Monday Deal Review - August 31, 2015

Welcome to your Monday Biotech Deal Review for August 31st, 2015!

In M&A, Vancouver based ocular biotechnology company QLT Incorporated announced that it has entered into a merger agreement under which it intends to acquire InSite Vision Inc., a California-based company in the same industry. In Financing, specialty pharmaceutical company Knight Therapeutics received a distribution of $1.5-million in relation to its investment in Sectoral Asset Management Inc.’s New Emerging Medical Opportunities Funds II. Combined with a USD$13.6-million distribution announced in June, this brings Knight’s total distributions from the Fund to USD$15.1-million in its fiscal year 2015.

Vancouver based QLT Inc. (NASDAQ:QLTI) (TSX:QLT) announced that it has entered into an Amended and Restated Merger Agreement with InSite Vision Incorporated (OTCBB:INSV), pursuant to which QLT will acquire InSite Vision in a share-for-share transaction.  The revised merger consideration will be payable in QLT common shares based on an exchange ratio equal to 0.078x of a QLT common share per share of InSite common stock, subject to two adjustment mechanisms. First, the merger consideration will include a “collar” mechanism, which provides that the exchange ratio will be adjusted so that the value to be received per share of InSite common stock (based upon the volume weighted average price per share of the QLT common shares for the fifteen (15) trading day period prior to the closing of the merger) will not be less than $0.25 nor greater than $0.30. Second, the merger consideration will also cap the maximum number of QLT shares to be issued in connection with the merger at 19.9% of QLT’s total outstanding shares. In the event the number of QLT shares to be issued in connection with the merger would otherwise exceed this 19.9% threshold, the remaining merger consideration otherwise owed to the shareholders of InSite will be paid pro rata in cash. The revised exchange ratio of 0.078x of a QLT common share per share of InSite common stock represents an increase from the original exchange ratio of 0.048x announced on June 8, 2015. In return for the increased value to shareholders, the termination fee payable by InSite Vision to QLT has been increased to $2,667,000. The Amended and Restated Merger Agreement was approved by the Boards of Directors of both companies.

IDT Biologika (company profile) announced its acquisition of Gallant Custom Laboratories, based in Cambridge Ontario, Canada. The transaction is to close August 31, 2015. Gallant Custom Laboratories is the only Canadian company authorized by the Canadian Food Inspection Agency (CFIA) to manufacture autogenous viral and bacterial vaccines. Gallant serves customers throughout Canada, particularly to those who provide vaccines to the Canadian livestock and poultry industry. The company relies on modern in-house diagnostic laboratory facilities to identify viral and bacterial diseases in pigs, sheep, goats, cattle and poultry, and to subsequently manufacture and supply the appropriate autogenous vaccines corresponding to specific pathogens out of its Cambridge-based manufacturing facilities in Ontario.

Knight Therapeutics Inc. (TSX:GUD), a leading Canadian specialty pharmaceutical company, announced that it has received a further distribution of US$1.5 million related to its investment in Sectoral Asset Management Inc.’s New Emerging Medical Opportunities Funds II, Ltd. (“NEMO II”) following the US$13.6 million distribution announced by Knight in June 2015.

Since June 2014, Knight has contributed US$12.6 million into NEMO II and has received distributions totaling US$15.1 million. Knight’s estimated remaining position in NEMO II is currently valued at more than US$5.5 million. The fund will continue to manage the remaining assets over the course of the fund life through 2018.

Advaxis, Inc. (NASDAQ:ADXS), a clinical-stage biotechnology company developing cancer immunotherapies, entered into a licensing agreement with Knight Therapeutics Inc. (TSX: GUD), a Canadian-based specialty pharmaceutical company focused on acquiring, in-licensing, selling and marketing innovative prescription and over-the-counter pharmaceutical products, to commercialize in Canada Advaxis’s product portfolio including its three lead drug candidates: axalimogene filolisbac (ADXS-HPV) for human papilloma virus (HPV)-associated cancers, ADXS-PSA for prostate cancer and ADXS-HER2 for HER2 expressing solid tumors.  In connection with the licensing agreement, Knight is purchasing directly from Advaxis 359,454 shares at $13.91 per share, which represents a 7 percent premium to the price of Advaxis’s common stock at market close on August 25, 2015. In addition, Sectoral Asset Management, a leading Canadian-based global healthcare investment advisor, is purchasing 1,437,815 shares at $13.91 per share directly from Advaxis on behalf of its clients. The combined gross proceeds to Advaxis from these direct investments is $25 million.

Montreal Based Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) and Sprout Pharmaceuticals, Inc. today announced that they have entered into a definitive agreement under which a wholly-owned subsidiary of Valeant will acquire Sprout, on a debt-free basis, for approximately $1 billion in cash, plus a share of future profits based upon the achievement of certain milestones.

Vancouver based Aequus Pharmaceuticals Inc. (TSX VENTURE:AQS) (OTCQB:AQSZF), announced its stock is now trading on the OTCQB® Venture Market in the United States under the symbol “AQSZF.”

MSI Methylation Sciences Inc., a pharmaceutical company developing a once-daily oral, small molecule therapy for adjunctive treatment of major depressive disorder (MDD), announced the treatment of the last patient in its HORIZON Phase 2 study. The HORIZON Study is designed to evaluate the efficacy and safety of Strada™ in patients suffering from MDD who have had an inadequate response to current antidepressant therapy. The HORIZON Study is being conducted exclusively in the US, under an IND, filed by MSI with the Food and Drug Administration, Center for Drug Evaluation and Research, Division of Psychiatry Products in 2013. The Company expects results from the HORIZON Study in early Q4 2015.

BioForest Technologies Inc. received a grant from the Federal Government of Canada to continue its research to help combat tree pests. The Sault Ste. Marie, Ontario based company will receive up to $160,000 through the National Research Council of Canada’s Industrial Research Assistance Program to research new biological organisms for innovative pest management that protects endangered trees in Canadian municipalities.

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