Australia's Progen, Avexa to merge

Progen had plenty of money but no strong clinical programs. Avexa had promising pipeline but no money. So the companies are merging to form a single well-funded drug development company--Avexa Pharmaceuticals Limited--that will focus on oncology and infectious disease, forming one of Australia's largest biotechs in the process.

Under the terms of the deal, Progen will issue Avexa shareholders one Progen share for every 12.857 Avexa shares--a premium of 49.6 percent to the current Progen share price. The implied value per Progen share of AUD$1.35 is greater than the expected net cash backing per Progen share of between AUD$1.10 to AUD$1.15 per share at transaction closing. The new company will therefore be owned 56 percent by Progen shareholders and 44 percent by Avexa shareholders. Prior to the merger, Progen will propose to return up to AUD$20 million in cash to its current shareholders through a share buyback at AUD$1.10 per share. 

The company's lead drug will be Avexa's HIV antiretroviral apricitabine. The merger will fund a Phase III trial of ATC and, if all goes well, registration with the FDA for approval. According to the release, ATC is one of only two new HIV therapies in Phase III clinical trials worldwide.

"This merger not only gives the combined company sufficient financial resources to fund Avexa's Phase III study with ATC, it also provides a much broader pipeline for both sets of shareholders," said Julian Chick, CEO Officer of Avexa. "We will not be the first company to jointly harness the therapeutic areas of oncology and infectious disease, as Gilead Sciences, Ardea Biosciences, and Anadys have similar synergistic strategies. As a result, the merged entity will have a higher quality portfolio of opportunities than either company individually."

- here's the joint release [1]
- read the article [2] from The Age

Related Articles:
Progen looks to M&A after late-stage failure [3]
Progen lung cancer therapy flunks Phase II [4]
Avexa talks takeover as it looks to raise $75M [5]