BioAlliance Pharma SA, an innovative company specialized in the development of drugs within orphan oncology diseases, and Topotarget A/S, a Scandinavian-based biopharmaceutical company, announced their intention to merge to create a leading orphan oncology company with a highly complementary pipelines of late-stage products addressing significant unmet medical needs. The merger agreement has been unanimously approved by the Boards of Directors of both companies.

Under the terms of the merger agreement, BioAlliance Pharma will be the continuing company and shares issued by Topotarget will be exchanged to the effect that shareholders of Topotarget will receive 2 newly issued shares in BioAlliance Pharma for each 27 Topotarget shares held, resulting in shareholders of Topotarget owning approximately 1/3 of the shares in the merged company, while existing shareholders of BioAlliance Pharma will hold approximately 2/.

Highlights of Transaction:    The merger of the two biopharmaceutical companies creates a leading orphan oncology company with a highly complementary pipeline of late-stage targeting genuine unmet medical needs; The total market for orphan oncology drugs exceeds USD ~45 billion in 2013 and is expected to reach USD ~80 billion in 2018. The overall unmet medical need is significant and new rare (or orphan) diseases are continuously discovered;  The new entity will be supported by a highly complementary pipeline of late-stage products with several significant value-creating events anticipated in both the short and medium term, and will benefit from operational efficiencies, combined knowledge-sharing, and a diversified revenue stream driving growth;  Topotarget’s primary product, belinostat, is a novel pan-HDAC (histone deacetylase) inhibitor with more than 1,100 patients treated.

Belinostat is in a pre-registration phase with the FDA for the treatment of relapsed or refractory PTCL (peripheral T-cell lymphoma). Following the assignment of a Prescription Drug User Fee Act, the expected date for an approval is August 9, 2014. The approval would trigger a milestone cash payment of USD 25 million from Topotarget’s US partner, Spectrum Pharmaceuticals as well as a double-digit royalty of sales going forward.

The compound has potential for being explored into other rare cancer indications within hematology and solid tumors. Topotarget holds the exclusive rights outside North America and India.

BioAlliance Pharma has two products in late-stage development; Livatag is currently in a pivotal phase III clinical trial in primary liver cancer, with potential estimated sales of 800 million euros and patent protection until 2032; Validive, the second most advanced product of BioAlliance Pharma’s orphan oncology program, was granted Fast Track Designation by the FDA for the prevention and treatment of oral mucositis induced by anticancer treatments in January 2014 and preliminary data from a large international phase II trial are expected in Q4 2014.

The merger will result in a broadened shareholder base with increased market capitalization, and a strengthened value proposition for US and European based investors.

The combined company will be under the leadership of an experienced management team and supervised by a highly skilled international Board of Directors with extensive pharmaceutical industry experience and proven track record.

The merger agreement is endorsed by the two largest institutional shareholders of both companies – in the case of BioAlliance Pharma by Financière de la Montagne and Idinvest Partners, representing 18.8% of the share capital of BioAlliance Pharma and in the case of Topotarget by HealthCap funds and HBM Healthcare Investments, representing 12.6% of the non-diluted share capital of Topotarget – who have agreed to vote in favor of the merger proposal at the upcoming extraordinary general meetings of the respective companies.

Patrick Langlois, chairman of the Board of Directors of BioAlliance Pharma, said: “Merging with Topotarget is a major milestone for BioAlliance Pharma. This transaction will result in a new and true leader in orphan oncology. I am confident that, under the leadership of Judith Greciet, the new entity will unleash its full potential and create value for our shareholders.”

Judith Greciet, chief executive officer of BioAlliance Pharma, said: “The merger with Topotarget will strengthen and diversify our position in rare oncology diseases. Topotarget is managed by a highly-experienced team of executives, and the merger will enable both teams to combine their respective expertise to create a new company with a robust and innovative pipeline that is primed for success. It is a unique and timely opportunity to develop an orphan oncology portfolio, which addresses a wider range of life-threatening medical conditions, while creating value for our shareholders”.

Bo Jesper Hansen, Chairman of the Board of Directors Topotarget, said: “Following an extensive strategic review I am confident that we have found the best solution for our shareholders and I am very pleased to see their support as well as the support from BioAlliance Pharma’s largest shareholders. It demonstrates that it is a “meeting of similar minds” with a shared vision of creating an immediately leading orphan oncology company with a strong patient focus”.

Anders Vadsholt, CEO of Topotarget, said: “The positioning of BioAlliance Pharma, their late stage assets and expertise makes BioAlliance Pharma a perfect fit as a company to merge with, allowing the acceleration of belinostat development in several new orphan oncology indications by leveraging on both team’s synergistic expertise. We are confident that this merger will deliver to our shareholders the best possible value and the opportunity to jointly shape a dynamic new player in the orphan oncology market.”

Centerview Partners and Nordea acted as financial advisors to BioAlliance Pharma in connection with the merger. Altana and Bech Bruun acted as legal counsel to BioAlliance Pharma. EY and Grant Thornton acted as BioAlliance Pharma’s advisors on auditing and accounting aspects, and Arsene Taxand and Bech-Bruun acted as advisors on tax aspects. Finally, Brunswick acted as PR advisor.

ABG Sundal Collier acted as financial advisor to Topotarget in connection with the merger.

Back Bay Life Science Advisors, acted as scientific advisor to Topotarget. Kromann Reumert and Dechert acted as legal counsel to Topotarget. PWC acted as Topotarget’s advisor on auditing, accounting and tax aspects. Finally, Impact Communications acted as PR advisor.