A Medical Device Daily
After turning down an unsolicited take-over offer from Tang Capital Partners (San Francisco) last week, Northstar Neuroscience (Seattle) is under pressure from a major stockholder to sell itself off or split its sizable cash hoard among shareholders.
Tang had offered to buy Northstar for $2.25 a share in cash (Medical Device Daily, July 7, 2008), but the company's board said the proposal, representing a 50% premium to the closing sale price of Northstar's common stock on July 1, was "not in the best interests of all shareholders" (MDD, July 9, 2008). That offer valued the company at $58 million.
In a letter, RA Capital Biotech Fund (Boston) said it was "surprised" by the company's rejection of a recent take-over offer from Tang, another major shareholder. RA Capital asked Northstar to maximize shareholder value by "reducing expenses and either finding a buyer or making a cash distribution."
Northstar's value plummeted after its lead therapy — which sought to stimulate the brain to improve motion in stroke survivors — failed in a clinical trial in January. Tang's offer was a roughly 47% premium to Northstar's average trading price since Jan. 22, when the company reported its disappointing EVEREST clinical trial results (MDD, June 10, 2008).
The company had $73 million cash as of March 31, considerably larger than its market capitalization of $49 million.
In its letter, RA Capital suggested that Northstar cease all its operations and lay off most of its employees in order to conserve cash while it finds a buyer. Northstar should resume discussions with Tang, the letter said. If the company does not find a buyer, it could liquidate itself.
"This would clearly be in the best interest of the stockholders of the company in light of the prices at which the company's stock has been trading since January 2008," said the RA Capital letter.
RA Capital owns about 2.5 million Northstar shares, about 9.6% of its outstanding stock.
In other dealmaking news:
• Agendia BV (Amsterdam, the Netherlands) said it has agreed to give Ferrer inCode (Barcelona, Spain) exclusive rights to sell two of its signature cancer diagnostics services: MammaPrint, a prognostic test that uses a 70-gene signature to indicate risk of breast cancer tumor recurrence, and CupPrint, a gene expression profiling service designed to identify the primary tumor site in Cancer of Unknown Primary (CUP).
Ferrer has gained rights to sell the tests in Germany, France, Italy and Portugal, in addition to a current agreement signed in 2007 covering Spain. The companies said they also discussing the possibility of future cooperation and expansion into other parts of the world.
Ferrer inCode is the biotech subsidiary of Grupo Ferrer Internacional, working in the field of personalized medicine as a provider of diagnostic orientation, prognosis and prediction services based on genomics, proteomics, metabolomics and bioinformatics.
Agendia develops gene expression analysis-based diagnostics and has three products on the market. It focuses on diagnostic tests using tumor gene expression profiling.
• Medical Properties Trust (MPT; Birmingham, Alabama) said it has acquired for about $19.5 million, the real estate of the HealthSouth Rehabilitation Hospital (HCP; Fayetteville, Arkansas). The deal represents the completion of the previously disclosed $358 million portfolio acquisition from HCP.
MPT is a self-advised real estate investment trust formed to capitalize on the changing trends in healthcare delivery by acquiring and developing net-leased healthcare facilities.
• The DNA Repair Company (DNAR; Boston), an emerging company focused on personalized approaches to cancer treatment, said it has licensed the exclusive rights in North America for the use of a diagnostic test that strongly predicts how women with breast cancer will respond to a common form of chemotherapy. The rights to the test were acquired from Helsinki University Central Hospital (Finland) through Licentia.
The discovery, published in this month's edition of Nature Genetics, marks an important step toward the development of the first tests capable of identifying the breast cancer patients who should be given an alternative to standard anthracycline-containing chemotherapy regimens, DNAR said. Heli Nevanlinna, MD, at Helsinki University and Jiri Bartek, MD, at the Danish Center Society (Copenhagen) led the research teams reporting the discovery. The test has the promise of guiding oncologists in critical treatment choices, the company said. DNAR said it would use the genetic variant of the NQO1 enzyme — called NQO1*2 — to create new diagnostic tests for personalized medicine applications and patient care.
Licentia commercializes inventions by licensing or selling intellectual property rights and by building new start-up companies.