Australian pharma nabs U.S. shareholders

Biota, Nabi Biopharmaceuticals to merge in $212 million deal

Lloyd Dunlap
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ROCKVILLE, Md.—Biota and Nabi Biopharmaceuticals have agreedto merge in order to form a combined company called Biota Pharmaceuticals. Thenew company, which is valued at around $212 million, will be headquartered inthe United States and listed on NASDAQ. 
Australian drugmaker Biota says the move to the UnitedStates was designed to achieve better value recognition and liquidity through astronger U.S. shareholder base.
"We believe this is a necessary step to increase our optionsfor the development and commercialization of our product portfolio and willultimately improve the recognition of the underlying value of our productportfolio for our shareholders," says Biota chairman Jim Fox.
The merger will provide Nabi's shareholders the opportunityto participate in the potential growth of the combined company, return ofsignificant cash, as well as a contingent value arising from future sale,transfer, license or similar transactions involving the anti-nicotine vaccineNicVAX.
"This merger is an exciting opportunity for Nabi'sshareholders," said Dr. Raafat Fahim, president and CEO of Nabi. "It willtrigger the distribution of significant cash to current Nabi shareholders, aswell as enable their participation in the growth opportunity of the combinedcompany, which includes royalty-generating products and a rich pipeline. Inaddition, it preserves for Nabi's current shareholders the possibility ofrealizing potential future value from NicVAX."
In June 2011, a preliminary assessment of the trial datashowed that subjects treated with NicVAX quit smoking at a similar rate ofapproximately 11 percent compared to subjects who received placebo. As inprevious trials, NicVAX was well tolerated and had a clinically acceptablesafety and tolerability profile.
Under the terms of the agreement, which is expected to closeby Sept. 30, Nabi will acquire all the shares in Biota for new shares in thename of Biota Pharmaceuticals. Biota shareholders will own approximately 74percent of Biota Pharmaceuticals, with Nabi shareholders owning the remainder.
In an interview with BusinessSpectator, Fox noted that Biota's royalty-only models "reallyconstrict the value that you can release, so it was really important that wehad an opportunity to take a product to market, which the U.S. government haspresented us with a $230 million dollar contract. At the end of the day, thatgave us the opportunity to go to market with a product and that's a massivevalue shift for this company."
He adds, "A NASDAQ listing provides Biota with access to thelargest healthcare capital market in the world and will enable us to transformour business model to one which can deliver significantly higher value than theroyalty-only model we have historically pursued. We believe this is a necessarystep to increase our options for the development and commercialization of ourproduct portfolio, ultimately generating significantly greater valuerecognition of our product portfolio for our shareholders."
Following the merger, Biota Pharmaceuticals will have threeroyalty generating products, Relenza, Inavir and potentially PhosLyra; a $231million contract with the Biomedical Advanced Research and DevelopmentAuthority (BARDA) for the advanced development of laninamivir; a portfolio ofclinical and preclinical programs comprised of vapendavir (HRV), respiratorysyncytial virus (RSV), hepatitis C (HCV-NN) and broad spectrum antibiotictargeting gyrase (GYR); an interest in NicVAX; and more than $100 million incash. Biota currently receives royalties on the influenza treatment Relenza(zanamivir), which is marketed by GlaxoSmithKline PLC, and a range ofantivirals including the lead product lnavir (indinavir), which is sold inJapan by Daiichi Sankyo.
Fox adds that the rising resistance to Tamiflu has added newimpetus to the need for a balance of drugs in government stockpiles forpandemic purposes.
"This is a great advantage with laninamivir; it's anon-Tamiflu product, so its resistance profile is completely different andclean." In addition, he notes, "With Tamiflu and Relenza, you've got to take itday and night over a number of days, and from a point of view of administeringthat in a pandemic, you've got to chase people up every day. Lani is a one-shot.Bang. Done. So, from a point of view of administration, it's a fantasticproduct, which is why the U.S. government just loves it."

Lloyd Dunlap

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