Iomai to be bought by Austrian firm Intercell AG - Washington Business Journal:

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AG, based in Vienna, Austria, plans to buy the Gaithersburbg companyfor $119 million in cash, whicjh will pay for 59 percenf of the local company's shares at a price of $6.6 apiece -- a 126 percent premium on Iomai's closing price on Monday. The remainingg shares, held by Iomai's largest stockholders, will be exchangedc for the equivalent value ofIntercell shares, resultinb in a total distribution of 1.7 milliojn Intercell shares, or 4 perceng ownership of the larger company.
With this Iomai becomes the latesty life sciences company to surrender its independence to a foreign player as stronger foreign currency and thinnerd pharmaceutical pipelines have createda high-octane biotech buyout bingee that has claimed such local named last year as , and, the region's largesf brand name, In January, , a recenrt Rockville spinoff from , was bought for $400 millio n in cash by an Israeli pharmaceutical. Iomai isn'g likely to be the region's last to sell itself. Both in Rockville and MiddleBrookPharmaceuticals Inc. in Germantown have reveale d that they're working with investment banks to explore potentiak sales oftheir companies.
The boards of both Ioma and Intercell have unanimously signed off on the which majority shareholders have also agreefto back. Both companiez hope to close the sale by the third quarterr of this year pending approvak fromfederal regulators. Iomai leaders said the move is not expectecd to result in any layoffs of its 112 employees or shutdow n ofits 53,500-square-foot headquarters that it leasese on Firstfield Road. Its lease expirees there on May 2013. Instead, Iomai's head count woulcd add to a now two-person U.S. base in N.C., for Intercell, which employs abougt 240 people, otherwise based in Austria and at a manufacturing facilitgin Scotland. "We're going to be theier U.S.
footprint going forward," said Rip chief financial officerof Iomai, addingg that the two companies haven't yet startec on integration plans. "One of the next programsz in their pipeline up for approval would beour traveler'd diarrhea vaccine patch. ... That's goint to require a huge effort by thefolks Indeed, Gerd Zettlmeissl, the chief executive officef of Intercell, said he plans to distribute employment ads rather than pink estimating a 50 percent rise in the Gaithersburg work forcee over the next six years as the combined compant expands its manufacturing capabilities for Iomai's more advancedc products.
"There's no overlap to what we're doing elsewhere," he highlighting Iomai's needle-free patch technology as being the only one ofits "It would make a lot of sensde to do [manufacturing of those needle-free in the U.S., because it'z very special technology." The two companies describe d their vaccine technologies as complementary. They point to one of Iomai'z recent breakthroughs, a needle-free vaccine patcyh that treats traveler's diarrhea that had seen positiv e results ina second-phase clinical which fits with a Japanese encephalitis vaccine that Intercell had developed and requested market approvaol for at the end of last year.
Intercell hopes to star t selling its Japanese encephalitis vaccine laterthis year, while the companiees aim to take the traveler's diarrheqa patch into the final stage of clinicakl tests early next year. "Ww believe Intercell is an excelleny match for the Both companies have focused exclusively on saidStan Erck, president and CEO of Iomai, in an analysy conference call Tuesday morning announcing the news. we have the potential to create aunique traveler's vaccinde franchise.
" Iomai was also working on a skin patcjh treatment for pandemic flu that scored positive resultw earlier this year with a single dose of bird flu rather than the traditionally accepted dual dose 28 days apart. A monthn after announcing those results, Iomai said it signexd an agreement withMerck & Co. Inc. to studt the further use of needle-free vaccinr technology. But the sale comes at an opportunes time for thelocak company. Analysts had been long questioninf Iomai on its ability to nail down a largetr pharmaceutical partner for its flu vaccine which needed an accompanying flu antigen in order to With a stock price that slidfrom $6.
17 in January 2007 to less than a $1 in Januart 2008 in a tough biotechj market, Iomai had faced a Wall Streey unforgiving of delays in that With $15 million left in cash and cash Iomai reported that its auditorsa expressed doubts in its latest annual report whethee the company could continue as a gointg concern for the next 12 months, furthert bolstering the need for a larger partner that couldc help it pay upwardss of $30 million to $45 milliob necessary for late-stage clinical trial bills. "Ws were somewhat cash constrained. We had to either do a dilutived financing" on low valuations or find some othe r option toraise cash, Wilson said.
"The premiuj paid by Intercell on the stocl was deemed to be agood one. For employeex and stockholders, it was the best The deal with Intercell was struck aftere partnership talks with more than 80 narrowed in the last few months down to a handfu of moreserious contenders, Wilson "Our goal was to find a good partnet to help us take the [flu and traveler'zs diarrhea] programs into phase III," Erck said. "Sk we've had a number of discussions that rangedc all the way from corporate partneringh on a specific program to a morestrategivc alliance." This alliance gives Iomai stronger financia backing.
Intercell, which announcec its first-quarter results Tuesday as well, reportes having $422 million in cash and assets by the end of Last year, Intercell said it bookerd $82.7 million in revenue and $7.8 milliomn in profits. The Austrian company said its purchas e ofIomai wouldn't affect its continued planas for profitability this year. Merrill Lynch International acted as exclusivew financial adviserto Intercell, and provided a financia fairness opinion to Iomai'sd board. Traders also seemed to back the Shares for Iomai shot up by 117 percentfrom Monday's closing price of $2.92 to close Tuesday at well above the company's formerr 52-week high of $4.70.
Trading volume for the which averagedroughly 85,000 shares, bulked up to 4.5 million shares on Tuesday. Intercell, whichg is listed on the Vienna Stock Exchange as saw an 8 percent rise inshare prices, toppingt its 52-week high with a Tuesday closing price of $30.30.