July 28, 2014
Welcome to your Monday Biotech Deal Review for July 28th, 2014!
The past weeks saw significant activity in the financing space, with Tribute closing their public offering, worth approximately $30 million in the aggregate. Spectral and Zenith on the other hand have closed private offerings of their own, obtaining proceeds of $13.2 million and $4.6 million, respectively. In other news, Trimel is acquiring the Canadian rights to Estrace®, together with existing inventories on hand, from Shire. The deal is worth approximately CDN$44.5 million. For greater detail on these stories, as well as the rest of the weeks’ major news, keep reading this week’s deal review.
Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) announced it has filed a premerger notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with the U.S. Federal Trade Commission relating to the proposed acquisition of Allergan, Inc. (NYSE: AGN).
Avidus Management Group Inc. (“Avidus” or the “Company”) (TSX-V: AVD) announced it has entered into an Asset Purchase Agreement with Truestar Health Inc. (“Truestar”), pursuant to which Avidus will acquire substantially all of the assets of Truestar (the “Acquisition”). The Acquisition is anticipated to have an immediate and substantial impact on monthly revenue and is expected to increase annualized consolidated revenue of Avidus to over $10 million CDN. Under the terms of the Asset Purchase Agreement, Avidus will purchase substantially all of the assets of Truestar for an aggregate purchase price (not including value of inventory) of CAD$6 million that will be paid as follows: CAD$500,000 upon close and the remaining $5.5 million based upon a 5% royalty override on Truestar’s revenue. Avidus will pay for existing Truestar inventory as products are sold. The 5% royalty override does not begin until after existing Truestar current inventory is sold. As part of the transaction, Avidus is acquiring Truestar’s proprietary software system that allows distributors and customers to create customized nutritional, diet and exercise plans around Truestar’s 30 plus products.
Calyx Bio-Ventures Inc. (TSX-V: CYX) (“Calyx”) announced that it has entered into a letter of intent to acquire Cannigistics Agri-Solutions Corp. (“Cannigistics”). Under the terms of the acquisition, Calyx will acquire all of the issued and outstanding shares of Cannigistics in exchange for 9,000,000 common shares of Calyx. The acquisition remains subject to the fulfillment of certain conditions, including the execution of definitive agreements and the approval of the TSX Venture Exchange.
Tribute Pharmaceuticals Canada Inc. (“Tribute” or the “Company”) (TSX-V:TRX) (OTCQB:TBUFF) announced that it has closed its previously announced public offering of units (the “Offering”) with a syndicate of underwriters led by Dundee Securities Ltd., and including Mackie Research Capital Corporation (together, the “Underwriters”). The Offering consists of 42,895,000 units (the “Units”) of the Company, including the full exercise of the 5,595,000 Unit over-allotment option. Each Unit consists of one common share and one-half of one common share purchase warrant (each, a “Warrant” and together, the “Warrants”) at a price per Unit of $0.70 (the “Offering Price”) for aggregate gross proceeds of $30,026,500. Each Warrant entitles the holder thereof to acquire one common share of the Company at a price per share of $0.90 for a period of 24 months following the issuance thereof.
Cardiome Pharma Corp. (NASDAQ: CRME)(TSX: COM) announced the closing of a senior, secured term loan facility of up to $22 million to be made available to the company by MidCap Financial, LLC in two tranches with an interest rate of Libor plus 8%. The loan carries a term of 48 months and is secured by substantially all of the assets of the company.
Spectral Diagnostics Inc. (TSX: SDI) (OTCQX: DIAGF) (the “Corporation” or “Spectral”) announced that at a special meeting (the “Special Meeting”) of shareholders (“Shareholders”) of the Corporation Shareholders overwhelmingly approved the terms of the previously announced proposed non-brokered private placement of the Corporation of up to $18.2 million (the “Offering”). The Corporation intends to use the net proceeds of the Offering to fund its EUPHRATES clinical development program for PMX, its lead theranostics product for the treatment of severe sepsis with septic shock and for working capital and general corporate purposes.
Spectral Diagnostics Inc. (TSX: SDI) (OTCQX: DIAGF) (the “Corporation” or “Spectral”) and Toray Industries, Inc. (“Toray”) announced the closing of Tranche “A” of the previously announced non-brokered private placement of the Corporation (the “Offering”). The Tranche “A” component of the Offering was comprised of 45,051,186 common shares of the Corporation (“Shares”), at a subscription price of $0.293 per Share for aggregate proceeds of $13.2 million. Among other insiders, Toray participated in Tranche “A” of the Offering and acquired 17,064,846 Shares, at a subscription price of $0.293 per Share, for aggregate proceeds of $5 million. As a consequence, Toray now holds 33,731,513 Shares or 18.8% of the issued and outstanding Shares, calculated on a non-diluted basis.
Merus Labs International Inc. (“Merus” or the “Company”) (TSX: MSL)(NASDAQ:MSLI) announced that the Company has exercised its right to convert the $10 million unsecured convertible debentures (the “Convertible Debentures”) issued to a large Canadian institutional investor in September 2013. The Company exercised its right based on the closing price of the Company’s common shares having equalled or exceeded $2.30 per share for the 20 consecutive trading days ended July 14, 2014. In aggregate, the Company will issue 6,677,918 common shares to convert the outstanding $10 million principal amount plus accrued but unpaid interest.
