Date: 2012-10-08
Type of information: Company acquisition
Acquired company: Diamyd Inc (US subsidiary of Diamyd Medical - Sweden)
Acquiring company: Periphagen Holdings (USA)
Amount: The purchase price amounts to one dollar and shares in the acquiring company, providing Diamyd Medical a holding of 10 percent in Periphagen Holdings, Inc. In addition, Diamyd Medical may receive up to USD 10 million, primarily in milestone payments, as well as 10 percent of upfront payments and other payments Periphagen Holdings, Inc. may receive from future partners, and royalties on future sales of NTDDS based drugs.
Terms: Diamyd Medical AB has entered into an agreement for the sale of the U.S. subsidiary, Diamyd, Inc., involved in drug development primarily relating to the NTDDS platform with applications in pain and neuropathy among others. The buyer, Periphagen Holdings, Inc., is owned by members of the management of Diamyd, Inc.
The transaction is a management buyout, where the purchasing corporation is owned by members of the management of Diamyd, Inc. The audit and consultancy firm Grant Thornton has prepared a fairness opinion regarding the transaction, and judge that, from a financial perspective, the terms are fair to the shareholders of Diamyd Medical. The agreement is subject to approval from Diamyd Medical's shareholders at an Extraordinary General Meeting to be held on October 30, 2012.
* On October 30, 2012, the Extraordinary General Meeting of Diamyd Medical with overwhelming majority approved the sale of the U.S. subsidiary, Diamyd, Inc., including the development projects based on the Nerve Targeting Drug Delivery System (NTDDS) with applications in pain and neuropathy among others. The buyer, Periphagen Holdings, Inc. assumes all costs and revenues related to the NTDDS business from September 1, 2012, whilst Diamyd Medical retains the right to share in future successes of the NTDDS platform.
Details: Under the agreement, in addition to the shares in Diamyd, Inc., Periphagen Holdings, Inc. assumes the intellectual property rights to the patented Nerve Targeting Drug Delivery System (NTDDS) technology, and all costs and revenues related to the business from September 1, 2012. The divestment will improve Diamyd Medical's operating profit/loss by approximately SEK 18 million during fiscal year 2012/13 compared to if the Company would have continued financing the development of the NTDDS platform.
During the fiscal year 2011/12, due to the transaction, impairment of intangible assets related to the NTDDS platform will have an adverse effect of SEK 17 million on operating profit/loss. The cash flow is not affected. Other immediate accounting effects and transaction costs attributable to the divestment are estimated to have an adverse effect on profit/loss during 2012/13 by approximately SEK 3 million. The impact on cash flow is minor.
Related: Gene therapy
