July 1, 2014

Monday Deal Review - June 30, 2014

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Welcome to your Monday Biotech Deal Review for June 30th, 2014!

 

This week saw the Allergan-Valeant saga continue, with Allergan’s board telling shareholders that the current Valeant offer is “grossly inadequate, substantially undervalues the company, creates significant risks and uncertainties…and is not in the best interests of [Allergan] and its stockholders. Valeant, meanwhile, has begun the process to obtain shareholder approval for the issuance of shares in connection with the Allergan offer.

In the financing space, Tribute Pharmaceuticals has indicated that their previously announced overnight marketed public offering will consist of 37,300,000 units with expected gross proceeds of $26,110,000.

For details on these stories, and the rest of the week’s major stories, keep reading this week’s Cross-Border Biotech Deal Review.

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Allergan, Inc. (NYSE: AGN) (“Allergan” or the “Company”) announced that its Board of Directors unanimously determined that Valeant Pharmaceuticals International, Inc.’s (“Valeant”) unsolicited exchange offer to acquire all outstanding common shares of Allergan is grossly inadequate, substantially undervalues the Company, creates significant risks and uncertainties for Allergan stockholders, and is not in the best interests of the Company and its stockholders. Accordingly, the Board strongly recommends that Allergan stockholders not tender any Allergan shares to Valeant. Pursuant to the Valeant exchange offer, Allergan stockholders would exchange each share of common stock of the Company for 0.83 shares of Valeant common stock and $72.00 in cash, or subject to proration, an amount of cash or a number of Valeant common shares with the implied value set forth in the exchange offer (the “Exchange Offer”). The Company noted that the implied value of the Exchange Offer is $173.20 per share, based on the closing price of Valeant’s stock on June 20, 2014, which is substantially lower than the initial $179.25 per share implied value of Valeant’s May 30, 2014 re-revised proposal, which also included a contingent value right that is not included in the Exchange Offer.

Valeant Pharmaceuticals International, Inc. (“Valeant”) (NYSE: VRX) (TSX: VRX) announced the filing of a preliminary proxy statement for a special meeting of shareholders, at which Valeant shareholders will consider and vote upon, among other things, a proposal to approve the issuance of Valeant common shares in connection with an acquisition of Allergan, Inc. (“Allergan”) (NYSE: AGN). Valeant commenced an exchange offer for the common stock of Allergan on June 18, 2014.

Warnex Inc. (TSX-V: WNX.H) (“Warnex”) announced that, at an annual and special meeting of its shareholders (the “Meeting”) its shareholders approved the terms of its previously announced amalgamation (the “Amalgamation”) with a wholly-owned subsidiary of Diagnos Inc. (“Diagnos”) (TSX-V: ADK). Closing of the Amalgamation is expected to occur on or about July 8, 2014. Upon 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. Each shareholder of Warnex and Diagnos will, following closing of the Amalgamation, be entitled to receive one half warrant (a “Warrant”) to purchase one Diagnos Share for each Warnex Share or Diagnos Share held. Each whole Warrant will be exercisable at a price of $0.10 per share for a period of twelve months following the closing of the Amalgamation. It is also expected that, following the closing of the Amalgamation, the Warnex Shares will be delisted from trading on the NEX and the amalgamated entity will apply to cease being a reporting issuer under the securities legislation of each province of Canada where it is a reporting issuer.

Auxilium Pharmaceuticals, Inc. (NASDAQ: AUXL) and QLT Inc. (NASDAQ: QLTI) (TSX: QLT) announced that they have entered into a definitive agreement under which Auxilium plans to merge with QLT. Under the terms of the agreement, a wholly-owned subsidiary of QLT will be merged with and into Auxilium. QLT will remain incorporated in British Columbia, Canada, and will be renamed “New Auxilium.” Current shareholders of Auxilium will receive 3.1359 QLT shares for each Auxilium share, subject to certain adjustments. For QLT shareholders, the transaction represents a 25% premium based on a calculation of the closing NASDAQ stock prices of Auxilium and QLT on June 25, 2014, the last trading day prior to the announcement of the merger. When completed, Auxilium shareholders will own approximately 76% of the combined entity on a fully diluted basis, and current QLT shareholders will own approximately 24%, subject to certain adjustments. The combined organization will be led by Auxilium’s current leadership team and will maintain Auxilium’s current offices in Chesterbrook, Pennsylvania. All current Auxilium directors are expected to join the merged company’s board, joined by two current QLT directors. Shares of the combined company are expected to trade on NASDAQ and QLT is expected to be delisted from the Toronto Stock Exchange.

