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BioAlliance Pharma, Topotarget to merge

Wednesday, April 16, 2014

BioAlliance Pharma, an innovative company specialized in developing drugs within orphan oncology diseases, and Topotarget, a Scandinavian-based biopharmaceutical company, intend to merge to create an orphan oncology company with highly complementary pipelines of late-stage products addressing significant unmet medical needs.

The merger agreement has been unanimously approved by the boards of directors of both companies.

BioAlliance Pharma will be the continuing company; shareholders of Topotarget will receive two newly issued shares in BioAlliance Pharma for each 27 Topotarget shares held, resulting in shareholders of Topotarget owning approximately one-third of the shares in the merged company, while existing shareholders of BioAlliance Pharma will hold two-thirds. The merger will be structured as a tax exempt cross-border merger in accordance with Danish, French and E.U. legislation

The total market for orphan oncology drugs exceeded $45 billion in 2013 and is expected to reach $80 billion in 2018. The overall unmet medical need is significant and new rare (or orphan) diseases are continuously discovered. The new entity will be supported by a highly complementary pipeline of late-stage products, with several significant value-creating events anticipated in both the short and medium term, and will benefit from operational efficiencies, combined knowledge-sharing and a diversified revenue stream driving growth.

Topotarget’s primary product, belinostat, is a novel pan-HDAC (histone deacetylase) inhibitor with more than 1,100 patients treated. Belinostat is in a pre-registration phase with the FDA for the treatment of relapsed or refractory PTCL (peripheral T-cell lymphoma). Following the assignment of a Prescription Drug User Fee Act, the expected date for approval is Aug. 9. The approval would trigger a milestone cash payment of $25 million from Topotarget’s U.S. partner, Spectrum Pharmaceuticals, as well as a double-digit royalty on sales going forward. The compound has potential for being explored in other rare cancer indications within hematology and solid tumors. Topotarget holds the exclusive rights outside North America and India.

BioAlliance Pharma has two products in late-stage development. Livatag currently is in a pivotal phase III clinical trial in primary liver cancer, with potential estimated sales of $1.1 billion and patent protection until 2032. Validive, the second most advanced product of BioAlliance Pharma’s orphan oncology program, was granted Fast Track Designation by the FDA for the prevention and treatment of oral mucositis induced by anticancer treatments in January, and preliminary data from a large international phase II trial are expected in Q4.

The merger will result in a broadened shareholder base with increased market capitalization and a strengthened value proposition for U.S. and European based investors. The merger agreement is endorsed by the two largest institutional shareholders of both companies—in the case of BioAlliance Pharma by Financière de la Montagne and Idinvest Partners, representing 18.8% of the share capital of BioAlliance Pharma; and in the case of Topotarget by HealthCap funds and HBM Healthcare Investments, representing 12.6% of the non-diluted share capital of Topotarget—who have agreed to vote in favor of the merger proposal at the upcoming extraordinary general meetings of the respective companies

The combined company will be led by Judith Greciet, CEO of BioAlliance Pharma. Patrick Langlois will continue to serve as chairman of the board of directors of BioAlliance Pharma. Bo Jesper Hansen, current chairman of the board of Topotarget and Per Samuelsson, HealthCap funds, current member of the board of directors of Topotarget are expected to be appointed as members of the board of directors of BioAlliance Pharma

The merger is expected to be completed in July/August.

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