Health Check: Like bloodthirsty sharks, offshore acquirers are circling cheap biotech assets

News.com.au

11 hours ago

As today's Medadvisor deal attests, underperforming biotech assets are getting a bite or two
Next Science shares continue to rally, but the company is still valued at less than Demant's offer price for most of its assets
Neurizon enters a key deal with the supplier of its drug candidate for motor neurone disease
Inspired by the 50 th anniversary of the original Jaws movie, local and offshore predators are on the hunt for local biotech prey.
Today, medication compliance group MedAdvisor (ASX:MDR) said it had entered a binding agreement to sell its Australian ops to the Canadian owned Jonas Software, for a headline $35 million.
As we reported yesterday, Medadvisor was the worst performing ASX-listed biotech last financial year, sinking 82%.
Yesterday, struggling wound management company Next Science (ASX:NXS) proposed a US$50 million ($75 million) deal to sell most of its assets.
The buyer is the Milan based Demetra Holdings (see below).
Mayne Pharma (ASX:MYX) is – or was – subject to a $600 million offer from US dermatology group Cosette, but the suitor spat out the arm after due diligence (allegedly) revealed horrors lurking in depths.
As with the makers of the epic Jaws movie, we must apologise to the sea's apex predators for besmirching their reputation.
Unlike with the six remarkably careless Jaws 1 victims, biotech's metaphorical equivalent is usually most welcome.
Medadvisor prefers US focus
Coming back to Medadvisor, the company wants to focus on its bigger US business, which provides prescription drug information services to patients via big pharma and chemists.
The terms are like the non-binding ones announced on May 9.
One quirk is that the deal includes the Medadvisor moniker, but Medadvisor can continue to use that name under a royalty-free arrangement.
Still, the company will seek shareholder approval to change its name.
While Medadvisor pockets $35 million now, it has dibs on an 'uncapped contingent consideration' based on the divested arm's performance.
On current trends, the company would expect another $7.35 million.
Medadvisor intends to use some of the proceeds to discharge a $23.5 million finance facility.
The company will use the remainder pending a review of its US operations, which have been hit by a downturn in vaccination rates.
This has resulted in the jab makers winding back promotional spend.
Next Science investors retain zeal for deal
Having pushed up Next Science shares 64% yesterday, investors today added another 9% on the back of the proposal that in effect will see their company disappear.
The proposal is subject to the consent of Next Science shareholders at a meeting scheduled on August 14.
In framing the friendly deal, Demetra no doubt has chatted to Next Science's 37% shareholder, property tycoon and biotech dabbler Lang Walker.
The deal is also subject to an independent expert report.
Next Science intends to redistribute to shareholders the estimated US$30 million remaining after winding up costs.
With approved products in the US, Next Science operates in wound care and surgical infection control.
Demetra supplies bone cement, for fixing orthopaedic implants and the like.
Next Science's regally dubbed CEO, Harry Hall IV says that in Demetra's more capacious hands Next Science's products 'will be better positioned to realise their full potential in improving patient care globally'.
Next Science listed at $1 in April 2019 in a $35 million IPO and peaked at close to $2 in mid 2021. It's been downhill from there.
Meanwhile the ASX circle of life continues, with wound management house Tetratherix (ASX:TTX) listing successfully last Monday.
Interestingly, Next Science still bears a market cap of a mere $34 million.
Neurizon does 'vet' deal but it's not going to the dogs
The developer of a repurposed drug candidate for a form of motor neurone disease, Neurizon Therapeutics (ASX:NUZ) has entered an exclusive global licensing agreement with the New York-listed Elanco Animal Health.
The deal doesn't take Neurizon back into veterinary drugs, the company's key remit when it was known as Pharmaust.
But Elanco is the exclusive maker of the drug candidate – monepantel – which regulators originally approved as a sheep drench.
Monepantel is the active component of NUZ-001, Neurizon's lead therapy for amyotrophic lateral sclerosis (ALS) and other human neurodegenerative diseases.
The deal bestows Neurizon with the global rights for Elanco's intellectual property, including extensive non-clinical (animal) and manufacturing data.
The agreement also outlines key terms for Elanco's future supply of monepantel, with a formal agreement expected in the current half.
Monepantel works by inhibiting the mTOR signalling pathway, which plays a central role in the growth of cancer cells and the degeneration of neurons.
mTOR stands for the 'mechanistic Target of Rapamycin', a reference not to a Tolkien novel but a well-known oncology target (rapamycin).
Neurizon is participating in Healey ALS, a collaborative MND trial across 70-plus sites in the US.
The platform will test several drugs simultaneously, thus increasing patient access and reducing study costs and completion and enrolment times.
Neurizon CEO Dr Michael Thurn says the deal should 'dramatically reduce near-term development costs and accelerate development timelines.'
The deal involves a nominal up-front payment and back-ended development milestones of US$9.75 million for the initial product.
Should sales take off, Neurizon pays sales milestones of up to US$65 million but we'll cross that bridge when we come to it.
Emvision's Emu hops to five sites, with one more to come
The developer of a portable bedside stroke scanner dubbed Emu, EMvision Medical Devices (ASX:EMV) hopes to sign up its sixth and final site for its pivotal trial pitched at regulatory approval.
The company today said five sites – three in the US and two locally – were now 'actively enrolling and scanning patients'.
The three US sites are New York's Mt Sinai Hospital, Florida's Mayo Clinic and UT Health Memorial Hermann Texas Medical Centre.
The local sites are Royal Melbourne Hospital and Sydney's Liverpool Hospital.
The sixth site, at a west coast US clinic, should be announced 'shortly'.
Emvision also won assent to start a continuous innovation study for stroke and traumatic brain injury patients, at Newcastle's John Hunter Hospital and Brisbane's Princess Alexandra Hospital.
The trial involves enrolling up to 300 suspected stroke victims. Clinicians will assess them in the normal manner along with an Emu scan.
The study aims to determine accurately whether a stroke is a blood clot or a bleed.
If Emu takes flight, the company plans to seek expedited US approval for an ambulance variant, called First Responder.