Zenith Epigenetics Corp. (“Zenith” or the “Company”) announced that it has closed a private placement of 4.3 million common shares at a price of US$1.00 per share for gross proceeds of CAD$4.6 million (the “Private Placement”). NGN BioMed Opportunity II, L.P. (“NGN”) subscribed for 1,000,000 common shares. After giving effect to the Private Placement, NGN holds 11,103,004 common shares of Zenith, representing approximately 12.2% of Zenith’s issued and outstanding common shares. NGN also holds 350,000 common share purchase warrants of Zenith. The Private Placement was a related party transaction within the meaning of applicable Canadian securities laws as NGN is an insider of Zenith.
Critical Outcome Technologies Inc. (“COTI”) (TSX-V: COT) (OTCQB:COTQF) announced that it is amending the expiry date of 3,569,458 common share purchase warrants (Warrants) issued as part of a non-brokered private placement on January 30, 2013, that were scheduled to expire on July 29, 2014. Each Warrant entitled its holder to purchase one common share of the Company at an exercise price of $0.26 per share for a period of 18 months from the date of issue. The expiry date is being extended to 5:00 p.m. (Toronto time) on January 29, 2016, (the New Expiry Date), provided that the New Expiry Date of the Warrants will be accelerated to 21 days if, for any ten consecutive trading days, the closing price of the common shares equals or exceeds $0.60.
Annidis Corporation (“Annidis” or the “Corporation”) (TSX-V: RHA) announced that it has reached an agreement with one of the Corporation’s private investors whereby an outstanding secured promissory note in the amount of $1,000,000 which matured on June 7, 2014 (the “Old Note”) shall be cancelled and replaced with a new $1,000,000 secured promissory note (the “New Note”). In connection with the surrender of the Old Note for cancellation, the Corporation has paid to the lender all accrued and outstanding interest on the Old Note up to and including November 30, 2013, along with a one-time note replacement fee of $50,000.00. The New Note matures on January 31, 2017 and bears interest beginning December 1, 2013 at a rate of 12% per annum compounded monthly and payable at maturity. In addition, in connection with the issuance of the New Note the Corporation has issued to the lender 2,133,333 warrants for the purchase of common shares in the capital of the Corporation (“Warrant”). Each Warrant is exercisable at a price of $0.30 per common share at any time prior to 4:00 p.m. (Ottawa time) on September 30, 2016. In exchange for the issuance of the Warrants, the lender has surrendered to the Corporation for cancellation two outstanding warrants for the purchase of up two 250,000 common shares in the capital of the Corporation.
Miraculins Inc. (TSX-V: MOM) (the “Company”) announced a non-brokered private placement offering (the “Offering”) of up to 2,272,727 units (“Units”) at a price of $0.11 per Unit for gross proceeds of up to $250,000. Each Unit will be comprised of one common share of the Company (a “Share”) and one Share purchase warrant. Each whole warrant (a “Warrant”) will entitle the holder to purchase one Share at a price of $0.15 per Share for a period of 12 months from the date the Warrant is issued.
Trimel Pharmaceuticals Corporation (TSX: TRL) announced that it has acquired from Shire plc, the Canadian rights for Estrace® (17-beta estradiol). Under the terms of the agreement, Trimel is acquiring the Canadian rights to Estrace®, together with existing inventories on hand, for CDN$44.5 million. In order to finance this acquisition, the Company has entered into a senior secured term credit facility with an affiliate of MidCap Financial, LLC for facilities of up to US$25.0 million (US$20.0 million of which was available at closing, and US$5.0 million of which may become available upon satisfaction of certain future conditions) and a convertible subordinated unsecured term note in the amount of US$25.0 million in favour of First Generation Capital Inc., a company affiliated with the chairman of the Board of Directors of the Company. In addition, the Company has entered into an agreement with Cormark Securities Inc. to purchase 28,801,000 common shares of the Company on a private placement basis at a price of $0.62 per share for gross proceeds of $17,856,620. The private placement is anticipated to close on or about July 30, 2014, subject to certain conditions including the receipt of all necessary regulatory approvals (including the Toronto Stock Exchange).
Sirona Biochem Corp. (TSXV: SBM) (OTCQX: SRBCF) (FRA: ZSB) , (the “Company”) announced that it has entered into a business consulting agreement (the “Agreement”) with PRC Partners Ltd. of Hong Kong (“PRC”), for a six month term commencing July 15, 2014. As compensation for the services to be provided, PRC will receive a total of 1,500,000 common shares of the Company, in tranches of 250,000 common shares each, on a monthly basis starting August 15, 2014. PRC will also receive stock options in the Company, under the Company’s stock option plan, entitling it to purchase 500,000 common shares at a price of $0.15 per share and 500,000 common shares at a price of $0.20 per share expiring 60 days after the Agreement is terminated. Services to be provided by PRC include consultation, advice, and the arrangement of strategic relationships with other companies and the acquisition of projects, access to capital markets in Europe, and similar activities designed to further the business and development of the Company.
