OXiGENE plans to fork over $22 million worth of its shares to acquire VaxGen, gaining the developer's programs and $33 million in cash to fund its operations. VaxGen shareholders will get 0.4719 of a share of OXiGENE for every share they own of VaxGen. That will leave them with about 20 percent of the equity in the merged company, which could shoot as high as 28 percent if they get shares being set aside in escrow for a schedule of milestones.
Mergers like these have become more commonplace as developers compete for a diminished pool of investor capital. OXiGENE, which has no revenue, will add the $33 million of cash held by VaxGen to its books. The stock swap values VaxGen shares at 67 cents, a 4.3 percent discount on Wednesday's close. VaxGen will become a wholly-owned subsidiary of OXiGENE.
"This transaction represents a timely and efficient strategy to strengthen our cash position and fund operations into 2011," said interim OXiGENE CEO Peter Langecker. "In addition to the benefit of an immediate infusion of significant cash which strengthens our ability to fund our clinical development programs, we believe that there is potential upside in this transaction in the form of milestones and royalties should the rPA anthrax vaccine be selected for government stockpiling."
- check out the OXiGENE release
- here's the Dow Jones report