Novartis’ CAR-T partner in China wraps $383M take-private deal engineered by CEO
After 13 years on Nasdaq, Cellular Biomedicine Group is returning to private hands.
CEO Tony (Bizuo) Liu is a key advocate of the deal, leading a consortium of mostly Chinese investors including other top company execs, Yunfeng Capital and TF Capital — even as the company is getting more entrenched in the US with its CAR-T and other cell therapy work.
Shareholders are receiving $19.75 per share $CBMG, which translates to a premium of 31.4% over the 30 trading-day average price as of August 11. The stock, though, has dropped significantly since the consortium first put in its proposal in November. Compared to then, the acquisition price marks only a 11.8% increase.
Cellular Biomedicine reported 19,432,979 shares of common stock outstanding as of August 1, putting the deal value at $383.8 million.
A China partner of Novartis , Cellular Biomedicine has also signed an alliance with the National Cancer Institute for tumor infiltrating lymphocytes (TIL) for non-small cell lung, stomach, esophagus, colorectal and head and neck cancer. It’s planning to use its Rockville, MD facility to launch clinical development in the US.
Rockville will eventually be home to the biotech’s headquarters, which is temporarily working out of Gaithersburg after relocating from New York City in late June.
Liu, a veteran of Microsoft who had led Alibaba’s overseas investment arm, assured employees in a letter that “there are no plans for any closures or relocations.” The commitment to excellence, he wrote, remains a top priority:
We are confident and assured that, subject to the completion of the transaction, the Consortium is the right partner to position CBMG for future growth. Following the closing of the transaction, we will retain the CBMG name, and will continue with business as usual. As a private company, we will have access to the resources and long-term commitment needed to better pursue new capital investment in existing assets and targeted acquisition opportunities as our sector continues to evolve, including further geographic and product diversification.
But the annual report filed with the SEC suggests a slightly darker picture.
With $225 million in accumulated deficit and several open loans, Cellular Biomedicine Group noted there’s a substantial doubt about its ability to continue as a going concern — and that external financing is needed to right the ship, be it equity, debt, private placements, public offerings or arrangements with private lenders.
In conjunction with the take-private deal — which comes with a one-month period in which other groups may yet propose better terms — Yunfeng is providing a $25 million bridge loan. The firm can choose to receive some payments in company stock.
Among the “rollover shareholders” who are taking new shares instead of money is Novartis. The Swiss pharma giant inked a pact with Cellular Biomedicine in 2018 to manufacture and supply Kymriah in China, while bagging a worldwide license to some of the biotech’s own CAR-T work.
“As of June 30, 2020, we have achieved several major milestones on the technology transfer and collaboration with Novartis on commercialization of Kymriah, specifically, process and analytical training, feasibility, export license for feasibility/comparability, and the majority of our manufacturing comparability run.” the 10-Q read. “On August 6, 2020, we executed a Quality Agreement for Cryopreservation Services to lay out technical parameter pertinent to the service agreement on leukapheresis material processing and cryopreservation executed on June 9, 2020.”
Having started out in regenerative medicine, Cellular Biomedicine expanded into CAR-T in 2014 through the acquisition of Beijing Agreen Biotechnology.