Vivalis, Intercell merge to create Valneva
The management boards of Vivalis, a biopharmaceutical company focused on cell-based solutions, and Intercell, a vaccine-biotechnology company, have agreed to the terms of a merger to create the newly-named Valneva, a European biotechnology company in vaccines and antibodies.
"The merger with Intercell is an important step towards Vivalis' strategic goal of building a profitable, product-based biopharmaceutical company and laying the foundations for rapid revenue and profit growth going forward,” said Grimaud and Mehtali, co-managers of Vivalis. “The merger will significantly complement our core capabilities, in particular towards product development, while also adding strength and breadth to our R&D portfolio. As a result of multiple revenue streams, Valneva will also enjoy enhanced financial strength to fund its future growth."
The merger will create an integrated company with greater scale and diversification, strengthened financial profile and complementary talent and capabilities:
- Complementary business models operating across the value chain with innovative technology platforms, discovery and development capabilities, state-of-the-art manufacturing and commercialization expertise.
- Diversified revenue streams from a marketed vaccine against Japanese encephalitis virus and income from multiple commercial technology licenses.
- A broad portfolio of promising partnered product candidates including a pandemic Influenza vaccine in phase III, a pseudomonas vaccine in phase II/III and a tuberculosis vaccine in phase II.
- A portfolio of validated and commercialized technology platforms including the EB66 cell line for human and veterinary product development which is becoming the industry standard, the VIVA|Screen antibody discovery platform and the IC31 novel adjuvant.
- $6.5–$7.8 million of expected cost synergies, on an annual run-rate basis, achieved within two years following completion of the merger.
- Substantially improved financial profile with a combined cash balance of $123 million as at September 30, 2012 (adjusted for the planned $52 million rights issue and the repayment of Intercell's outstanding convertible bond). This improved financial position will enhance the development of Valneva's vaccine and antibody portfolio and will de-risk the path to profitability.
- A complementary and experienced management team led by Thomas Lingelbach as president and CEO, Franck Grimaud as president and chief business officer, Majid Mehtali as chief scientific officer and Reinhard Kandera as CFO.
"Our strategy,” said Thomas Lingelbach, CEO of Intercell, “is to build a sustainable biotech company with a well-balanced and diversified value proposition enabling us to develop innovative products with a strong focus on preventing and treating infectious diseases. The merger will help achieve this goal by combining Vivalis' discovery and technology capabilities with Intercell's development, manufacturing and commercialization expertise. The increased financial strength will provide us greater capabilities to progress our pipeline. We expect both sets of shareholders will substantially benefit from the strengthened capabilities of the combined company."
Upon completion of the merger, Intercell shareholders will receive 13 new Vivalis ordinary shares and 13 new preferred shares for every 40 Intercell shares that they own. The merger consideration represents a premium for Intercell shareholders of 38.5% on the basis of the last closing share prices and 31.7% on the basis of the average share prices over the last three months, as at December 14, 2012. The merger is expected to occur in May 2013, and based on the current issued share capital of each company, Vivalis former shareholders will hold approximately 55.0% and Intercell former shareholders approximately 45.0% of the issued share capital of Valneva.
Each preferred share will convert into 0.4810 Valneva new ordinary shares upon the issuance of a marketing authorization for Intercell's pseudomonas vaccine in the U.S. or in Europe, which would result in the creation of approximately 8.6 million new ordinary Valneva shares. The preferred shares will not be listed but will be freely transferable.
The issuance of this potential market authorization will unlock the significant value of the pseudomonas vaccine from which all Valneva shareholders will benefit. Through Intercell's current pseudomonas partnership, Valneva will be entitled to either receive royalties tied to sales performance and potential development milestones of $158 million or, should it elect to co-develop the product, participate in a profit sharing scheme.
The new supervisory board will be chaired by Grimaud, currently chairman of the supervisory board of Vivalis. The remainder of Valneva's supervisory board will be comprised of two additional members proposed by the supervisory board of Vivalis, three members proposed by the supervisory board of Intercell, and one member to be proposed by the FSI (upon completion of the planned $52 million rights issue).
Shortly following completion of the merger, Valneva intends to launch a $52 million rights issue, where its shareholders will have the right to subscribe on a pro rata basis.
Vivalis and Intercell have received the following commitments with respect to the intended rights issue, and therefore already secured the $52 million capital increase:
- The FSI has undertaken to participate in the rights issue for 62.5% of the total size of the offering, up to $32 million
- Groupe Grimaud and Unigrains (one of Groupe Grimaud's long-term shareholders) have irrevocably undertaken to subscribe in aggregate to the rights issue for $6.5 million
- Two banks have committed to underwrite $13 million under market-standard terms and conditions
Valneva shares will be listed on the regulated markets of NYSE Euronext in Paris and the Vienna Stock Exchange.