Must read
Quite interesting article found on the net... Camire spoke, no need for financing and a possible candidate for takeover.
ProMetic signs licensing, investment agreements with Abraxis BioScience
Thu Sep 4, 7:22 PM
Ross Marowits, The Canadian Press
By Ross Marowits, The Canadian Press
MONTREAL - ProMetic Life Sciences Inc. (TSX: PLI.TO) has concluded its largest deal ever after California-based Abraxis BioScience, Inc. (NASDAQ: ABII) agreed to potentially inject more than US$300 million into the Montreal-based biotechnology company.
A sale of between $7 million and $25 million of ProMetic equity to Abraxis, along with other revenue streams, will fund ProMetic's daily operations and eliminate the need for outside financing unless significant expansion opportunity arises.
"When you finally have to stop relying on the capital markets to go from month to month, yes it will change the company," ProMetic CEO Pierre Laurin said in an interview.
Abraxis' deep pockets will accelerate the development of drugs and allow several products to be developed at the same time, he said.
For starters, Abraxis will invest at least US$7 million to buy an equity stake in ProMetic and make an upfront payment of US$8 million under an agreement for the two companies to develop and commercialize four unidentified biopharmaceutical products.
The companies estimate that the four products could potentially generate more than US$600 million in annual revenue for Abraxis, which will have marketing rights for most of the world except China and Taiwan, which China sees as a breakaway province rather than an independent country.
ProMetic has already concluded deals for those two markets. Earlier this year, it signed an agreement with China National Biotech Group for seven drugs that could generate more than $100 million in five or six years.
It also concluded agreements with companies in Taiwan, Italy and Germany. But this is the first involving an equity stake in ProMetic.
Under certain circumstances, Abraxis could invest up to US$25 million in ProMetic and pay more than US$295 million in milestone payments if sales targets are achieved by the four products.
ProMetic could also receive royalty payments based on ongoing sales.
The first product is expected to reach commercial stage by 2011. In the meantime, Abraxis will fund all development costs leading up to regulatory approval. The licensed products will be manufactured by ProMetic.
ProMetic will also perform product development activities on behalf of Abraxis under a separate service agreement.
The combination of development milestones and service fees could represent revenue totalling US$34 million over the next three years for ProMetic.
"Abraxis is using our technology to bring proteins that will make life simpler to patients and enable much more efficient treatment," Laurin said.
It is seeking to produce orphan drugs with special market protection that are typically used to treat rare genetic diseases.
Abraxis chairman Patrick Soon-Shiong said the agreement, which was hatched three months ago at the suggestion of a New York adviser, will provide his company with access to leading protein technologies and products with excellent market potential.
"ProMetic is providing us with proven technologies enabling the development and manufacturing of four valuable therapeutics, while Abraxis' corporate and financial resources will significantly accelerate their commercialization," he said in a statement.
Claude Camire of Paradigm Capital said the unexpected agreement is a tremendous endorsement of ProMetic's technology that it has been promoting for several years.
"I think it's a transformational event here for ProMetic. After all those years waiting for a major company in the U.S. to endorse the technology, I think it's very positive."
The protein development market is a $10 billion industry that has been booming of late.
The partnership could make ProMetic a takeover target from the likes of Baxter Biotech or CSL Ltd. of Australia, Camire said.
While not impossible, Laurin said he doubts this one deal will tip the balance.
"Takeover comes strategically when the disruptive aspect of what we bring to market becomes really threatening. It's getting there but I don't see that that event in itself is going to trigger that, at least for now."
ProMetic lost $5.6 million, or two cents per share, in the second quarter, compared to a loss of $4.8 million a year earlier. Revenue fell to $1.1 million from $3 million.
It has partnered with the American Red Cross on two joint ventures.
Following the agreement's announcement, ProMetic shares fell 5.71 per cent to 33 cents.