Prima BioMed Acquisition of Immutep SA

Marc Voigt is CEO of Prima BioMed Ltd. He talks to AI Global about a landmark transaction, completed earlier this year.

Prima BioMed Ltd (Prima) is a biotechnology company in the field of cancer immunotherapy. It is listed on the Australian Stock Exchange, NASDAQ in the US and the Deutsche Börse in Germany.

 Marc Voigt tells us more about the firm and how it differentiates from the competition. “We specialise in cell therapy manufacturing of autologous blood products and are conducting Phase II clinical trials in ovarian and pancreatic cancer with our lead product CVac™,” he begins. “Through the acquisition of Immutep we also now have a portfolio of products relating to the LAG-3 immune control mechanism of T cells. Products include an immune activator called IMP321 and 2 antibodies licensed to development partners GSK and Novartis.

 “Our differentiating feature is a pipeline focused on multiple immunotherapy products capable of development individually, or in combination, with other immunotherapy treatments creating a flexible product development pathway.”

 Earlier this year Prima announced the acquisition of French private biotechnology company Immutep SA in early October which was completed in late November 2014. 

 Prima paid an upfront cash payment of US$10.8M and issued US$3m worth of Prima BioMed ordinary shares to Immutep shareholders, as well as 200M warrants of which 30M are dependent on a milestone. The remaining cash component of US$7.2M is payable, subject to the achievement of milestones related to Immutep’s acquired product portfolio and warranty retention arrangements.

Voigt explains the strategic rationale behind the deal and what it will achieve for the parties involved. “The aim of the transaction was to create shareholder value and build up critical mass with cutting edge technology. Further strengthening our scientific management team and establishing a pipeline of complimentary products that can be developed in parallel or in combination with other therapies to create an optimal anti-cancer response were of primary strategic importance. The combined entity will have significantly enhanced access to scientific, manufacturing and clinical expertise; and there will be potential revenues from near, mid and long-term milestones from partnerships for each of its products. Furthermore, research and development will continue to create new product opportunities and cost savings via merging internal administrative activities.

 “The acquisition will give Prima far greater growth opportunities making it easier to partner technologies and raise further capital. A diverse product pipeline will make us far more attractive than when we were focused solely on a single product.

 “The deal will provide increased visibility for Prima in the cancer immunotherapy field. The LAG-3 technology is in a high profile immune checkpoint inhibitor space that is being favoured by larger pharmaceutical companies and the medical community. The growth of the industry and the interest in these molecules should help drive partnering opportunities.

 “It is anticipated the merged entity will generate a pipeline of products that might also be supported financially by access to global grant funding opportunities.  The partnerships of the combined entity and the diverse mechanisms of action of the products being created will increase the likelihood of successfully commercialising beneficial cancer treatments.”

 The deal will allow Immutep to gain access to greater capital market opportunities via Prima’s triple listing on the ASX, NASDAQ and Deutsche Borse to generate the further investment needed to support the growth of its product portfolio. For Immutep’s venture capital shareholders the transaction provided an exit opportunity.  Voigt elaborates: “The Immutep personnel will also gain access to Prima’s scientific and clinical advisory boards and expertise from the clinical, manufacturing and business development teams. This will help guide the optimal development of the LAG-3 technologies both technically and commercially.

 “Prima gains access to a new pipeline of products in a high profile area that has already been partnered. Development is at partners cost in some cases so investment risk is reduced if there is technical failure. Prima also gains internal R&D capability with laboratory space in Paris and scientific expertise from Immutep staff. Potential milestone payments from partners add potential revenues and the partnerships provide access to relationships with larger pharmaceutical companies for future projects.”

 The deal process was relatively straight forward, as Voigt continues: “Discussions commenced in January 2014. Immutep’s founders provided early due diligence material for revision by the Prima clinical, manufacturing, intellectual property and business development teams. Upon negotiation of a non-binding term sheet, a full-fledged due diligence proceeded via thorough review of an electronic data room that included corporate information. Independent advice was provided by legal, clinical and financial advisors.

“In order to mitigate potential financing risk, a structured finance arrangement was negotiated with Bergen Global Opportunity Fund LLC to provide funds of up to US$37.4M over two years. Flexible terms for the financing were agreed with an ability to pause or terminate tranches of funding to minimise shareholder dilution. 

“The binding terms of a Share Sale Agreement with Immutep were agreed and announced on the 2 October together with the Bergen Funding Agreement.  Independent valuations on the Immutep transaction were performed by KPMG, Australia and Maxim Group LLC., New York, USA.”

“Given the potential of the Immutep products the whole process has been intense. After signing the LOI the main challenge was completing the due diligence, negotiating terms and securing the funding agreement within tight timeframes.

 “With staff and consultants engaged across three continents/time zones and some language differences as well, the deal negotiations coordination was sometimes a challenge. Most staff and consultants were incredibly flexible, working very long hours to hold multiple teleconferences.”

 Voigt describes how the current business climate is conducive to a problem-free transaction. “The current business climate is generally favouring merger and acquisition activity. The available opportunities to consider were therefore perhaps more limited as many technologies have been acquired by larger companies with greater resources.”

 Voigt’s predictions for the future of the parties involved are very positive. “We will continue to develop these programs in clinical trials and continue to be active in business development, thus creating a win-win situation for all parties involved.”