Telesta (TST.T) will cease to exist should shareholders agree to an all-share deal offered by Prometic Life Sciences (PLI.T) for the company’s Belleville, Ontario vaccine production facility.
That facility, according to company documents, is a revenue neutral facility, which Prometic figures would make for a good addition to their assets as a backup/growth production option.
Telesta fell in a hole when their MCNA program came unglued in the FDA approval process. The company announced earlier this month that it would kill MCNA as part of their strategic review process.
Telesta today announced that it has executed a Termination Agreement with its European partner, Ipsen, which provides for the return of all of the former rights granted to Ipsen for the MCNA program in Europe and some other jurisdictions. Since Telesta’s End of Review Type A meeting with the FDA in April, Telesta has determined that there is no reasonable assurance that a development partner in any region of the world can be found for MCNA in the short term. As such, Telesta will cease to expend any significant effort or funds to find a partner or further develop this asset and Telesta will close its Montreal-based manufacturing facility, seeking a buyer for this facility while reducing ongoing intellectual property expenditures to a minimum
The company essentially went on care and maintenance while they scrambled to find an exit.
- Provides the opportunity for further integration of manufacturing capability and longer term capacity expansion in a 150,000 sq. ft. facility in Belleville, Ontario;
- Provides approximately $34 million in cash to be deployed towards ProMetic’s drug development and clinical programs and value generating activities;
- Does not materially affect ProMetic’s EBITDA and operating cash flows;
- Provides up to $50 million in potential tax attributes; and
- Provides ProMetic with a significant foothold in Ontario, consolidating its presence as a major player in the Canadian market.
Prometic is offering a 100% premium on Telesta stock, giving up $0.14 per share. The company was selling for $0.07 before the deal was announced, having traded at around $0.80 back before they got FDA-pounded, so any shareholder not sprinting to a ‘yes’ vote today is certifiable.
I owned Prometic stock back in 2014 when it was pushing up against a buck. Sold at around $1.40 having doubled my money, but would have doubled it again if I’d held for the last year. Telesta folk will enjoy having their fortunes overseen by a team that delivers.
— Chris Parry