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Tribute Pharmaceuticals Canada Inc. (“Tribute” or the “Company”) (TSX-V:TRX) (OTCQB:TBUFF), announced the terms of its previously announced overnight marketed public offering (the “Offering”) with a syndicate of underwriters led by Dundee Securities Ltd., and including Mackie Research Capital Corporation (together, the “Underwriters”). The Offering will consist of 37,300,000 units of the Company (the “Units”), each Unit consisting 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 $26,110,000. Each whole Warrant will entitle 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. The Underwriters have been granted the option to offer for sale up to an additional 15% of the Units, exercisable in whole or in part at any time up to 30 days following the closing of the Offering. The Company plans to file an amended preliminary prospectus reflecting the terms herein. The Offering is scheduled to close on or about July 15, 2014.

Transition Therapeutics Inc. (“Transition” or the “Company”) (NASDAQ: TTHI)(TSX: TTH) announced that it has closed its previously announced private placement through which 3,195,487 units of the Company were purchased by Jack W. Schuler, Larry N. Feinberg, Oracle Investment Management, certain Transition Board members, management and other existing shareholders.   Gross proceeds of the private placement totalled US$17 million. As previously announced, 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, 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 in proceeds.

Knight Therapeutics Inc. (“Knight”) (TSX: GUD) announced that it has entered into a secured debt agreement with privately-held Origin Biomed Inc. (“Origin”). The $850,000 Canadian secured loan issued by Knight to Origin will bear interest at a rate of 15% per annum and matures on June 25, 2017. The loan is secured by a charge over the assets of Origin. In addition, Knight has been issued warrants to acquire 698,483 Origin preferred shares at $0.0794 per share. Origin will use the funds to promote the growth of Neuragen in both Canada and the U.S.

EnWave Corporation (TSXV: ENW) (FRA: E4U) (“EnWave”, or the “Company”) announced that it has closed a non-brokered private placement with Mr. John P.A. Budreski, raising CAD$150,000 through the issuance of 111,111 common shares at a price of $1.35 per common share. The common shares have a four-month hold period expiring on October 24, 2014. The proceeds are to be used for working capital and general corporate purposes.

 

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Knight Therapeutics Inc. (“Knight”) (TSX: GUD) announced that it has entered into a letter of agreement with Sectoral Asset Management Inc. (“Sectoral”) to invest USD$13 million into its New Emerging Medical Opportunities Funds II, Ltd. (“NEMO II”). In exchange for Knight’s investment in NEMO II, which is expected to close June 30, 2014, Sectoral will encourage Sectoral-invested companies (“Investee Companies”) to select Knight as their Canadian partner of choice. Additionally, Sectoral will facilitate introductions for loan agreements between Investee Companies and Knight.

Intelligent Hospital Systems (IH Systems) announced a distribution agreement with Simeks in Istanbul, Turkey. The healthcare solutions provider, which also has offices in Izmir and Ankara, will serve as IH Systems’ exclusive distributor in Turkey, Azerbaijan, Turkmenistan, Uzbekistan, Kazakhstan, Georgia and Iraq, further increasing RIVA’s reach with hospitals and others.

 

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Northleaf Venture Catalyst Fund (NVCF) announced that it has committed $10 million to leading global healthcare venture capital manager Versant Ventures.

Theratechnologies Inc. (Theratechnologies) (TSX: TH) announced that it will receive a refund of approximately $4.1 million from the Canada Revenue Agency after settling a dispute over its claims of refundable investment tax credits related to its 1994 and 1995 taxation years. There are no other ongoing disputes related to the Company’s investment tax credit claims.

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