BIOTIE THERAPIES CORP. STOCK EXCHANGE RELEASE 24 October 2008 at 8.40
a.m.
Biotie to acquire CNS and inflammation specialist elbion GmbH
Biotie Therapies Corp ("Biotie" or the "Company") has today entered
into an agreement with privately held elbion NV to acquire its
wholly-owned subsidiary elbion GmbH. In exchange Biotie will issue
46,802,967 new shares to elbion NV (the "Exchange Offer"). In
connection with the Exchange Offer, certain shareholders of elbion NV
have committed to invest an aggregate amount of EUR 3.3 million into
the combined entity (the "Offering", together with the Exchange Offer
the "Transaction"). The Transaction is subject to the necessary
resolutions passed by Biotie and elbion NV shareholders at the
general meetings to be held on 14 November 2008 and 10 November 2008,
respectively.
elbion GmbH is a pharmaceutical research and development company
based in Radebeul, Germany, originally founded through a management
buy-out from the German industrial group Degussa AG and subsequently
financed by an international syndicate of venture capital investors
in 2004. For further information on elbion GmbH please refer to
Appendix 1.
Following the Exchange Offer, elbion GmbH will be a wholly-owned
subsidiary of Biotie. The combined entity will focus on research and
development of drugs for central nervous system disorders (addiction,
psychotic illnesses) and inflammatory diseases (e.g. rheumatoid
arthritis and psoriasis) with high unmet medical need. The combined
entity will have a strong and balanced pipeline with first-in-class
compounds at various stages of clinical development; many programmes
have already been validated by top-tier pharma partners such as
Roche, Wyeth and Lundbeck."Bringing together the outstanding pharmaceutical development
capabilities and strong clinical pipelines of both companies will
create a European leader in the CNS and inflammation market", said
the Chairman of Biotie, Mr Juha Jouhki. Mr Luc Philips, the Chairman
of elbion NV stated that "this business combination is a unique
opportunity to combine complementary programmes and capabilities with
sufficient financial means to reach key value inflection points".
The combined entity's most advanced product, Nalmefene, is currently
in phase III development for the treatment of alcohol addiction
disorders and is already licensed to Lundbeck. Two compounds
targeting inflammatory disorders are also in clinical development:
(i) ELB353 is an orally available selective anti-inflammatory agent
with potential application in several inflammatory indications and
has completed phase I clinical development; (ii) BTT-1023, a fully
human monoclonal antibody targeted against VAP-1, the combined
entity's proprietary inflammatory receptor, has recently completed a
first in-man clinical study and is expected to proceed to clinical
studies with repeated doses of the antibody. BTT-1023 has significant
potential in treatment of inflammatory diseases such as rheumatoid
arthritis and psoriasis. The combined entity is also developing
Buprenorphine Depot, a next generation proprietary formulation of the
leading drug for the treatment of opioid dependence; this drug is
currently being prepared for clinical development. In addition,
elbion GmbH's world-class PDE-focused drug discovery platform is
expected to provide a stream of further product candidates.
The combined entity's clinical and pre-clinical pipeline has been
endorsed by leading international pharmaceutical partners. elbion
GmbH has entered into a licensing and collaboration agreement for the
development of PDE10-inhibitors with Wyeth. This agreement contains
potential milestones of up to USD 110 million as well as significant
royalties on sales. Biotie has entered into a licensing agreement
with Lundbeck for Nalmefene involving potential milestones of up to
EUR 82 million as well as significant royalties on sales. Biotie also
has option agreements with Roche for BTT-1023 and for a pre-clinical
stage SSAO-inhibitor compound.
The management of the combined entity will be as follows:
Name Position in the combined Current position
entity
Timo Veromaa Chief Executive Officer CEO of Biotie
Thomas Taapken Chief Financial Officer CFO of elbion NV
Thomas Kronbach Chief Scientific Officer CSO of elbion NV
Antero Kallio Chief Medical Officer VP of Drug Development of
Biotie
Kai Lähdesmäki will serve as a senior business development advisor
for the combined entity. Mr. Lähdesmäki has been an advisor to Biotie
since 2007 after retiring from his position of VP, Business
Development of Biotie.
