September 16, 2015
By Alex Keown, BioSpace.com Breaking News Staff
MISSISSAUGA, Ontario – Nuvo Research Inc. , the maker of topical pain treatment Pennsaid 2%, plans to split into two separate public entities to enhance long-term value for shareholders, the company announced this morning.
The split would have to be approved by both the company’s board of directors and shareholders. Nuvo has engaged Bloom Burton & Co. as its financial advisor and Goodmans LLP as its legal counsel in connection with the proposed transaction. Nuvo did not disclose how much the company has spent on laying the groundwork for a breakup.
In August, Pfizer Inc. said it has spent approximately $300 million on exploring options of breaking itself up into multiple entities. Frank A. D’Amelio, Pfizer’s chief financial officer said breaking the company up would cost billions of dollars.
If the split occurs, Nuvo said it would create a “pure-play commercial healthcare company with growing revenue” as well as a “pure-play biotech development company with a deep pipeline of product candidates and significant capital.”
John London, president and co-chief executive officer of Nuvo, said the company has been exploring the option for some time. He said the company believes the time is right to split the company due to the “significantly improved revenue we are beginning to receive as a result of Horizon‘s success in selling Pennsaid 2% in the U.S. and the opportunity to make Pennsaid 2% a global brand.”
Dan Chicoine, Nuvo‘s chairman of the board and co-chief executive officer, said both business models have “distinctly different business models, capital requirements and talent needs.”
“This transaction, if completed, would give both businesses greater flexibility to focus on, and pursue, their respective growth strategies, which we believe should provide shareholders with greater value over the longer term. This separation will create greater clarity not just to our shareholders, but also to potential strategic partners that want to evaluate business opportunities with Nuvo,” Chicoine said in a statement.
Nuvo has been exploring a strategy to split into multiple companies since earlier this year. In April, the company publicly revealed its intention to spin its WF10-related assets into a separate research and development focused entity.
If the split occurs, current Nuvo shareholders will receive shares in both entities, the company said. Before a vote, Nuvo said shareholders will receive details of the proposed split. If approved, Nuvo said the split could be complete by early 2016.
In addition to Pennsaid 2%, which has been approved in the U.S. for pain of osteoarthritis of the knee, the company is developing WF10, an immune modulating drug candidate, which is currently in a Phase II study for the treatment of allergic rhinitis. Additionally, Nuvo has topical and transdermal drug candidates in various stages of development, including the Heated Lidocaine/Tetracaine Patch for the treatment of acute musculoskeletal pain, Flexicaine for the treatment of diabetic neuropathy and post herpetic neuralgia, IBUFOAM, an ibuprofen foam formulation for the treatment of acute pain and antifungal formulations for the treatment of onychomycosis.
In June, the company received approval from the German Federal Institute for Drugs and Medical Devices (BfArM) to conduct a placebo controlled Phase III trial of Pennsaid 2% for the treatment of acute ankle sprains. Nuvo retained PricewaterhouseCoopers Corporate Finance Inc. to assist it in securing international license agreements for Pennsaid 2%.
Nuvo’s is currently trading at $5.27, down from Tuesday’s close of $5.30 per share.
