Monday Deal Review - June 16, 2014

Welcome to your Monday Biotech Deal Review for June 16th, 2014!

The last two weeks saw significant activity in both the acquisition and financing spaces, so keep reading to see details on the weeks’ major biotech news.

Nordion Inc. (TSX: NDN) (NYSE: NDZ) announced that its shareholders (the “Shareholders”) have approved the special resolution authorizing the previously announced plan of arrangement (the “Arrangement”) providing for the acquisition by Sterigenics of all Nordion’s outstanding shares for cash consideration of US$13.00 per share. Further, that the Ontario Superior Court of Justice (Commercial List) has issued a final order approving plan of arrangement . The Arrangement resolution required the approval of 66 2/3% of the votes cast by Shareholders present in person or represented by proxy at the Annual and Special Meeting of Shareholders (the “Meeting”). As a result of the postponement of the Meeting to June 6, 2014, the hearing on the final order in respect of the Arrangement before the Ontario Superior Court of Justice (Commercial List) will now be held on June 11, 2014 at 9:30 a.m., 330 University Avenue, Toronto, Ontario. The transaction is not subject to any financing condition and is expected to close in the second half of calendar 2014.

Warnex Inc. (TSX-V: WNX.H) (“Warnex”) announced that it has entered into a pre-amalgamation agreement on May 30, 2014 (the “Pre-Amalgamation Agreement”) with Diagnos Inc. (“Diagnos”), pursuant to which Warnex agreed to carry out an amalgamation (the “Amalgamation”) under which Warnex will amalgamate with a wholly-owned subsidiary of Diagnos. Upon the closing of the Amalgamation, shareholders of Warnex will receive one common share of Diagnos (a “Diagnos Share”) for each common share of Warnex (a “Warnex Share”) held. For the purposes of the Amalgamation, each of the Diagnos Shares and the Warnex Shares have been attributed a value of $0.08 per share. The warrants to purchase Warnex Shares held by Persistence Capital Partners (“PCP”), which owns approximately 52% of the Warnex Shares, will be exchanged for an equal number of warrants to purchase Diagnos Shares on identical terms (“Replacement Warrants”). The Amalgamation has been unanimously approved by the board of directors of Warnex. Completion of the Amalgamation remains subject to a number of conditions.

Jamieson Laboratories Ltd (“Jamieson”) announced the acquisition of leading Canadian women’s wellness company Lorna Vanderhaeghe Health Solutions. As part of the transaction, founder, Lorna Vanderhaeghe, has become a key shareholder of Jamieson and a member of its Board of Directors.

Primera Bioscience Research Inc. (“Primera” or the “Company”) announced that it has completed the acquisition of Copenhagen Minerals Inc. (“CMI”) in a share purchase transaction (the “Acquisition”). As a result, the Company now owns a 100% interest in the Storo Gold Project, an exploration project located in Greenland. The Company’s name will be changed to “Greenland Resources Inc.” to reflect this Acquisition.

Biosign Technologies Inc. (TSX-V: BIO) (“Biosign” or the “Company”) announced the execution of a Share Purchase Agreement (the “SPA”) under which it has agreed to acquire 50% of the issued and outstanding shares of Toronto-based Edgewater Employee Services Inc. (“EESI”). The total purchase price of $197,500 will be satisfied by the issuance of 3,950,000 common shares of Biosign at an ascribed price of $0.05 per share, being a premium to the market price at the execution date of the SPA. In connection with this transaction, Biosign entered into a consulting and business development agreement with Edgewater Financial Group Inc. and Kearns Investment Corporation (jointly the “Consultant”) for a term of 3 years. Under this agreement, the Consultant will receive a monthly base fee of $5,000 payable in arrears and performance fees (“Success fees”), paid in the form of Share Purchase Warrants up to a maximum of 6.5 million warrants, exercisable to purchase one common share of Biosign at an exercise price which is the greater of $0.10/share or the lowest price permitted by the Toronto Venture Stock Exchange at the date of grant.

Transition Therapeutics Inc. (“Transition” or the “Company”) (NASDAQ: TTHI)(TSX: TTH) announced that Jack W. Schuler, Larry N. Feinberg, Oracle Investment Management, certain Transition Board members, management and other existing shareholders will make an investment of up to US$30.8 million by purchasing 3,195,487 units of the Company at a price of US$5.32 per unit. Each unit consists of one common share, and 0.61 of a common share purchase warrant with a purchase price of US$7.10 per whole warrant.   Each whole warrant will entitle the holder, within two years from closing, to purchase one additional common share in the capital of the Company. If and when all of the warrants are exercised, the Company will realize an additional US$13.8 million, bringing the total investment to US$30.8 million before transaction costs. Closing of the private placement is expected to occur on or about June 20, 2014 and is subject to approval from the Toronto Stock Exchange.

Merus Labs International Inc.(“Merus” or the “Company”) (TSX: MSL)(NASDAQ:MSLI) announced that the Company has entered into a private placement subscription agreement to issue $10 million of Series A convertible preferred shares (the “Series A Preferred Shares”) to a large Canadian institutional investor. Concurrent with this transaction, Merus has also signed a letter agreement to acquire a new corporation to be incorporated by Dacha Strategic Metals Inc. (“Dacha”) (TSX-V:DSM) which upon closing will have approximately $11 million in cash and no other assets or liabilities in exchange for Merus common shares. The $21 million in proceeds from the two financing transactions are expected to be used by the Company for future acquisition opportunities as well as for general corporate purposes. The letter agreement with Dacha contemplates that Dacha will convert its current liquid assets into cash and cash equivalents and contribute the proceeds to a new corporation to be incorporated by Dacha. This subsidiary will have no less than $11 million in cash and no other assets or liabilities when acquired by Merus. The purchase price will equal the total value of the cash held by the newly incorporated subsidiary and will be paid for by the issuance to Dacha (of Merus common shares valued at $1.70 per share), subject to certain purchase price adjustments. Dacha will be granted certain equity participation rights and will be paid a transaction structuring fee of 3.5%, which will be paid by the issuance of Merus common shares on closing. The acquisition is expected to close (on/or) before August 15, 2014. Merus subsequently announced that it has amended the terms of the previously announced bought deal public offering with a syndicate of investment dealers co-led by Canaccord Genuity Corp., Clarus Securities Inc. and Cormark Securities Inc. (the “Underwriters”) to increase the size of the offering by an additional 3,000,000 common shares (the “Additional Common Shares”). Under the amended terms of the offering, the Underwriters have agreed to purchase an aggregate of 16,000,000 common shares (“Common Shares”) of the Company for total gross proceeds of $27,200,000.

