Flu drug developer Biota is moving to the United States, where it says investors will be more understanding of the biotech’s value.
Biota, which is probably best known as the developer of the flu drug Relenza, on Monday announced that it had agreed to merge with US-based Nabi Pharmaceuticals to form a new company that will be listed on America’s Nasdaq index.
The new company will be called Biota Pharmaceuticals and headquartered in the US biotech hub of Rockville, Maryland.
Biota chairman Jim Fox said the move to the US was designed to achieve better value recognition and liquidity through a stronger US shareholder base.
Dr Fox said Australian investors had appeared not to have truly appreciated the value of a $US231 million ($A223.37 million) contract the US Office of Biomedical Advanced Research and Development Authority (BARDA) awarded Biota in April 2011.
The contract was for the advanced development of a second-generation flu drug called laninamivir.
Dr Fox said the contract was almost 1.4 times bigger than Biota’s market capitalisation at the time.
“Just an amazing contract, but the marketplace didn’t really understand that,” Dr Fox said.
“We believe the US market will appreciate what we’ve got and better reflect the value of our assets than staying in Australia.”
Dr Fox said Biota’s time over the next two years would be far better spent building a knowledge base of the company in the US.
Dr Fox said the US was a far better place to be because there were far more funds that specialised in investing in pharmaceutical development.
Under the agreement with Nabi, Nabi will acquire all of the shares in Biota for new shares in Biota Pharmaceuticals.
Biota is expected to wrap up the deal by September 30 and then be delisted from the Australian Securities Exchange.
Current Biota shareholders will own about 74 per cent of Biota Pharmaceuticals, and Nabi shareholders will own about 26 per cent.
“We are doing a share swap. Our shareholders will trade their shares in and receive shares in a new company,” Dr Fox told reporters.
Dr Fox said Nabi’s main asset was $US54 million ($A52.22 million) in cash, and Biota had ascribed zero value to Nabi’s pharmaceutical assets.
“We (Biota) are subscribing our cash in, plus our programs – that’s why we end up with 74 per cent; they end up with 26 per cent,” he said.
Dr Fox said the “guts” of the transaction was based around the cash and the Nasdaq listing.
Biota has expertise in respiratory diseases, particularly influenza, and developed the flu drug Relenza, which is marketed by GlaxoSmithKline.
Also, Biota and Japan’s Daiichi Sankyo co-own some second-generation flu drugs, of which the lead product, laninamivir, is marketed in Japan under the brand Inavir.
Biota’s contract from BARDA is for the advanced development of laninamivir in the US.
Nabi Biopharmaceuticals develops products that target medical conditions in the areas of nicotine addiction and bacterial infections.
Biota shares closed 8.5 cents lower at 86 cents.
