Privately held Millenium Biologix Inc. is expanding and going public by way of an acquisition of quoted Cytovax Biotechnologies Inc.
The companies entered a definitive merger agreement in a transaction that has received approval from both boards. Upon completion of the deal, and excluding the effect of a related financing to fund the combined company's operations, Millenium's existing ownership base will own or have rights to acquire an aggregate of 80 percent of the combined company. Cytovax's existing stockholders and holders of rights to acquire its shares will own or have rights to acquire the remaining 20 percent.
"Being a public company will improve our investor capital to fund fairly aggressive growth plans," Ian Malone, Millenium's chief financial officer, told BioWorld Today. "This public disclosure will help increase the awareness of the company, and in addition will give our suppliers and partners greater confidence."
He noted that Cytovax has a full listing on the Toronto Stock Exchange, rather than a venture exchange listing. The Edmonton, Alberta-based company had about 10.1 million shares outstanding when the deal was announced late Tuesday. Wednesday the stock (TSE:CXB) traded dropped C2 cents to close at C38 cents (US30 cents).
Terms of the all-stock agreement call for all of Millenium's preferred shares and convertible debentures to be converted into common shares, which, together with all issued and outstanding common shares, will be exchanged for Cytovax common shares. The transaction contemplates the amalgamation of Kingston, Ontario-based Millenium with a special purpose, wholly owned subsidiary of Cytovax. A forthcoming proxy statement will disclose full details of the deal, and the continuing company will be called Millenium Biologix Corp.
While the transaction allows Millenium to take its securities to the public, Malone admitted that the companies do not necessarily possess a product development synergy.
"There is not a lot of overlap, but there is a little bit in that our growth factor products are based on small-molecule peptides, and they have some peptides in their background in the development of their monoclonal antibody program," he said. "We are going to take their technology forward, hopefully to hit some of their milestones."
Beyond that point, he added that Millenium might look to partner such assets. Cytovax, which has focused on developing peptide vaccines and monoclonal antibody therapeutics as both preventative and treatment products, posted a C$2.2 million net loss in the quarter ended June 30 and had C$5.3 million in cash and short-term deposits as of that date. It has five employees.
Millenium, a company founded in 1992 that had grown to about 50 employees before the merger, is focused on the development of orthobiologic and skeletal tissue regeneration products. It has one product on the market, Skelite, a synthetic bone graft launched in June 2003 and marketed by Biomet Inc., of Warsaw, Ind. Millenium's other products remain in late-stage development, such as the growth factor products Primacoll and Peptos, as well as a tissue-engineering system called Actes.
"Our product line is quite integrated, so you have both stand-alone products, but they can also be integrated within our own product range and also potentially with others," Malone said. "We're currently collaborating with some major multi-nationals on joint development."
Millenium's current CEO, Sydney Pugh, will continue in that capacity. The board initially will include five members, with four to be nominated by Millenium and one to be nominated by Cytovax.
The transaction remains subject to regulatory approval, including support from the Toronto Stock Exchange and the shareholders of both companies, as well as obtaining commitments for the sale of about C$15 million worth of common stock to fund the combined company's operations and various other customary conditions. Both deals, the merger and the stock placement, are expected to close no later than Nov. 30.