Biotie and Synosia Combine to Create a Leading CNS Development Company
News Jan 11, 2011
The combined entity includes a promising pipeline of nine clinical-stage drug candidates; a significant international presence with operations in Finland, The United States and Switzerland, and an experienced management team and Board of Directors.
The transaction remains subject to approval by the extraordinary general meeting (“EGM”) of shareholders of Biotie to be held on 1 February 2011.
The combined clinical development pipeline includes nalmefene, Biotie’s Phase 3 product candidate for the treatment of alcohol dependence, which recently reported positive results from the first two Phase 3 trials conducted by its partner Lundbeck and is on track for submission for approval in Europe in the second half of 2011.
Synosia brings a broad pipeline of innovative central nervous system (CNS) product candidates and a recently announced partnership with UCB Pharma SA (UCB) that included a $20 million equity investment and has potential for $725 million in milestone payments plus royalties. This collaboration covers SYN-115, a novel adenosine A2a receptor antagonist for Parkinson’s disease in Phase 2 and SYN-118, a potential first-in-class hydroxyphenyl-pyruvate dioxygenase (HPPD) inhibitor intended for movement disorders also in Phase 2.
Timo Veromaa, President and Chief Executive Officer (CEO) of Biotie commented: "We are very excited to announce this compelling business combination, bringing together an outstanding pipeline and complementary drug development expertise. Through this transaction we establish Biotie as a global leader in CNS drug development.”
Ian Massey, President and CEO of Synosia stated: "We are enthusiastic to join forces with Biotie and confident that the combined entity has the right capabilities and infrastructure to maximize the value for shareholders and deliver innovative products to patients."
About the New Organization
Under the combination agreement, Timo Veromaa, will continue as President and CEO of Biotie. Synosia’s CEO, Ian Massey, will become Chief Operating Officer and President, US Operations, a newly created position.
Synosia’s Chief Medical Officer (CMO), Stephen Bandak, will become Biotie’ CMO. Chris Piggott, Biotie’ Chief Business Officer will continue in this role in the combined entity.
Biotie’s Chief Financial Officer (CFO), Thomas Taapken, will continue in his role through the closing of the transaction and until 1 April, 2011, when he will leave the Company for personal reasons. Ulla Sjöblom, Biotie’s Vice President, Finance, will serve as acting CFO from 1 April 2011 until a new CFO is appointed.
It will be proposed at Biotie’s EGM in February that Biotie’s Board of Directors is augmented by the addition of the following Synosia board members: Brad Bolzon, Ismail Kola, Guido Magni and Andy Schwab.
In addition, Bill Burns, until recently CEO of Roche Pharmaceuticals, will be proposed to join Biotie’s board. Bill led the global pharmaceuticals division for eight years through some of its most significant milestones, including the including the short-form merger acquisition of Genentech.
All these individuals have given their consent to stand for election at the upcoming EGM.
It is intended that Peter Fellner will continue as Chairman of Biotie’s Board of Directors and that Brad Bolzon will serve as Deputy Chairman. Pauli Marttila and Riku Rautsola have decided to step down from the Biotie board at the EGM.
Biotie’s Chairman, Peter Fellner stated: “We all thank Pauli Marttila and Riku Rautsola for their valuable contribution to the company during their many years of service and wish them well.“
Brad Bolzon, Chairman of Synosia’s Board of Directors, paid tribute to those who had supported Synosia through its rapid growth: “We have benefitted from an outstanding board of seasoned investors in life sciences and an experienced management team, who together established a new paradigm of efficient drug development in CNS. We look forward to being part of this exciting new entity.”
The Boards of Directors of both Biotie and Synosia unanimously support the proposed combination of companies.
The EGM is to be convened for 1 February, 2011 to resolve on issuance of new shares in Biotie in connection with the Transaction (as defined below) and to take certain other decisions required for the completion of the Transaction.
Biotie will publish an invitation to the EGM separately which will contain full details of the proposed resolutions. Existing Biotie’s shareholders, representing more than thirty (30) per cent of the Company’s total number of votes, have agreed to vote in the EGM in favor of the transaction.
