acquire one common share of Medifocus at a price of $0.50. The Company will extend the term of the Warrants from April 24, 2014 to April 9 of 2015. All other terms and conditions of the Warrants (as amended) will remain unchanged and in full force and effect.

Calyx Bio-Ventures Inc. (TSX-V: CYX) (“Calyx”) announced that it has entered into an agreement with BDC Capital Inc. and Agrisoma Biosciences Inc. (“Agrisoma”) pursuant to which Calyx has agreed to waive its pre-emptive right in order to allow a third party to finance Agrisoma. The proposed Agrisoma financing, if it were to proceed as proposed and without Calyx’s participation will, upon closing, dilute Calyx’s interest in Agrisoma from 49.96% to approximately 29%. Following an evaluation by an Independent Committee of Calyx’s board of directors, it was determined that in Calyx’s view, Agrisoma’s business had not progressed as expected, and no options for financing Agrisoma could be found that would be satisfactory to shareholders of Calyx. Additionally, intellectual property (“IP”) which was exclusively licensed to Agrisoma by Calyx is no longer under exclusive license to Agrisoma. With the IP reverting to Calyx, Calyx is now able to license and utilize its IP in other agricultural sector opportunities that it is currently investigating. The unique and powerful features of this technology provide clear advantages for the development of plant-based products. Accordingly, the Calyx board has determined to cancel the dilutive non-brokered private placement for the issuance of up to 35 million units at a price of six cents per unit for cash proceeds of up to $2.1-million previously announced on March 31, 2014.

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