Under a cloud of claims and counterclaims, controversial billionaire biotech entrepreneur Patrick Soon-Shiong and his outfit NantCell say they will acquire Altor Bioscience for two bucks a share, plus a weighted CVR worth up to $4 per share should it hit biobucks milestones.
The very brief update says: “The upfront payment alone represents over a 20% premium to Altor BioScience’s most recent equity financing completed in March 2017 and a 33% premium to equity financings in 2016.
“Each share will also receive two Contingent Value Rights (CVR), which entitle its holder to receive payments of up to an additional $4 per share (payable in cash and/or NantCell common stock at the election of each Altor BioScience stockholder) upon achievement of a regulatory milestone and a sales milestone.”
But this comes amid legal claims that the “low-ball” deal should never have gone through. Over the weekend Adam Waldman, one of the two Washington lawyers and former Altor Bioscience director who filed suit against Patrick Soon-Shiong, who in April became the chair of Altor, and his “mystery entity” NantCell, told me he did so as he saw the company as “trying to loot Altor Bioscience from minority shareholders.”
In the formal complaint, the documents says: “An exercise price of $2 per share translates into a valuation of an outrageously low $290 million (after taking into account Altor’s own cash being used to fund much or all of the cash portion of the transaction) for Altor, a value that is inexplicably and substantially lower even than the company’s last valuation ($309 million) in December 2016, in an equity financing round directed and dominated by Soon-Shiong.
“Defendants have further designed their egregiously low-ball offer to provide minority shareholders half of their consideration, or $1 per share, in exchange for illiquid shares that, upon information and belief, are grossly inflated in ascribed value in the unknown acquiring entity.”
But in the update this morning, the statement says: “The transaction has been approved by the boards of directors of both companies, including the independent directors of Altor BioScience.” The deal is set be done by Q3.
Altor works on cytokine-based immunotherapeutics for cancer and infectious diseases – last year, it in fact penned a collab deal with NantKwest for work on Altor’s lead candidates based on cytokines Interleukin-15 (IL-15) and Interleukin-2 (IL-2), that are currently in several phase 1/2 tests for hematologic and solid tumors.
Under the terms of the pact, Altor and NantKwest said they would exclusively work on the development of therapeutic applications combining Altor’s IL-15 superagonist (ALT-803) and its single-chain T cell receptor/IL-2 fusion protein (ALT-801) products along with NantKwest’s NK cell cancer candidates. Financial terms were not disclosed.
NantCell is part of the umbrella of companies owned and run by Soon-Shiong, which includes NantHealth, NantWorks and NantKwest, with a focus on early cancer work.
Soon-Shiong has not had a great start to the year, however, with a series of reports from medical news site STAT alleging that he had been giving out millions of dollars for philanthropic causes, but then saw this money come back to his company.
Its shares dropped around 20% after the report, and a few months back reported a $184 million loss for 2016.
Soon-Shiong also recently released a bizarre new video called ‘New Breakthrough’ (and later ‘Promise of immunotherapy’) which touted his biotech’s NK cell therapy (not yet approved) as being part of the promise of cancer immunotherapy, and where the “breakthroughs” will happen.
Cue a patient, Lisa, crying and telling the camera how brilliant she thought this drug was, with logos of the company and references to the drug in question, NK-92, and a #solvecancer hashtag.
Questions from Stat and Adam Feuerstein at The Street mounted as to whether Soon-Shiong and his company had violated FDA promotion rules, given that its candidates are not on the market, yet Lisa said in the original piece that she had been “cured” by this therapy. A few days later, the video was heavily edited to take out the drug reference, the logos and the cure line from Lisa.