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Cash-Strapped Iomai Jumps on $189M Buyout Bid by Intercell
(BioWorld Today Via Acquire Media NewsEdge) Shares of Iomai Corp. surged more than 117 percent after the firm agreed to be acquired by Austrian vaccines maker Intercell AG in a deal valued at about $189 million.
Intercell's bid of $6.60 per share marked a hefty premium - about 126 percent - to Iomai's Monday closing price of $2.92, though it still fell short of the company's February 2006 initial public offering price of $7. But the deal, expected to close in the third quarter, provides a much-needed boost for Iomai, which ended 2007 with only $15.5 million in the bank.
That, plus its grants and government contracts relating to its pandemic influenza vaccine adjuvant, were projected to carry the company no further than the third quarter of this year, prompting an independent auditor to label Iomai with a going concern qualification earlier this year.
Shares of Iomai (NASDAQ:IOMI), trading at nearly 50 times the average volume, gained $3.42, or 117 percent, to close Tuesday at $6.34.
The acquisition is structured as an all-cash deal "except for a few of our larger shareholders" who opted for a stock-for-stock exchange, said Stanley Erck, Iomai's president and CEO.
Those major shareholders hold about 41 percent of the company's stock. Intercell agreed to issue about 1. 7 million shares to those shareholders, representing about 4 percent of Intercell's total outstanding shares. The remaining 59 percent of Iomai's shares will be bought for cash - about $119 million - from Intercell's reserves, which totaled about $421 million as of March 31.
It's a deal that looks like a win for both companies. Iomai gains access to Intercell's resources, which will "allow us to keep on track" with vaccine programs using its needle-free vaccine patch technology, Erck said. He added that the firm anticipates moving into late-stage trials next year with its lead programs, likely starting with its traveler's diarrhea vaccine in the first half of 2009.
Intercell also intends to keep Iomai's Gaithersburg, Md.-based facility in operation, along with most of the 110 employees.
Intercell, meanwhile, gains a "U.S. footprint," Erck said, and picks up rights to a vaccine portfolio, as well as a delivery technology, Iomai's transcutaneous immunization (TCI) technology, that it could use with vaccine candidates in its own portfolio.
Intercell CEO Gerd Zettlmeissl said the TCI technology potentially could be applied to some of Intercell's existing projects, such as its pneumococcus vaccine development program, which is due to enter the clinic later this year, and its influenza vaccine IC31, which is undergoing a Phase I trial at present.
During an investor conference call, Erck called Vienna, Austria-based Intercell an "excellent match for Iomai," especially since both firms focus exclusively on the vaccine market.
Iomai had "chatted with several companies," Erck told BioWorld Today, initially seeking a partner for its traveler's diarrhea vaccine. But talks with Intercell soon "turned into strategic discussions," as Intercell came to "recognize how powerful the [TCI] platform is."
The traveler's diarrhea vaccine likely will be the first program to advance into pivotal studies next year. Clinical data have been impressive to date, including a study showing that travelers to Mexico and Guatemala were significantly less likely to be sickened after receiving the patch-based vaccine compared to those who received placebo.
Of the 59 patients in the study to receive Iomai's patch, only three suffered moderate or severe diarrhea vs. 23 of the 111 who received placebo, a reduction of 75 percent.
Both Iomai and Intercell expect that product to be complementary to Intercell's Japanese encephalitis vaccine, which currently is under review, with approvals expected this year in the U.S., Europe and Australia.
The companies both have influenza programs that are expected to fit well together. Intercell is investigating its IC31 vaccine adjuvant in combination with the trivalent influenza vaccine Agrippal (Novartis AG) for seasonal flu, while Iomai is working on an adjuvant for pandemic flu with help from a $128 million grant from the National Institutes of Health.
The acquisition is not expected to have a major impact on Intercell's bottom line, and Zettlmeissl said the firm will "stay profitable" going forward, even with the Iomai purchase. He said the additional costs associated with funding Iomai's programs will be offset by the completion of the development and registration of its Japanese encephalitis vaccine.
At this time, Intercell does not intend to retain Iomai's Nasdaq listing.
"We might list on Nasdaq at a later stage in the future of the company," Zettlmeissl told BioWorld Today. But, he added, that likely would involve a "product-driven trigger."
Shares of Intercell, listed on the Vienna Stock Exchange under the ticker "ICLL," gained 7 percent to close at ?30.30 (US$46.91) Tuesday, up ?2.15. n
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