It is proposed that Biotie's Extraordinary General Meeting of
Shareholders would appoint Bernd Kastler, currently Chief Executive
Officer of elbion NV, together with Ann Hanham and Christoph
Schroeder as additional new members of the Board of Directors of
Biotie. The combined entity will have its operations in Turku,
Finland, and Radebeul, Germany, with approximately 75 employees.
Biotie reported revenues of EUR 4.0 million for the first three
quarters of 2008 and a net loss of EUR 3.8 million. On a pro-forma
basis, the combined entity would have had revenues of EUR 6.6 million
and would have incurred a loss of EUR 5.3 million in the first three
quarters of 2008. After completion of the Transaction, Biotie will
have approximately EUR 27 million in cash. The pro-forma financial
information on the combined entity for the financial year 2007 and
the first three quarters of 2008 will be available in the listing
prospectus intended to be published by Biotie on or about 12 November
2008.
Extraordinary General Meeting of Shareholders to be convened
The Board of Directors gives notice today that it is convening an
Extraordinary General Meeting of Shareholders on 14 November 2008 to
authorise the issue of 46,802,967 new shares to elbion NV in
connection with the Exchange Offer ("Consideration Shares") and
authorise the further issue of up to 7,305,733 new shares in
connection with the Offering ("Institutional Offering Shares",
together with Consideration Shares the "New Shares").
Subsequent to the subscription and registration of the New Shares,
the aggregate number of shares in issue in Biotie will be
144,320,560. The number of the Consideration Shares offered to elbion
NV represents 51.88 per cent of Biotie's issued share capital and
votes attaching thereto prior to the Transaction (32.43 per cent
thereafter). The Institutional Offering Shares represent 8.10 per
cent of the Company's issued share capital and votes attaching
thereto prior to the Transaction (5.06 per cent thereafter).
The Board of Directors proposes that the Extraordinary General
Meeting of Shareholders would authorise the Board of Directors to
resolve on one or more share issues. This authorisation would contain
the right to issue new shares or dispose of the shares in the
possession of the Company and to issue options or other specific
rights to the shares pursuant to chapter 10 of the Companies Act. The
authorisation would consist of up to 7,000,000 shares in the
aggregate. A maximum of 819,000 own shares in the possession of the
Company could be conveyed.
Biotie has been notified that the shareholders representing
approximately 49 per cent of the Company's shares and voting rights
will propose to the Extraordinary General Meeting of Shareholders
that, in addition to the current members of the Board of Directors,
three new members would be elected in connection with the transaction
implemented through the exchange of shares. The new members of the
Board of Directors would be Ann Hanham, Bernd Kastler and Christoph
Schroeder.
In connection with the proposed Transaction, existing Biotie's
shareholders representing approximately 49 per cent of the Company's
shares and voting rights, have agreed to vote in the general meeting
in favour of i)the Transaction, ii) the authorisation to issue new
shares for the purpose of option programmes and iii) the appointment
of further Directors to the Board of Biotie.
Biotie will publish an invitation to the Extraordinary General
Meeting of Shareholders separately.
Exemption from the obligation to make a public tender offer in
relation to Biotie shares
Following the completion of the issue of New Shares, elbion NV's
voting rights in Biotie will amount to approximately 32.43 per cent
of all voting rights attached to the issued shares of Biotie. Under
Chapter 6 of the Finnish Securities Market Act, a shareholder whose
holding in a listed entity exceeds 3/10 or one half of the total
voting rights is under the obligation to launch a public tender offer
in relation to all shares of such entity, unless exempted by the
Finnish Financial Supervision Authority (the "Fin-FSA"). elbion NV is
in discussion with the Fin-FSA to receive such an exemption. The
receipt of such exemption is a prerequisite for closing of the
Transaction.
