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Nabi Biopharmaceuticals merges with Biota Holdings
04-23-2012
by Jeffrey Bouley  |  Email the author

SHARING OPTIONS:

ROCKVILLE, Md.—Nabi Biopharmaceuticals today announced plans to merge with Melbourne, Australia-based Biota Holdings Ltd., thus forming a new company to be named Biota Pharmaceuticals Inc. that will be listed on NASDAQ and headquartered in the United States.
 
"A NASDAQ listing provides Biota with access to the largest healthcare capital market in the world and will enable us to transform our business model to one which can deliver significantly higher value than the royalty-only model we have historically pursued," says Biota Chairman Jim Fox. "We believe this is a necessary step to increase our options for the development and commercialization of our product portfolio, ultimately generating significantly greater value recognition of our product portfolio for our shareholders."
 
"This merger is an exciting opportunity for Nabi's shareholders," said Dr. Raafat Fahim, President and CEO of Nabi. "It will trigger the distribution of significant cash to current Nabi shareholders, as well as enable their participation in the growth opportunity of the combined company, which includes royalty generating products and a rich pipeline. In addition, it preserves for Nabi's current shareholders the possibility of realizing potential future value from NicVAX."
 
NicVAX nicotine conjugate vaccine is a proprietary investigational vaccine for the treatment of nicotine addiction and prevention of smoking relapse, currently under development by Nabi.  
 
According to Nabi, the merger will provide to Nabi's shareholders the opportunity to participate in the potential growth of the combined company, return of significant cash, as well as a contingent value right providing payment rights arising from future sale, transfer, license or similar transactions involving NicVAX.   Biota's move to the United States is designed to achieve better value recognition and liquidity through a stronger U.S. biotechnology shareholder base.  
 
Following the closing of the merger, the new Biota Pharmaceuticals will have three royalty-generating products, which as Relenza, Inavir and potentially PhosLyra; two clinical programs for vapendavir, a phase III-ready human rhinovirus program; and a $231 million contract with the U.S. Office of Biomedical Advanced Research and Development Authority (BARDA) for the advanced development in the United States of laninamivir, a long acting anti-influenza neuraminidase inhibitor).  
 
In addition, the combined company will have an interest in NicVAX and several preclinical programs, including respiratory syncytial virus, hepatitis C, broad spectrum antibiotic targeting gyrase, and more than $100 million in cash with which to develop its program pipeline.  
 
The merger and related matters will require approval of the Biota and Nabi shareholders. Assuming this happens, Nabi will acquire all of the outstanding ordinary shares in Biota in exchange for newly issued shares of Nabi common stock. Nabi plans to return to its stockholders its remaining cash in excess of the $54 million required to be held by Nabi at closing after satisfying outstanding liabilities. In addition, Nabi's board also intends to distribute contingent value right providing payment rights arising from future sale, transfer, license or similar transactions involving NicVAX.  
 
Immediately following the closing of the merger, the shares of Nabi common stock issued to former Biota shareholders will represent approximately 74 percent of the outstanding common stock of the combined company and shares of Nabi common stock held by current Nabi shareholders will represent approximately 26 percent of the outstanding common stock of the combined company.  
 
Also immediately following the closing of the merger, the board of directors of the combined company will consist of six current Biota directors and two current Nabi directors. Also, Biota's current CEO and CFO will serve as the CEO and CFO, respectively, of the combined company and additional U.S.-based executives will be appointed.  
 
Nabi expects to close the merger in the third quarter of 2012 after receipt of approval by both Nabi's and Biota's shareholders and satisfaction of customary closing conditions and regulatory approvals, including Australian courts.  
 
The picture isn't entirely rosy, as the announcement caused Biota's share price to plunge more than 8 percent almost immediately, and drop as much as 9.5 percent at various points in the trading day. As for that bit of news, Fox simply told the media, "We think the share price...will be significantly higher than it is now—otherwise, we would not be doing this. The reality for shareholders is we think this deal is value enhancing." He added that he didn't think Biota's share price at the time reflected the company's value and he wasn't concerned about short-term movements in the price.
 
Although some market-watchers have wondered aloud why Biota feels such a need to be on the NASDAQ and why it can't achieve the same results by remaining based in Australia rather than moving to the United States, RBS Morgans analyst Scott Power, says the merger makes sense strategically in the medium to long term and adds that "The BARDA contract that they have requires a U.S. centered and focused company."  

 
Code: E04231201

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