The Hindu Business Line : Panacea Biotec picking up 14.5% stake in PharmAthene

New Delhi, Oct. 1 Health management company Panacea Biotec Ltd announced that it will pick up 14.5 per cent stake in US-based PharmAthene, Inc for $13.1 million. PharmAthene is a bio-defense company developing medical countermeasures against biological and chemical threats. Panacea Biotec will invest in the American firm through its wholly-owned subsidiary, Kelisia Holdings Ltd.

Under the financing, Panacea Biotec’s subsidiary has agreed to purchase approximately 3.73 million shares of PharmAthene common stock at a negotiated price of $3.50 a share. Upon the closing, Panacea Biotec’s subsidiary will also receive 12-month warrants to purchase up to approximately 2.75 million additional shares of PharmAthene common stock at an exercise price of $5.10 a share. The transaction is expected to close on or before October 20, 2008.

Impetus for growth

“The investment will increase PharmAthene’s ongoing product development activities, enhance working capital, and provide new resources for corporate growth,” said a press release. Panacea Biotech will have the right to purchase up to an additional 2.75 million shares, subject to a stock ownership cap, following any warrant exercise, of 19.99 per cent of PharmAthene. During the next three years Panacea Biotec has agreed not to purchase additional shares of PharmAthene stock without the prior written consent of PharmAthene

“An alliance with PharmAthene presents important strategic opportunities to create value for both of our companies. Panacea Biotec is committed to identifying partners for US distribution of our products. We recognise the position that PharmAthene has taken in the biodefense space and the core competencies of its management team with respect to vaccine development and commercialisation. We are very pleased to participate in this strategic alliance,” said Mr Rajesh Jain, Joint Managing Director of Panacea Biotec.

“Our agreement with Panacea Biotec is part of a comprehensive strategy to strengthen our balance sheet and forge a strategic alliance with a globally-recognised biopharmaceutical company,” said Mr David P. Wright, President and Chief Executive Officer of PharmAthene.

Under a related agreement, PharmAthene has the first right of negotiation for US distribution of certain of Panacea Biotec’s biodefense products.

The alliance may also include development and manufacturing by Panacea Biotec of certain PharmAthene biodefense products. Panacea Biotec’s subsidiary will be granted limited rights to participate in future private financings by PharmAthene to maintain its current ownership level.

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