The Hindu Business Line : Biocon makes $3.5 m pitch for Nobex IP

BIOCON has made a `stalking horse' or early suitor bid of $3.5 million (around Rs 15.75 crore) for the intellectual property assets of its troubled US R&D partner Nobex Corp.

The US company that has filed for bankruptcy safeguards under Chapter 11 says in its Web site that it will auction its IP assets on March 16.

Biocon tied up with Nobex in October 2004 and is co-developing two of Nobex's half-a-dozen key research projects, namely oral insulin tablet IN105 and a heart failure drug BN054. Both of them are in advanced pre-clinical stages. According to the Web site, the deadline for submitting bids is March 13; auction on March 16 and sale hearing on March 20.

Meanwhile, Biocon will be looking out for rival bids, which may start coming in later this month, those familiar with the developments told Business Line. While domestic pharma companies have been on an acquisition spree, a favourable outcome in the Nobex case would arguably make Biocon the first Indian company to acquire international IP that is under development in this manner.

The `stalking horse' bid covers the costs of keeping these co-development projects going and meeting administrative and routine staff expenses until the IP assets are disposed of. Whether Biocon wins or loses its bid, the expense it bore would be discounted for in the final reckoning under a `debtor in possession' provision in the US law, the sources said. Several parties have shown interest in the assets, according to Nobex.

In the early stages of its partnership, Biocon invested a separate amount of $5.8 million (Rs 27 crore) in Nobex. This includes: $1 million (around Rs 4.5 crore) as common stock and the rest in convertible loans. "Biocon has exclusive licensing rights which as per the agreement survive any event of bankruptcy," the CMD, Ms Kiran Mazumdar Shaw, had earlier said.

The Bangalore biotechnology major announced its intent to go for Nobex's entire intellectual assets as soon as the latter filed for Chapter 11 in early December.

Work on oral insulin molecule IN105 is going on in the US and India and the molecule is due to go in for Indian regulatory approval for pre-clinical trials during this quarter or the next and phase 2 early human trials in early 2007. In the US, an INDA (innovative new drug application) is due for filing at the same time.

As for BN054, it is going through pre-clinical trials prior to INDA filing and possible proof of concept trials in the US in 2009.