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VaxGen and Raven biotechnologies Announce Signing of Definitive Merger Agreement
November 26th, 2007
2007 NOV 26 -- VaxGen Inc. (Pink Sheets: VXGN), a biopharmaceutical company, and Raven biotechnologies, inc., a privately held company focused on the development of monoclonal antibody therapeutics (MAbs) for treating cancer, announced that their respective boards of directors have unanimously approved a definitive merger agreement. The merger is expected to create a drug development company with a robust pipeline of monoclonal antibody candidates in oncology, proprietary antibody discovery platforms, biopharmaceutical manufacturing capabilities and sufficient cash to fund operations at least through the end of 2009. Details of the Proposed Transaction Under the terms of the agreement, VaxGen shall issue, and the holders of Raven Series D preferred stock shall receive, in a tax-free transaction, approximately 32 million shares of VaxGen common stock. Following the closing of the transaction, VaxGen stockholders will own approximately 51 percent of the combined company, on a pro forma basis, and Raven Series D preferred stockholders will own approximately 49 percent. This ratio is subject to adjustment under certain circumstances described more fully in the merger agreement, but in no event will VaxGen stockholders own less than 50.1 percent of the combined company on a pro forma basis. In addition, VaxGen will assume Raven's debt and equipment lease obligations of approximately $1.8 million as of December 1, 2007. Raven Series D preferred stock warrants will be converted into approximately 332,000 VaxGen common stock warrants. All other Raven options and warrants will be cancelled. Completion of the transaction is conditioned upon the approval of the stockholders of both companies, as well as other customary closing conditions. Major Raven stockholders already have executed voting agreements in favor of the transaction. Further conditions to close include a requirement that VaxGen relist its common stock on a national stock exchange, preparations for which are underway. VaxGen expects to file a Form S-4 and related proxy statement/prospectus with the U.S. Securities and Exchange Commission in the coming weeks. The merger is expected to close in the first half of 2008. Between signing and closing, Raven will receive a bridge loan of $3.8 million from the holders of Raven Series D preferred stock to fund operating and transaction-related expenses. VaxGen will provide a bridge loan of up to $6 million to fund ongoing operations and to support advancement of Raven's pipeline prior to the transaction's closing. All principal and accrued interest due under the VaxGen loan is repayable in full in the event the transaction does not close. All principal and accrued interest due under the loan from the holders of Raven Series D preferred stock will automatically convert into shares of Series D preferred stock immediately prior to the closing of the transaction. This conversion is reflected in the current exchange ratio agreed to between the two companies. Keywords: Biopharmaceuticals, Biotechnology, Drugs, Medical Device, Mergers and Acquisitions, Monoclonal Antibody, Pharmaceuticals, Therapies, Therapy, Treatment, VaxGen Inc. This article was prepared by Biotech Business Week editors from staff and other reports. Copyright 2007, Biotech Business Week via NewsRx.com.
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