North American Vaccine Inc. (NAVA) has filed a registrationstatement with the U.S. Securities and Exchange Commission for aproposed public offering of 6.5 million shares of common stock. Ofthese, 3.5 million will be issued by NAVA (AMEX:NVX), ofBeltsville, Md. and 3 million by BioChem Pharma(NASDAQ:BCHXF), of Laval, Canada.The complicated arrangement involves the public offering as well asstock swaps. Ultimately, the deal will reduce BioChem's stake inNAVA from 38 percent to below 20 percent and boost the stake ofanother major shareholder group, which includes IVAX Corp., to 18percent. Merrill Lynch and Co. and Furman Selz Inc. are the managingunderwriters for the offering.The offering was prompted by the desire of BioChem Pharma to reduceits stake in NAVA and to raise additional funds. Given this situation,NAVA chose the public offering route as a way to manage thedisposition of the shares in an orderly fashion, to minimize adverseeffects, and to raise capital for its own operations, according to DanielAbdun-Nabi, NAVA's senior vice president for legal affairs.NAVA is engaged in the research, development, and production ofvaccines for human infectious diseases. BioChem Pharma develops andcommercializes diagnostic, therapeutic and vaccine products. IVAX isa holding company, based in North Miami, Fla., with subsidiariesspecializing in medical diagnostics, specialty chemicals,pharmaceuticals, cosmetics, and skin care.Companies Will Exchange StockWhen the offering is completed, NAVA will exchange 1 million of theshares it holds in BioChem Pharma's stock for up to 1 million NAVAshares now held by BioChem Pharma. BioChem will also trade250,000 shares of NAVA common stock for 100,000 common IVAXshares to be issued by IVAX.In addition, IVAX will convert the 1 million shares of NAVA series Apreferred stock it holds into 2 million shares of NAVA common stock.The closing price of NAVA's common stock on April 19, the lastreported before filing, was $12.25 per share. NAVA could thereforeexpect to realize some $42.9 million before taxes and expenses fromthe sale of its shares. When the sale is completed, the company willhave 33.5 million shares outstanding.Current licensing agreements between NAVA and BioChem Pharmaare not affected by the transaction.Abdun-Nabi said NAVA has recently acquired a new facility and nowplans to build it out. In addition, the funds will be used to expandresearch and development and to undertake clinical trials.Abdun-Nabi said NAVA is completing Phase III trials in Sweden of aDTAP (Diptheria/Tetanus/Acellular Pertussis) vaccine. This vaccine isbased on a toxin that is toxoided. In addition, he said, a vaccine againsta form of meningitis associated with Group B streptococcal bacteria isin Phase II trials. Other products in NAVA's pipeline include apertussis stand-alone vaccine, and vaccines against various forms ofmeningitis that are now in preclinical testing, Abdun-Nabi noted.According to Jean-Yves Duthel, vice president for public relations withBioChem Pharma, by holding fewer than 20 percent of NAVA'sshares, his company's stake in NAVA will be treated as a portfolioinvestment. As a result, BioChem will no longer have to consolidate itsshare of NAVA's results on its books for reporting purposes. ForBioChem's last financial report, this would have reduced thecompany's reported losses from $9 million to $4 million, Duthel said.Duthel said BioChem Pharma will use the proceeds from the sale of itsshares to undertake new acquisitions related to its diagnostic andtherapeutic business. Although the lion's share of BioChem's revenuescome from the sale of diagnostic kits and instruments in Europe, thecompany would like to expand its therapeutic line, Duthel said.
-- Philippa Maister
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