Bioniche signs licensing, funding deal with Paladin

Bioniche (ASX:BNC) has signed a wide-reaching debt refinancing and funding agreement with Canada’s Paladin Labs, as well as a licensing deal covering bladder cancer candidate Urocidin.

Under the arrangement, speciality pharmaceutical company Paladin Labs has acquired Bioniche’s existing debt facility with Capital Royalty Partners for around C$22 million ($21.2 million).

Paladin will also provide Bioniche with an additional C$8 million loan - C$5 million initially and C$3 million once Bioniche receives equity from licensing revenue or equity financing.

The total loan will bear an interest rate of 13.25% and mature in July 2014. A payment of 105% of principal will be due once the company closes the planned sale of its animal health business.

The arrangement also includes a provision for Paladin to acquire up to three million Bioniche shares. Paladin has agreed to invest C$500,000 in Bioniche if the latter completes its equity raising by the end of September.

Bioniche will meanwhile grant Paladin an exclusive licence to market and distribute Urocidin in Canada, South Africa and Mexico.

Bioniche will bear all remaining product development and manufacturing costs, while Paladin will pay sales and marketing costs in the three markets.

The companies will share net revenue from sales and Paladin is offering sales performance milestones worth up to C$16 million over the course of the deal.

“We are pleased to have received this support from Paladin Labs, which demonstrates their belief in our business model and in our planned value unlocking opportunities, including the divestment of our animal health business now underway,” Bioniche president and CEO Graeme McRae said.

Bioniche shares were trading unchanged at $0.35 as of around 1.30 pm on Thursday.