By Brady Huggett
Neurotrophic Bioscience Inc. and IGT Pharma Inc. entered a letter of intent to form a new entity through a combination that validates the term "merger of equals," Neurotrophic said.
"The board of IGT and the CEO of IGT did not go into any posturing and strong-arming," said Anthony Giovinazzo, president and CEO of Neurotrophic. "This is truly a merger of equals."
IGT Pharma will acquire all of the issued and outstanding shares of Neurotrophic and create a renamed new company, but for now that company will be called CombinationCo. The deal is subject to approval by the shareholders of both IGT Pharma and Neurotrophic, and acceptance by the Canadian Venture Exchange. CombinationCo will be a public company.
CombinationCo will work toward the discovery and development of novel protein and small-molecule-based therapeutics for the treatment of neurodegenerative and neurological disorders. It will develop drug discovery programs that combine chiral chemistry, primary cell-based screening, genomics and proteomics and will study neuron-specific neurotrophic factors and amino acid-type drugs targeting specific metabotropic glutamate receptors in the brain.
CombinationCo will begin with 29 employees, but will aim for 45 by the end of next year and 60 to 70 by the end of 2002, Giovinazzo said. There is only one person losing a job through the merger, Giovinazzo said, and that in itself is a sign of how smoothly the process has gone.
"The one person losing a position is the CEO of IGT," Giovinazzo said. "When he and I first met, both of us offered to step down, and we began to laugh. But he felt strongly that my vision, my own direction and my experience were valuable." IGT's CEO, Bruce Schmidt, will remain as an adviser for the company and will serve on the board of directors.
Giovinazzo said the new company will begin on the Canadian Stock Exchange, but should move to the Toronto Stock Exchange and perhaps to Nasdaq by meeting milestones or through acquisitions.
CombinationCo anticipates closing a private placement of C$10 million (US$6.6 million) to C$20 million when the merger is finalized. The money will include C$6 million raised through existing investors, Giovinazzo said.
The new company will pool the knowledge and technologies of its parents, thus becoming more attractive, Giovinazzo said.
"This should allow both programs to focus and concentrate," Giovinazzo said. "We plan to create a critical mass of people, capital, proprietary libraries and candidate molecules to attract funding, partners and collaboration opportunities. When we come together, we will be the only public entity focused on the rescue of neurons either from death or disruption of the biochemical pathways."
Giovinazzo said he has been in the business arena for some time and this merger went as well as he has seen.
"These are the three biggest problems you have with mergers: one, CEOs want to be CEOs; two, scientists don't like to combine programs or share the limelight; and three, the boards and investors have problems negotiating," Giovinazzo said. "But we didn't have those problems. The boards and investors didn't try to nickel-and-dime each other. That's why we have gotten through this in record time."
IGT Pharma's stock (CDNX:IGT) closed unchanged Friday at C$1.25.