Commitment to invest in Biotie
Biotie has obtained commitment from certain shareholders of elbion
NV, namely Burrill & Company, TVM Capital and AGF Private Equity, to
subscribe for an aggregate amount of 7,305,733 new shares in Biotie
at a subscription price of EUR 0,4517 per share which equates to a
total subscription value of EUR 3.3 million payable in cash. The
subscription price per share corresponds to the trade-volume weighted
average of the Company's share price during the 20 trading days up to
and including 22 October 2008.
The current shareholder of elbion GmbH, elbion NV, has undertaken to
provide additional capital to elbion GmbH prior to the completion of
the Exchange Offer for an aggregate amount of EUR 1.8 million.
Combination Agreement
Biotie, elbion NV and elbion GmbH have today entered into a
Combination Agreement, which sets out the terms and conditions of the
Exchange Offer and the Offering. The Combination Agreement includes
conditions to the completion of the Exchange Offer and the Offering.
Such conditions include i) the availability of additional financing
by means of the Offering, ii) the availability of necessary
authorisations, iii) the absence of breach of agreement or material
adverse change in the respective businesses of Biotie and/or elbion
and iv) certain other conditions. The Combination Agreement also
contains stipulations governing the conduct of Biotie and elbion GmbH
prior to the completion of the Exchange Offer, the cooperation of the
parties for the purposes of preparing necessary filings and documents
to complete the Exchange Offer and the Offering and the possible
termination of the Combination Agreement for example on the basis of
material adverse change in the respective businesses of Biotie or
elbion and the absence of relevant authorisations.
In the Combination Agreement, elbion NV has agreed not to transfer
the shares held in Biotie during a period of twelve months from the
completion of the Exchange Offer except for transfers among or to the
shareholders or affiliated entities of elbion NV and to certain
directors of elbion GmbH provided that such entities or persons are
subject to an applicable transfer restriction.
Completion of the Combination and Offering
Provided that the Extraordinary General Meeting of Biotie on 14
November 2008 approves the issue of the New Shares, the Exchange
Offer and the Offering will be completed immediately. Once registered
at the Finnish Trade Register the New Shares will rank pari passu in
every respect with the existing shares in Biotie. Biotie will apply
to list the New Shares on NASDAQ OMX Helsinki Oy. Trading of the New
Shares is expected to commence on approximately on 18 November 2008.
Listing Prospectus
Biotie will publish a prospectus in relation to the listing of the
new shares offered in connection with the Exchange Offer and Offering
on or about 12 November 2008. The prospectus will be available in
the Finnish language on Biotie's web site, www.biotie.com, at the
offices of Biotie, Tykistökatu 6, Turku and at OMX Way, Fabianinkatu
14, Helsinki.
Expected Timetable of Principal Events
24 October 2008 Combination Agreement signed,
invitation to the Extraordinary General Meeting of Shareholders
10 November 2008 Extraordinary General Meeting of Shareholders
of elbion NV
12 November 2008 Listing Prospectus will be available
14 November 2008 Extraordinary General Meeting of Shareholders
of Biotie
(approx.) 14 November 2008 New Shares subscribed in the Exchange
Offer and the Offering
(approx.) 17 November 2008 New Shares registered with the Finnish
Trade Register
(approx.) 18 November 2008 Trading of the New Shares commences
Turku, 24 October 2008
Biotie Therapies Corp.
Board of Directors
For further information, please contact:
Timo Veromaa, President and CEO, Biotie Therapies Corp
tel. +358 2 274 8901, e-mail: timo.veromaa@biotie.com
www.biotie.com
DISTRIBUTION:
NASDAQ OMX Helsinki
Main Media
Appendix 1
Information on elbion GmbH
elbion GmbH ("elbion") is domiciled in Germany, and its address is
Meissner Str. 191, 01445 Radebeul, Germany. elbion is a German
limited liability company (GmbH, Gesellschaft mit beschränkter
Haftung) that complies with the German legislation. The Commercial
Registry Code of elbion is HRB 25710. The accounting period of elbion
is a calendar year. Pursuant to the Articles of Association of
elbion, elbion's line of business encompasses research and
development of pharmaceutical products. elbion was established in
2002 and it began its operations on 2 July 2002 through a management
buyout from German industrial group Degussa AG. In October 2004, a
syndicate of international investors funded the further operations of
the company by means of a EUR 35 million equity investment.
