Nabi Biopharmaceuticals merges with Biota Holdings

Merger creates a $250 million group, and Biota moves to the United States

Jeffrey Bouley
ROCKVILLE, Md.—Nabi Biopharmaceuticals todayannounced 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 onNASDAQ and headquartered in the United States.
 
"A NASDAQ listing provides Biota with accessto the largest healthcare capital market in the world and will enable us totransform our business model to one which can deliver significantly highervalue than the royalty-only model we have historically pursued," says BiotaChairman Jim Fox. "We believe this is a necessary step to increase our optionsfor the development and commercialization of our product portfolio, ultimatelygenerating significantly greater value recognition of our product portfolio forour shareholders."
 
"This merger is an exciting opportunity forNabi's shareholders," said Dr. Raafat Fahim, President and CEO of Nabi."It will trigger the distribution of significant cash to current Nabishareholders, as well as enable their participation in the growth opportunityof the combined company, which includes royalty generating products and a richpipeline. In addition, it preserves for Nabi's current shareholders thepossibility of realizing potential future value from NicVAX."
 
NicVAX nicotine conjugate vaccine is a proprietaryinvestigational vaccine for the treatment of nicotine addiction and preventionof smoking relapse, currently under development by Nabi.
 
 
According to Nabi, the merger will provide toNabi's shareholders the opportunity to participate in the potential growth ofthe combined company, return of significant cash, as well as a contingent valueright providing payment rights arising from future sale, transfer, license orsimilar transactions involving NicVAX.
 
Biota's move to the United States is designed toachieve better value recognition and liquidity through a stronger U.S.biotechnology shareholder base.
 
 
Following the closing of the merger, the new BiotaPharmaceuticals will have three royalty-generating products, which as Relenza,Inavir and potentially PhosLyra; two clinical programs for vapendavir, a phaseIII-ready human rhinovirus program; and a $231 million contract with the U.S.Office of Biomedical Advanced Research and Development Authority (BARDA) forthe advanced development in the United States of laninamivir, a long actinganti-influenza neuraminidase inhibitor).
 
 
In addition, the combined company will have an interestin NicVAX and several preclinical programs, including respiratory syncytialvirus, hepatitis C, broad spectrum antibiotic targeting gyrase, and more than $100million in cash with which to develop its program pipeline.
 
 
The merger and related matters will requireapproval of the Biota and Nabi shareholders. Assuming this happens, Nabi willacquire all of the outstanding ordinary shares in Biota in exchange for newlyissued shares of Nabi common stock. Nabi plans to return to its stockholdersits remaining cash in excess of the $54 million required to be held by Nabi atclosing after satisfying outstanding liabilities. In addition, Nabi's boardalso intends to distribute contingent value right providing payment rightsarising from future sale, transfer, license or similar transactions involvingNicVAX.
 
 
Immediately following the closing of the merger, theshares of Nabi common stock issued to former Biota shareholders will representapproximately 74 percent of the outstanding common stock of the combinedcompany and shares of Nabi common stock held by current Nabi shareholders willrepresent approximately 26 percent of the outstanding common stock of thecombined company. 
 
Also immediately following the closing of themerger, the board of directors of the combined company will consist of sixcurrent Biota directors and two current Nabi directors. Also, Biota's currentCEO and CFO will serve as the CEO and CFO, respectively, of the combinedcompany and additional U.S.-based executives will be appointed.
 
 
Nabi expects to close the merger in the thirdquarter of 2012 after receipt of approval by both Nabi's and Biota'sshareholders and satisfaction of customary closing conditions and regulatoryapprovals, including Australian courts.
 
 
The picture isn't entirely rosy, as theannouncement caused Biota's share price to plunge more than 8 percent almostimmediately, and drop as much as 9.5 percent at various points in the tradingday. As for that bit of news, Fox simply told the media, "We think the shareprice...will be significantly higher than it is now—otherwise, we would not bedoing this. The reality for shareholders is we think this deal is valueenhancing." He added that he didn't think Biota's share price at the time reflectedthe company's value and he wasn't concerned about short-term movements in theprice.
 
Although some market-watchers have wondered aloudwhy Biota feels such a need to be on the NASDAQ and why it can't achieve thesame results by remaining based in Australia rather than moving to the UnitedStates, RBS Morgans analyst Scott Power, says the merger makes sensestrategically in the medium to long term and adds that "The BARDA contract thatthey have requires a U.S. centered and focused company."
 


Jeffrey Bouley

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