Albireo Ltd, a privately held Swedish biopharmaceutical company, agreed to acquire Biodel Inc. (NASDAQ: BIOD) in a stock-for-stock merger deal. At closing Biodel will change its name to Albireo Pharma Inc. and its ticker symbol on the NASDAQ Capital Market will be ranamed ALBO. The combined company will focus on the development of novel bile acid modulators to treat orphan pediatric liver diseases, as well as other liver and gastrointestinal diseases and disorders.

Albireo was spun out from British-Swedish global pharmaceutical and biologics company AstraZeneca plc (NYSE: AZN)(ADR) in 2008, and raised $40 million in a Series A round from a syndicate of top-tier growth equity life sciences investors. The investment syndicate includes Phase4 Partners, TPG Biotech, TVM Capital Life Science, and Aberdeen Asset Management, as well as AstraZeneca.

Albireo’s existing investment syndicate agreed to inject an additional $10 million prior to the Biodel merger closing, at which time Albireo stockholders will exchange their shares for newly issued shares of Biodel common stock. Albireo stockholders will own 67% of the combined company, and Biodel stockholders will own 33%.

Biodel’s shares rose 21%, closing today at $0.46, giving the company a market value of $29.51 million.

In January, Biodel was forced to downsize its staff in half, after York, Pennsylvania-based Unilife abandoned a co-development agreement late last year, crushing Biodel’s stock to about 25 cents.

In 2007, Biodel raised $75 million in its IPO through an offering of 5 million shares priced at $15.00 per share, but its initial clinical trials for VIAject, an insulin treatment for diabetics, were unsuccessful.

Albireo Ltd is a holding company for Albireo AB, a clinical-stage biopharmaceutical company focused on the development of novel bile acid modulators to treat orphan pediatric liver diseases and other liver and gastrointestinal diseases and disorders. Albireo’s clinical pipeline includes two Phase 2 product candidates and one Phase 3 product candidate.

Albireo Ltd is incorporated and registered in England and Wales, and its wholly owned subsidiaries are located in Gothenburg, Sweden and Boston, Massachusetts.

Albireo is developing its lead product candidate, A4250, initially for the treatment of Progressive Familial Intrahepatic Cholestasis (PFIC), which is a life threatening, orphan liver disease that affects young children. A4250 is currently being studied in a Phase 2 clinical trial in children with cholestatic liver disease that is designed to support Albireo’s planned future pivotal development in PFIC.

Biodel Inc. is a specialty biopharmaceutical company focused on the development and commercialization of innovative treatments for diabetes that may be safer, more effective and more convenient for patients. Biodel’s product candidates are developed by applying proprietary technologies to existing drugs in order to improve their therapeutic profiles. Biodel was founded in 2003 and is headquartered in Danbury, Connecticut.

The proposed transaction has been approved by the boards of directors of both companies and by the Albireo stockholders. It is expected to close in the third calendar quarter of 2016, subject to the approval of the Biodel stockholders and other customary conditions.

Ron Cooper, Albireo’s president and CEO, will continue in the same role at the combined company, with David Chiswell serving as chairman. The board of the combined company will be comprised of seven members, including five members to be designated by Albireo and two members of Biodel’s current board of directors.

“This transaction with Biodel and concurrent financing is expected to provide Albireo with sufficient capital to advance our lead product candidate, A4250, through an important Phase 2 clinical readout later this year and a subsequent planned pivotal trial in PFIC,” said Cooper. “We believe A4250 has potential to greatly benefit patients suffering from a devastating orphan pediatric liver disease with no approved drug treatment options.”

“Following an extensive and thorough review of strategic alternatives, we concluded that the transaction with Albireo provides Biodel stockholders with a significant equity stake in a biopharmaceutical company with promising clinical assets and substantial upside opportunity,” said Gary Gemignani, CEO of Biodel. “We are optimistic that the promise of Albireo’s pipeline and the strength of its leadership team, coupled with Biodel’s cash resources, will enable the combined company to reach significant milestones.”

Biodel’s financial advisor for the transaction is Ladenburg Thalmann & Co. Inc., and Biodel’s legal counsel is Cooley LLP. Albireo’s financial advisor for the transaction is Guggenheim Securities, and Albireo’s legal counsels are Ropes & Gray LLP, Mintz Levin Cohn Ferris Glovsky and Popeo PC and Bristows LLP.

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