On 15 November 2006, elbion and 4AZA Holding NV in Leuven, Belgium
and all their respective shareholders combined their operations and
entered into a Business Combination Agreement. After the transaction,
which was technically a reverse acquisition under which elbion's
shareholders became the majority shareholders of the combined
company, 4AZA Holding NV was renamed into elbion NV and became the
parent company and only shareholder of elbion.
Prior to the completion of the Transaction, elbion NV and its
affiliated companies will take certain re-structuring measures to
transfer all assets except its Naltrexone Debot product into elbion
GmbH. Such measures would include the assignment to elbion, by means
of an agreement entered into between elbion and affiliated company
elbion Products NV, Belgium, of all assets in relation to the
Buprenorphine Depot product and a second product, including a product
license agreement concerning the underlying technology, trademarks
and other intellectual property rights and scientific documentation.
Furthermore, a portfolio of intellectual property rights owned by
4AZA IP NV will be exclusively licensed to elbion. In addition, an
option agreement to purchase all outstanding shares of 4AZA IP NV, a
fully owned subsidiary of elbion NV until 31 March 2009 will be
entered into between elbion NV and elbion GmbH.
Taking into account the restructuring measures as if they would have
taken place by 30 September 2008, the following balance sheet
positions, as compared to the balance sheet position as of 30
September 2008 set out section "Certain financial information
regarding elbion GmbH" below, would change as follows: Intellectual
property similar rights and licenses would increase approximately 5.1
million euro, cash in hand and in banks would increase approximately
1.8 million euro and intercompany receivables would decrease 7.2
million euro.
In April 2007, elbion changed its legal form from a German stock
corporation (AG, "Aktiengesellschaft") to a German limited liability
company (GmbH).
Management and Employees
The managing directors of elbion are:
Name Year born Position Year joined the
Company
Bernd Kastler 1949 CEO 2002
Koenraad Blot 1961 CMO 2007
Thomas Kronbach 1951 CSO 2005
Thomas Taapken 1965 CFO 2002
On September 30 2008, elbion GmbH had 45 employees.
The Largest Shareholders of elbion NV
The largest shareholders of elbion NV (elbion GmbH's sole
shareholder) by means of equity holding are:
Beloni Konsortialgesellschaft
19.95%
former shareholders of DrugAbuseScience SAS
12.34%
funds owned or managed by 3i group
10.80%
funds owned or managed by Burrill & Company
9.26%
funds owned or managed by TVM Capital
8.82%
funds owned or managed by DVC Deutsche Venture Capital
6.17%
funds owned or managed by AGF Private Equity
4.63%
funds owned or managed by Omega Fund Management
4.41%
funds owned or managed by BayTech Venture Capital
3.09%
funds owned or managed by PharmaBio Development (Quintiles)
3.09%
others
17.44%
Following completion of the Transaction, elbion NV intends to
distribute the Consideration Shares received in the Exchange Offer to
its shareholders, subject to necessary approvals, clearances and the
receiving shareholders adhering to the same lock-up conditions that
elbion NV has agreed to. Due to contractual arrangements between
shareholders of elbion NV and certain provisions in the articles of
association of elbion NV, a potential distribution of such Shares
will not take place proportionally to the respective equity holdings.
In such distribution, the following groups would receive more that 5%
of the total amount of Consideration Shares held by elbion NV at that
time:
funds owned or managed by TVM Capital
funds owned or managed by Burrill & Company
funds owned or managed by 3i group
funds owned or managed by DVC Deutsche Venture Capital
funds owned or managed by Omega Fund Management
funds owned or managed by AGF Private Equity
Certain financial information regarding elbion GmbH
The following table sets forth elbion GmbH balance sheet summary
information. The information is presented in German generally
accepted accounting principles (German GAAP).
