12:00 AM
 | 
Jun 09, 2008
 |  BioCentury  |  Finance

Ebb & Flow

Having gotten his hands on 215 pages of documents fromBiogen Idec (NASDAQ:BIIB) under judicial order by the Delaware Chancery Court, activist investor Carl Icahn last week leveled new charges that at least one potential acquirer walked away from the bidding process rather than work under the conditions demanded by the biotech.

Icahn, who has been pressuring Biogen Idec to put itself up for sale, had sought the documents after the company's efforts to sell itself foundered (see BioCentury, May 26).

The financier has suggested manage-ment's sales process actually has hindered any potential transaction. Specifically, Icahn has been concerned with a requirement that change of control discussions not take place between a potential bidder and Biogen Idec's partners Elan (NYSE:ELN) and Genentech (NYSE:DNA) until an offer had been submitted.

In SEC filings last week, Icahn said the documents indicated at least one potential bidder asked to speak to Elan before submitting an offer, and subsequently walked away without making a proposal.

Biogen Idec spokesperson Naomi Aoki told Ebb & Flow that the potential bidder only asked to speak to Elan after bids were due and had never previously expressed any concerns or hesitations on that front.

Icahn also asserted the company's board was not involved or informed about the sales process until after it had been completed.

Aoki also said the "board was fully engaged in the process from beginning to end," meeting eight times during the process, and that it was consulted about the design of the sales process.

Icahn also suggested the bidding guidelines might have made it difficult for bidders to change their offers after they had had the change of control discussions with Elan or Genentech.

Aoki responded that Biogen Idec's bankers had made it clear to participants that "they wouldn't have to incur fees or execute a binding agreement" prior to any change of control discussion.

On June 19, Biogen Idec will hold its annual meeting in Cambridge, Mass., at which shareholders will vote on competing board slates proposed by the company and by Icahn. The financier has said he will use any seats on the board, plus additional seats he hopes to gain in 2009, to wage a proxy battle (see BioCentury, Feb. 4).

Biogen Idec shares rose $2.22 to $64.57 on Thursday, but finished the week down $0.33 to $62.42.

Seed speed

Looking to skip the multiple venture rounds that dilute early stage investors, Two Rivers Group last week took cancer company Arno Therapeutics public via a reverse merger into shell company Laurier. This was the second time in less than a year that the VC took a company straight from seed financing to a public listing via reverse merger.

David Tanen, a director of Arno and partner at the firm, told Ebb & Flow that by going public so quickly, investors get a "trade-off of liquidity in order to reduce dilution." But he added that he expects the existing Arno investors will be long-term holders.

Prior to the merger, Arno completed an $18 million private financing through the sale of common stock to undisclosed investors, including institutional investors.

Tanen said the cash should last about a year. In that time, the company hopes to complete Phase I testing for lead compound AR-67, a third-generation camptothecin analog, and move it into multiple Phase II trials for indications including glioblastoma, as well as a couple of other solid tumor types and hematological cancers.

In addition, the company hopes to submit INDs for preclinical oncology compounds AR-12 and AR-42 in 1H09.

Founded in August 2005, the company had only raised about $4 million prior to this financing. The company in-licensed undisclosed technology from an undisclosed source in January 2007. And in January of this year it in-licensed several preclinical oncology candidates from Ohio State University.

The newco will be known as Arno and initially will trade under the Laurier symbol of LRRI.OB. The company intends to apply to be re-listed under a new ticker on a major exchange like NASDAQ or AMEX.

Arno shareholders hold 19.2 million (94.6%) outstanding shares, while Laurier shareholders hold 1.1 million (5.4%) shares.

Two Rivers executed a similar strategy with Nile Therapeutics (NASDAQ:NLTX), which completed its merger into a public shell in September 2007 and raised $20 million in a private placement. The shares, which had traded over-the counter, were listed on NASDAQ in May.

Nile's lead candidate, CD-NP, is a selective natriuretic peptide receptor B (NPRB) agonist to treat heart failure. It started a Phase Ib trial in February. The stock has climbed from $2 at the time of the merger to $5.01 by the end...

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