French-owned Vivalis will acquire Austria’s Intercell for about €133 million ($174 million), in a merger intended to create a stronger developer of anti-infective treatments.
The merged company, to be called Valneva, is expected to generate between €5 million and €6 million (between $6.6 million and $7.9 million) in annual savings, as well as raise another €40 million ($52.7 million) through a rights offering soon after the close of the merger acquisition.
The companies said the deal—expected to close in May 2013—offered the advantage of a combined cash balance of €94 million ($123.7 million) as of September 30, taking into account the rights offering as well as repayment of an Intercell bond: “This improved financial position will enhance the development of Valneva’s vaccine and antibody portfolio and will de-risk the path to profitability,” Vivalis and Intercell said in a statement.
"Our strategy is to build a sustainable biotech company with a well-balanced and diversified value proposition enabling us to develop innovative products with a strong focus on preventing and treating infectious diseases. The merger will help achieve this goal by combining Vivalis’ discovery and technology capabilities with Intercell’s development, manufacturing, and commercialization expertise,” Intercell CEO Thomas Lingelbach said in the statement.
Lingelbach will become CEO of the new Valneva, while Vivalis CEO Franck Grimaud will be the new company’s business officer.
The new company said its combined portfolio will include a pandemic flu vaccine in Phase III, a Pseudomonas vaccine in Phase II/III and a tuberculosis vaccine in Phase II, as well as validated and commercialized technology platforms that include the EB66® cell line for human and veterinary product development, the VIVA|Screen™ antibody discovery platform, and the IC31® novel adjuvant.
Through Intercell’s existing Pseudomonas partnership with Novartis, Valneva would be entitled to either receive up to €120 million ($158 million) in royalties and milestones tied to sales performance and potential development, or participate in profit sharing if it elected to co-develop the vaccine.
While both companies have operated in the red, Intercell recently raised its projection of how much it would lose this year, from €20 million to €24 million, as failed clinical trials and weaker-than-expected sales took its toll on the company.
Upon completion of the merger, Intercell shareholders will receive 13 new Vivalis ordinary shares and 13 new preferred shares for every 40 Intercell shares they own. That’s a premium for Intercell shareholders of 38.5% based on the most recent closing share prices before the deal was announced Sunday, and 31.7% on the basis of the average share prices over the last three months through December 14.
Vivalis former shareholders would hold about 55%, and Intercell former shareholders about 45% of Valneva shares.