Spectral Diagnostics Inc. (TSX: SDI) (OTCQX: DIAGF) (the “Corporation”) announced it has entered into agreements for a non-brokered private placement of up to $18.2 million (the “Proposed Offering”). The Corporation intends to use the net proceeds of the Proposed 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. In connection with the Proposed Offering, the board of directors (the “Board”) of the Corporation engaged Koger Valuations Inc. (“Koger”) to consider the fairness of the Proposed Offering. After the completion of its review and analysis, Koger delivered its opinion to the Board and concluded that the Proposed Offering is fair, from a financial point of view, to the disinterested shareholders of the Corporation, based upon and subject to the various assumptions, limitations, qualifications and other considerations set forth in the fairness opinion.

Lorus Therapeutics Inc. (TSX: LOR) (Lorus”) announced that 18.5 million common share purchase warrants and 1.2 million broker warrants expiring on June 8, 2014 and originally issued in connection with a financing completed in June 2012, have been exercised recently, raising approximately $8.7 million in net proceeds since mid-April. The proceeds will be used for working capital and general corporate purposes.

Resverlogix Corp. (“Resverlogix” or the “Company”) (TSX:RVX) announced it has closed a private placement of 3.5 million common shares at a price of CAD$0.65 per common share for gross proceeds of CAD$2.3 million (the “Private Placement”). NGN BioMed Opportunity II, L.P. (“NGN”) subscribed for 1,230,769 common shares. Directors and officers of Resverlogix subscribed for a total of 1,080,522 common shares. After giving effect to the Private Placement, NGN holds approximately 9.3% of Resverlogix’s issued and outstanding common shares. NGN also holds 350,000 common share purchase warrants of Resverlogix. The Private Placement was a related party transaction within the meaning of applicable Canadian securities laws as NGN and other subscribers are insiders of the Company or are controlled by insiders of the Company. The transaction was exempt from the formal valuation and minority approval requirements applicable to related party transactions on the basis that the value of the transaction was less than 25% of the Company’s market capitalization. The Company did not file a material change report more than 21 days prior to closing as contemplated by the related party transaction requirements as the insider participation was only recently confirmed.

Critical Outcome Technologies Inc. (TSX-V: COT) (“COTI” or the “Corporation”) announced the completion of the final tranche of its previously announced non-brokered private placement with the issuance of 5,595,135 units (the “Units”) at a price of $0.16 per Unit for gross proceeds of approximately $895,000. In aggregate, the Corporation raised gross proceeds from the offering of approximately $1,432,000 through the sale of 8,951,385 Units. Each Unit consists of one common share and one warrant of the Corporation. Each warrant is exercisable for one common share of the Corporation at an exercise price of $0.28 per share for a period of 24 months, from the date of issue.

ProMetic Life Sciences Inc. (TSX: PLI) (OTCQX:PFSCF), (“ProMetic” or the “Corporation”) announced that it has received a $5.6 million purchase order under its ongoing supply agreement with Octapharma. This order should be delivered during the remainder of 2014. This latest order relates to the purchase of PrioClear™, a proprietary prion capture resin incorporated into Octapharma’s manufacturing process for its solvent/detergent treated plasma product, OctaplasLG®.

Easton Pharmaceuticals Inc. (OTC: EAPH) announced it has signed an agreement to purchase an interest in a pending medical marijuana operation. The agreement provides Easton Pharmaceuticals with an exclusive option to purchase any amount between 10% and 49% of the private medical marijuana company with no funds being advanced until the license has been granted by Health Canada. Presently, Easton Pharmaceuticals maintains cash on hand to purchase approximately one-half of its exclusive option with additional commitments from its finance partner for up to another $5 Million in additional financing which would allow Easton to purchase all of its option from MDRM Canada.

CQDM and Sanofi Canada (OTCMKTS:SNYNF) announced their partnership to support highly innovative research in Quebec and Canada. Sanofi Canada will be contributing up to $500,000 over a period of up to five years to research projects that will positively impact drug discovery and development as well as find concrete solutions to complex medical problems. Sanofi Canada is the newest pharmaceutical member participating in CQDM’s unique precompetitive research biopharmaceutical consortium. The partnership includes membership in the Explore program, which targets highly innovative breakthrough technologies, in order to enable drug discovery. In addition to Sanofi Canada’s financial contribution, CQDM will also benefit from in-kind contributions, namely the involvement of a senior North American representative, on the Explore Advisory Committee, as well as the participation of key scientists at Sanofi in CQDM’s unique mentorship program.

Stem Cell Therapeutics Corp. (“SCT”) (TSX:SSS) (OTCQX:SCTPF) announced that it has filed articles of amalgamation to merge with its wholly-owned subsidiary Trillium Therapeutics Inc. (“TTI”). The combined company has adopted the Trillium name. Conditional approval for the name change was received from the TSX. The Company will soon begin trading under the symbol “TR”

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