The shares of Aegerion Pharmaceutical rise after the news came out of its definitive merger agreement with another biotech company QLT. The company stock climb to 31.20% with a share of $1.25 after the heavy trading volume last Wednesday (June 15) afternoon while the QLT stock is advancing to 6.29% with $1.52 per share.
Each outstanding shares of Aegerion will be exchanged for 1.0256 per shares of QLT’s common stock. The transaction is expected to close at the end of the year. Aegerion will be fully owned and indirect subsidiary of QLT.
The investors are composed of existing and new shareholders of both pharmaceutical companies. The investors plan to provide an investment of $22 million in QLT.
The merging of the two companies will give rise to a new company called Novelion Therapeutics. The company will be traded at the Toronto Stock Exchange and NASDAQ Global Select Market.
As of today, there are 10.88 million shares that have been traded for Aegerion compared with the average of 819,166 daily volumes of shares. There are also 1.22 million shares for QLT that have been exchanged which is significantly above the daily average of volume shares of 90,167.
The Aegerion Pharmaceuticals has “sell” rating. TheStreet Ratings gave the company a D grade rating because of the company’s weak operating cash flow, disappointing returns on equity, a high debt management risk, deteriorating net income and a feeble earning per share.
TheStreet Ratings has objectively rated the stock according to Aegerion’s total return prospect of “risk-adjusted” for over 1 year investment horizon.
Mary Szela, Chief Executive Officer of Aegerion will serve as Novelion’s CEO following the closing of the deal. Szela said in an interview that, “Aegerion has high hopes with QLT’s meaningful cash position and clinical development team”. She noted that, “the commercialization expertise of Aegerion will help unlock QLT’s significant asset which is Zuretinol. Novelion will help pursue the important milestone in the late-stage and commercial portfolio including the possibility of regulatory approval for Juxtapid in Japan and the potential for regulatory filings for Myalept in Europe.”
Szela believes that this definitive merger will present as an opportunity and a fresh start to create a significant value to look forward to.
Both companies said that the planned merger on the third quarter of this year will let Novelion to have an unrestricted cash balance of more than $100 million.
The acting CEO of QLT said in an interview that the resource requirements of QLT to build a global commercial infrastructure prompted their board to come up with a decision to join forces with a strategic alliance that would help maximize the value of their ultra-orphan asset Zuretinol.
The merger of Aegerion and QLT is a strategic alliance. Both companies will benefit from the strength of the other. Aegerion’s expertise is more of commercialization of the drug, while QLT has a lead drug which lacks a global commercial infrastructure.The birth of Novelion Therapeutics will give rise to a new team with better strategic and forward-thinking marketing plans.