On June 30, 2009 BioSante Pharmaceuticals, Inc. (NASDAQ:BPAX) and Cell Genesys (NASDAQ:CEGE), reported that they have entered into a definitive merger agreement by which the companies will merge in an all-stock transaction, with BioSante as the surviving company (Press release, BioSante, JUN 30, 2009, View Source [SID1234531733]).
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Under the terms of the merger agreement, Cell Genesys stockholders will receive 0.1615 of a share of BioSante common stock for each share of Cell Genesys common stock they own. Based on the companies’ closing stock prices on June 29, 2009, this represents $0.347 per share of consideration to be received by the Cell Genesys stockholders, or a total consideration of approximately $38 million, and a premium of 12 percent to the closing sale price of Cell Genesys’ common stock on that date. Upon completion of the transaction, BioSante stockholders prior to the merger are expected to own approximately 60.4 percent of the outstanding shares of the combined company and the former Cell Genesys stockholders are expected to own 39.6 percent.
Stephen M. Simes, president and CEO of BioSante, and Phillip B. Donenberg, CFO of BioSante, will continue to serve in those positions in the merged company. Dr. Louis W. Sullivan, chairman of the board of BioSante, will continue in that position. It is anticipated that Stephen A. Sherwin, M.D., chairman and CEO of Cell Genesys, and John T. Potts, Jr., M.D., a current member of the Cell Genesys board, will join the board of the merged company upon completion of the merger.
The merged company will focus primarily on LibiGel, BioSante’s testosterone gel in Phase III clinical development under a U.S. Food and Drug Administration (FDA) agreed Special Protocol Assessment (SPA) for the treatment of female sexual dysfunction (FSD). The merged company also will seek future development opportunities for GVAX Immunotherapies including potential combination with BioVant, BioSante’s vaccine adjuvant, as well as possible external collaborations, and also will seek to outlicense other Cell Genesys technologies. In addition, the merged company will acquire a 16 percent equity ownership position in Ceregene, Inc., a former subsidiary of Cell Genesys which is developing gene therapies for neurodegenerative disorders.
"This merger allows BioSante to secure additional funding required for the continued Phase III development of LibiGel for FSD and offers the potential to expand our product development portfolio with the addition of GVAX Immunotherapies," said Stephen M. Simes, BioSante’s president and CEO. "LibiGel remains the only pharmaceutical product in the U.S. in active development for the treatment of hypoactive sexual desire disorder (HSDD) in menopausal women. We continue to believe that LibiGel can be the first product approved by the FDA for the common and unmet medical need of FSD with the completion of Phase III studies targeted for mid-to-late 2010. In addition, our company has had a long-standing interest in immunotherapy based on our proprietary vaccine adjuvant, BioVant, and we look forward to future value-creating opportunities for our stockholders based on Cell Genesys’ technologies and other assets."
"Over the past several months, we have had the opportunity to evaluate a wide range of strategic alternatives for our company including several merger opportunities. After reviewing various strategic alternatives, engaging in discussions with a number of other potential merger candidates and conducting extensive due diligence on BioSante’s product development and business activities, our board of directors has voted to recommend a merger with BioSante," stated Stephen A. Sherwin, M.D., chairman and CEO of Cell Genesys. "We believe that BioSante’s lead product, LibiGel, represents a compelling near term product opportunity with significant upside potential. We also are impressed with BioSante’s record of achievement including the recent launch of Elestrin (estradiol gel) as well as their CaP nanotechnology platform which includes BioVant, a novel vaccine adjuvant with potential in immunotherapy."
The merger agreement has been approved unanimously by the boards of directors of both BioSante and Cell Genesys and will need to be approved by both BioSante’s and Cell Genesys’ stockholders. The merger is subject to customary closing conditions as well as a condition requiring Cell Genesys’ net cash, less certain expenses and liabilities, to be a specified minimum amount as of 10 calendar days prior to the anticipated closing date of the merger.
As of June 23, 2009, Cell Genesys’ cash balance was approximately $36 million and BioSante’s cash and cash equivalents balance was approximately $6.2 million. As a result of Cell Genesys’ recently completed exchange offer, Cell Genesys has outstanding approximately $20.8 million of new 3.125% Convertible Senior Notes due in 2013 and $1 million of the original 3.125% Convertible Senior Notes due in 2011.
The transaction is expected to be completed in the late third quarter or early fourth quarter of 2009. BioSante was advised in this transaction by Oppenheimer & Co. Inc. and Cell Genesys was advised by Lazard.
About BioVant
An adjuvant is a substance that, when added to a vaccine, enhances the vaccine’s effectiveness by enhancing the body’s immune response. In multiple studies, BioVant has been shown to be safe and cause minimal dose-dependent inflammation at the injection site, and has been shown both to prevent the manifestation of allergic response, and, to effectively ‘switch off’ established Th2-T-cell-associated allergic reactions. BioVant also may permit a reduction in the needed dosage of vaccine, thereby potentially improving the safety profile of the vaccine.
About GVAX Immunotherapies
GVAX cancer immunotherapies are non patient-specific therapies comprised of whole tumor cells that have been modified to secrete GM-CSF (granulocyte-macrophage colony-stimulating factor), an immune stimulatory cytokine, and then irradiated for safety. GVAX is administered via intradermal injections on an outpatient basis. To date, over 1000 patients have been treated in clinical trials with different GVAX cancer immunotherapies for various types of cancer. Although phase III trials in prostate cancer were discontinued in 2008, phase II trials under physician investigator sponsored-INDs are ongoing at the Sidney Kimmel Cancer Center at Johns Hopkins Hospital in pancreatic cancer, leukemia and breast cancer.