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August 24, 2016

ProMetic to Acquire Telesta Therapeutics

  • ProMetic Life Sciences plans to acquire Telesta Therapeutics, the companies said today, in a deal the buyer said would help it further integrate its manufacturing capabilities and allow for long-term capacity expansion in Ontario, Canada.

    ProMetic is a biopharma specializing in bioseparations, plasma-derived therapeutics, and small-molecule drug development. The company aims to develop novel small-molecule therapeutics targeting unmet medical needs in the field of fibrosis, anemia, neutropenia, cancer, and autoimmune diseases/inflammation, as well as certain nephropathies.

    Headquartered in Laval, QC, Canada, ProMetic has R&D facilities in the U.K., the U.S., and Canada; manufacturing facilities in the U.K.; and commercial activities in the U.S., Europe, Russia, Asia, and Australia.

    Prometic said in a statement that the acquisition would benefit the company by allowing for future expansion of a 150,000 square-foot facility in Belleville, Ontario, thus expanding its presence in Canada.

    The deal comes less than a month after Telesta disclosed plans to shrink its workforce to 15 full-time employees from 32 as of June 30, and 50 as of March 31. Another four employees were to be retained at Telesta’s two manufacturing facilities, which the company said it would sell. Telesta on August 2 also said it was terminating its European rights agreement with Ipsen for the bladder cancer treatment Mycobacterium phlei cell wall-nucleic acid complex (MCNA), as well as continuing to assess strategic options and cut costs.

    In March, Telesta announced a 15% workforce reduction, saying it needed to cut costs as it reviewed strategic options. That reduction in force followed receipt of a Complete Response Letter from the FDA concerning its Biologics License Application (BLA) for MCNA. In the letter, the FDA said Telesta would need to complete another Phase III trial to establish the candidate’s safety and efficacy.

    The Complete Response Letter ended earlier plans by the agency to decide on the BLA by MCNA’s Prescription Drug User Fee Act (PDUFA) review goal date of February 27.

    In its most recent results covering the company’s third fiscal quarter ending March 31, released May 10, Telesta said it generated a net loss of $1.6 million, compared with a $3.3 million loss a year earlier.

    ProMetic said the deal will give it approximately $34 million cash toward drug development and clinical programs as well as “value generating activities,” while generating up to $50 million in potential tax attributes.

    Under the deal, ProMetic will acquire all shares of Telesta for 14 cents a share, double its last traded price on the Toronto Stock Exchange of 7 cents a share. The transaction also includes a mutual $2.5 million breakup fee payable by Telesta or ProMetic in specified circumstances.

    ProMetic said its planned purchase of Telesta will not materially affect its EBIDTA and operating cash flows.

    The acquisition is expected to close in November, subject to approval by Telesta shareholders and customary closing conditions that include court and regulatory approvals, including the approval of the Toronto Stock Exchange.

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