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Mergers and Acquisitions

Date: 2011-01-10

Type of information: Company acquisition

Acquired company: Synosia Therapeutics (Switzerland)

Acquiring company: Biotie Therapies (Finland)

Amount: € 93.6 million

Terms:

On 2 February 2011, Biotie Therapies announced that the acquisition of Synosia Therapeutics Holding AG has been completed.The details of and conditions to the completion of the transaction as well as a description of the combined entity have been published on 11 January 2011. The issue of the new shares in the acquisition of Synosia and their subscriptions and payment have been completed, and the title to the share capital of Synosia and outstanding warrants of Synosia has been transferred to Biotie. As consideration for the entire share capital in Synosia and outstanding warrants of Synosia, Biotie has issued 161,448,371 new shares to Synosia shareholders and warrant holders. Based on Biotie's closing share price on 10 January 2011 of EUR 0.58, the Transaction is valued at € 93.6 million. In addition, 14,912,155 shares has been issued to Synosia to be held in treasury and used to satisfy future potential exercise of Synosia's options (the Additional Treasury Shares and together with the Consideration Shares, the New Shares).

Details:

The combined entity includes a promising pipeline of nine clinical-stage drug candidates; a significant international presence with operations in Finland, The United States and Switzerland, and an experienced management team and Board of Directors.
The combined clinical development pipeline includes nalmefene, Biotie's Phase 3 product candidate for the treatment of alcohol dependence, which recently reported positive results from the first two Phase 3 trials conducted by its partner Lundbeck and is on track for submission for approval in Europe in the second half of 2011. Synosia brings a broad pipeline of innovative central nervous system (CNS) product candidates and a recently announced partnership with UCB Pharma SA that included a $20 million equity investment and has potential for $725 million in milestone payments plus royalties. This collaboration covers SYN-115, a novel adenosine A2a receptor antagonist for Parkinson's disease in Phase 2 and SYN-118, a potential first-in-class hydroxyphenyl-pyruvate dioxygenase (HPPD) inhibitor intended for movement disorders also in Phase 2.

Under the combination agreement, Timo Veromaa, will continue as President and CEO of Biotie. Synosia's CEO, Ian Massey, will become Chief Operating Officer and President, US Operations, a newly created position. Synosia's Chief Medical Officer (CMO), Stephen Bandak, will become Biotie's CMO. Chris Piggott, Biotie's Chief Business Officer will continue in this role in the combined entity.

The combined product pipeline represents a strong and balanced portfolio of novel drugs for diseases with high unmet medical need. Key features are summarized below:

_ Nalmefene: Novel, oral opioid receptor antagonist in Phase 3 clinical trials with partner Lundbeck. As-needed dosing offered by nalmefene could dramatically alter the way alcohol dependence is treated. Recent results from the first two of a total of three Phase 3 trials reported positive results in helping patients reduce alcohol consumption. A final Phase 3 trial (ESENSE2) is expected to complete Q2 2011.

_ SYN-115: Potent and selective inhibitor of the adenosine A2a receptor with class-leading profile for the treatment of Parkinson's disease. SYN-115 is the first potential new mechanism in 20 years in Parkinson's with the potential to impact motor and non-motor symptoms and be disease modifying. Phase 2a completed successfully and Phase 2b trial planned to start H1 2011. This program is partnered with UCB.

_ SYN-118 (nitisinone): Already approved and marketed product for an orphan disease indication (Orfadin®) by Swedish Orphan Biovitrum. The combined entity will have rights outside orphan disease indications and plans to leverage this product as a new treatment for Parkinson's disease that could be complementary to SYN-115. A placebo-controlled Phase 2a study in Parkinson's disease is ongoing with data expected H1 2011. UCB has an option to license this compound.

_ SYN-120: Orally available inhibitor of 5-HT6 receptors in the CNS with potential to be a best-in-class treatment for cognitive disorders, such as Alzheimer's disease. This product has completed single and multiple ascending dose Phase 1 studies and is currently in studies to establish therapeutic dose due to report in H2 2011. Roche has an opt-in right after completion of the ongoing studies.

_ SYN-114: Orally bioavailable potent and selective antagonist of the 5-HT6 receptor. SYN-114 has completed Phase 1 single and multiple ascending dose studies and is a back-up compound to SYN-120.

_ SYN-117 (nepicastat): Orally available inhibitor of dopamine metabolism (dopamine betahydroxylase) in Phase 2 trials for post-traumatic stress disorder which are funded by the US Department of Defense.

_ SYN-111 (rufinamide): Sodium channel blocker marketed by Eisai as an adjunctive therapy for Lennox Gastaut Syndrome. The combined entity will seek opportunities to evaluate this compound for the treatment of bipolar disorder.

_ VAP-1 antibody: First-in-class monoclonal antibody targeting vascular adhesion protein-1 (VAP-1). The product is well tolerated and has shown encouraging activity in Phase 1b trials for rheumatoid arthritis. Preparations for Phase 2 development are ongoing. In parallel, Biotie is considering potential partnerships for this product.

_ Ronomilast: A Phase 2 ready, potentially best-in-class phosphodiesterase-4 (PDE4) inhibitor for chronic obstructive pulmonary disease (COPD). Biotie is considering potential partnerships for this product.

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