Biotie reported revenues of EUR 1.5 million for the first three quarters of 2010. Liquid assets were EUR 8.9 million, as at 30 September 2010. Biotie’s research and development costs from continuing operations for the same period amounted to EUR 4.4 million.
Synosia reported revenues of EUR 1.1 million and cash and cash equivalents of EUR 34.6 million for the same period, and had research and developments costs of EUR 8.1 million.
On a pro forma basis, the combined entity would have had revenues of EUR 2.6 million from continuing operations in accordance with IFRS in the first three quarters of 2010. On a combined basis, cash and cash equivalents without pro forma or IFRS adjustments would have been EUR 40.1 million as at the end of September 2010.
Certain debt repayments will be made by Synosia prior to the completion of the transaction, which will reduce cash and cash equivalents on a combined basis by approximately EUR 8.8 million after the completion of the transaction.
Research and development costs incurred for the continued operations on a combined basis for the first three quarters of 2010 would have been EUR 12.5 million without pro forma or IFRS adjustments. Biotie earnings per share will be affected by the transaction as the revenues and results of Synosia and Biotie are combined to consolidated financial statements, and on the other hand as Biotie will issue new shares to the shareholders of Synosia.
The unaudited pro forma financial information on Biotie for the nine months ending on 30 September 2010 and the full year 2009 will be available in the listing prospectus intended to be published by Biotie on or about 1 February 2011.
About the Combined Pipeline
The combined product pipeline represents a strong and balanced portfolio of novel drugs for diseases with high unmet medical need. Key features are summarized below:
_ Nalmefene: Novel, oral opioid receptor antagonist in Phase 3 clinical trials with partner Lundbeck. As-needed dosing offered by nalmefene could dramatically alter the way alcohol dependence is treated. Recent results from the first two of a total of three Phase 3 trials reported positive results in helping patients reduce alcohol consumption. A final Phase 3 trial (ESENSE2) is expected to complete Q2 2011.
_ SYN-115: Potent and selective inhibitor of the adenosine A2a receptor with class-leading profile for the treatment of Parkinson’s disease. SYN-115 is the first potential new mechanism in 20 years in Parkinson’s with the potential to impact motor and non-motor symptoms and be disease modifying. Phase 2a completed successfully and Phase 2b trial planned to start H1 2011. This program is partnered with UCB.
_ SYN-118 (nitisinone): Already approved and marketed product for an orphan disease indication (Orfadin®) by Swedish Orphan Biovitrum. The combined entity will have rights outside orphan disease indications and plans to leverage this product as a new treatment for Parkinson’s disease that could be complementary to SYN-115. A placebo-controlled Phase 2a study in Parkinson’s disease is ongoing with data expected H1 2011. UCB has an option to license this compound.
_ SYN-120: Orally available inhibitor of 5-HT6 receptors in the CNS with potential to be a best-in-class treatment for cognitive disorders, such as Alzheimer’s disease. This product has completed single and multiple ascending dose Phase 1 studies and is currently in studies to establish therapeutic dose due to report in H2 2011. Roche has an opt-in right after completion of the ongoing studies.
_ SYN-114: Orally bioavailable potent and selective antagonist of the 5-HT6 receptor. SYN-114 has completed Phase 1 single and multiple ascending dose studies and is a back-up compound to SYN-120.
_ SYN-117 (nepicastat): Orally available inhibitor of dopamine metabolism (dopamine betahydroxylase) in Phase 2 trials for post-traumatic stress disorder which are funded by the US Department of Defense.
_ SYN-111 (rufinamide): Sodium channel blocker marketed by Eisai as an adjunctive therapy for Lennox Gastaut Syndrome. The combined entity will seek opportunities to evaluate this compound for the treatment of bipolar disorder.
_ VAP-1 antibody: First-in-class monoclonal antibody targeting vascular adhesion protein-1 (VAP-1). The product is well tolerated and has shown encouraging activity in Phase 1b trials for rheumatoid arthritis. Preparations for Phase 2 development are ongoing. In parallel, Biotie is considering potential partnerships for this product.
_ Ronomilast: A Phase 2 ready, potentially best-in-class phosphodiesterase-4 (PDE4) inhibitor for chronic obstructive pulmonary disease (COPD). Biotie is considering potential partnerships for this product.