For the nine months For the year
ended 30 September ended 31 December
2008 2007 2007 2006 2005
(unaudited) (unaudited) (audited) (audited) (audited)
ASSETS (EUR in thousands)
A. NON-CURRENT ASSETS
I. Intangible
assets
1. Intellectual
property
similar
rights and
licenses 398 88 473 175 305
Total
non-current
intangible
assets 398 88 473 175 305
II. Tangible assets
1. Land and
buildings 1.757 1.882 1.850 1.972 2.098
2. Machinery
and
equipment 422 542 505 649 867
3. Other office
and factory
equipment 548 804 708 815 1.152
4. Advance
payments and
assets under
construction 0 11 34 32 0
Total
non-current
tangible
assets 2.727 3.239 3.098 3.469 4.116
B. CURRENT ASSETS
I. Accounts
receivable and
other current
assets
1. Trade
receivables 453 456 1.126 13 17
2. Intercompany
receivables 7.204 6.509 6.835 2.679 0
3. Other
current
assets 759 2.594 1.483 312 2.357
Total acc
receivables and
other current
assets 8.416 9.559 9.444 3.004 2.374
II. Other
securities 129 434 2.310 6.661 11.838
III. Cash in hand
and at banks 1.324 4.852 1.141 10.635 632
C. PREPAID EXPENSES 172 254 216 210 228
TOTAL 13.166 18.426 16.682 24.153 19.493
LIABILITIES AND
SHAREHOLDERS' EQUITY
A. SHAREHOLDERS' EQUITY
I. Share capital 792 792 792 792 592
II. Additional
Paid-in capital 0 0 0 0 200
II. Capital
reserves 39.034 39.034 39.034 39.034 26.109
III. Retained losses -27.437 -19.805 -19.805 -14.021 -442
IV. Loss for the
financial year -2.047 -5.337 -7.632 -5.784 -13.579
Total shareholders'
equity 10.342 14.684 12.389 20.021 12.880
B. SPECIAL ACCOUNT WITH
RESERVE
CHARACTERISTICS 137 247 183 247 337
C. ACCRUALS AND
PROVISIONS
1. Provisions
for pensions
and similar
obligations 456 486 459 488 580
2. Other
provisions 1.872 2.430 3.030 2.806 4.378
Total
provisions 2.329 2.916 3.489 3.294 4.958
D. LIABILITIES
1. Advances for
loss
transfer 0 0 0 0 9
2. Trade
payables 300 505 543 509 1.069
3. Other
liabilities 58 74 77 82 239
Total
liabilities 359 579 621 591 1.317
TOTAL 13.166 18.426 16.682 24.153 19.493
The following table sets forth elbion GmbH income statement summary
information. The information is presented in German GAAP.
For the nine months For the year
ended ended 31 December
30 September
2008 2007 2007 2006 2005
(unaudited) (unaudited) (audited) (audited) (audited)
(EUR in thousands)
1. Revenues 1.275 1.482 2.592 3.792 0
2. Research and
Development
expenses -4.958 -10.075 -14.035 -12.758 -14.429
3. Gross margin -3.683 -8.593 -11.443 -8.966 -14.429
4. Selling
expenses -206 -176 -245 -388 -397
5. General and
administrative
expenses -823 -1.054 -1.467 -2.328 -3.055
6. Other
operating
income 2.322 3.890 4.807 5.376 3.718
7. Other
operating
expenses -47 -89 -313 -15 -19
8. Interest and
similar income 391 891 1.043 617 412
9. Writedown of
other
securities 0 -4 -42
10. Interest and
similar
expense -1 -205 -1 -45 -108
11. Loss before
loss transfer
and taxes -2.047 -5.337 -7.620 -5.752 -13.918
12. Income and
other taxes 0 0 -12 -40 -14
13. Loss transfer 0 0 0 9 353
14. Loss for the
financial year -2.047 -5.337 -7.632 -5.784 -13.579