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.

Tony Liu

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.

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