Welichem Biotech Inc. (the “Company”) (TSX-V: WBI) announced that it has entered into a termination agreement with Shenzhen Celestial Pharmaceuticals Ltd. (“Celestial”) and Beijing Wenfeng Tianji Pharmaceuticals Co., Ltd. (“BWTP”) to terminate the asset purchase agreement dated March 26, 2013 (the “China APA”) among the parties, pursuant to which the Company agreed to purchase the exclusive development and commercialization rights (the “Rights”) to the novel anti-inflammatory agent, WBI-1001, in China, Taiwan, Macao and Hong Kong. Welichem, Celestial and BWTP have been trying to negotiate with the relevant Chinese authorities since 2012 to obtain approval of the China APA as required for the transfer the Rights, however, negotiations have been unsuccessful in this regard. The Termination Agreement provides that Celestial and BWTP will return the $10 million payment made by Welichem pursuant to the China APA, less an amount representing costs of the parties in seeking regulatory approval of the China APA plus the amount of any taxes required to be deducted.
BioSyent Inc. (TSX-V: RX) (“BioSyent”) announced that its subsidiary BioSyent Pharma Inc. has signed an exclusive Licensing and Distribution Agreement with an existing European partner for a new product that will be marketed by its’ Hospital Products Division. The new product utilizes a patented delivery system that offers technical advantages over existing alternatives and will be used in hospitals and acute care settings. The product will be launched after Health Canada approval.
Cipher Pharmaceuticals Inc. (TSX: DND) announced it has entered into a definitive distribution and supply agreement with Ranbaxy Laboratories Ltd. (“Ranbaxy”) under which Cipher has granted Ranbaxy the exclusive right to market, sell and distribute Cipher’s isotretinoin capsules in Brazil. Under the terms of the agreement with Ranbaxy, Cipher will receive an upfront payment and is eligible for additional pre-commercial milestone payments. Cipher will supply the product to Ranbaxy and product manufacturing will be done by Cipher’s partner, Galephar Pharmaceutical Research. Ranbaxy will be responsible for all regulatory related activities associated with gaining and maintaining regulatory approval of the product in Brazil.
NanoSpeed announced that they have appointed an exclusive European distributor for their 25-OH Vitamin D deficiency test kit – Test4D™ following the announcement last week that Test4D™ is CE marked and registered for sale in the European Union. AKSA Medical is an independent distributor based in the Benelux specializing in the sale of in-vitro diagnostics and point of care testing.
Valeant Pharmaceuticals International, Inc. (“Valeant”) (NYSE: VRX) (TSX: VRX) announced that it has filed a detailed complaint with the Autorite des marches financiers (“AMF”) regarding Allergan, Inc.’s (NYSE: AGN) apparent attempts to mislead investors and to negatively influence the market price of Valeant’s common shares by continuing to make false and misleading statements regarding Valeant’s business despite Valeant’s public statements correcting this misinformation. A similar complaint was filed earlier this week with the U.S. Securities and Exchange Commission (“SEC”).
Lorus Therapeutics Inc. (“Lorus” or the “Company”) (TSX: LOR) announced that its shareholders will be asked to approve (i) a change of the corporate name to “Aptose Biosciences Inc.” as part of its comprehensive rebranding efforts; and (ii) a consolidation of the common shares of the Company at a ratio within the range of one (1) common share for each five (5) to fifteen (15) common shares (the “Share Consolidation”) at its annual and special meeting of shareholders (the “Meeting”). Lorus shareholders will be asked at the Meeting to approve the change of the name of the Company from “Lorus Therapeutics Inc.” to “Aptose Biosciences Inc.” (the “Name Change”). Additionally, and if approved by the shareholders at the Meeting, the Board of Directors of Lorus will have the authority to implement the Share Consolidation, the date and exact ratio of which would be determined by the Board of Directors within the above mentioned ratio range approved by the shareholders. If the proposed Share Consolidation is implemented, the number of common shares issued and outstanding will be reduced from approximately 139,324,451 common shares (as of July 15, 2014) to between approximately 27,864,890 and 9,288,296 common shares, depending on the ratio selected by the Board. The proposed Share Consolidation is being contemplated as a way to potentially increase the trading price of the common shares as Lorus is contemplating a potential listing on the NASDAQ Stock Exchange and the rules of the NASDAQ Stock Exchange require a minimum trading price of $3.00 or $4.00 under certain conditions.
Supreme Pharmaceuticals Inc. (the “Company”) (CSE: SL) (OTCMKTS:SPRWF) reports that through the company’s newly formed subsidiary, Supreme Pharmaceuticals USA Inc., it is in the preliminary stages of evaluating medical cannabis investment opportunities within the State of Arizona, in the US. These opportunities include, but are not limited to, edibles, cultivation, and dispensary operations. There is no guarantee that an acquisition will be made.
iCo Therapeutics Inc. (“iCo” or “the Company”) (TSX-V: ICO) (OTCQX: ICOTF), at the request of IIROC, confirmed that there is no material change that would account for the recent increase in market activity.