http://www.news.com.au/heraldsun/story/0,21985,24881354-664,00.html
Fight for Progen cashbox
Olga Galacho
January 07, 2009 12:00am
THE tug-of-war over the $60 million cashbox that drug developer Progen is sitting on intensified yesterday as a roadshow got under way to sell the proposed merger between the biotechnology company and Avexa.
Speaking after a Melbourne shareholder briefing, Avexa chairman Nathan Drona defended the merger, saying it would help flush out a better price from one of the big pharmaceuticals it was in talks with for the HIV drug the company is trialling.
"This transaction would allow us to put the right deal out and give us flexibility to put pressure on big pharma," Mr Drona said.
He dismissed claims by a group of disgruntled Progen shareholders that the merger would disadvantage them.
Led by former CSL vice-president Bob Moses, the Progen Shareholders Group said the deal was seriously flawed. The group plans to call for a boardroom spill at a shareholders' meeting on Friday.
Avexa believes its HIV therapy, known as ATC, could have a "conservative market opportunity of between $400 million and $500 million" if approved by regulators.
Biotech analysts remain divided over whether the deal should go ahead.
Intersuisse Bioscience investment associate Darren Grubb said that in the current economic climate, it made good strategic sense for "a company that has cash and another with a quality program to get together".
"I would be quite pleased to see the cash and the HIV therapy in the one company," Dr Grubb said. "It would be prudent for shareholders to take an offer that's on the table rather than hope for something better in the future that may not materialise."
However, Dr Grubb acknowledged Progen and Avexa should address the concerns of the "loud dissenting voices" to the proposed merger.
Among those concerns, according to Bioshares editor David Blake, are that the HIV drug might not be economically viable.
"If nobody has come to bid for the product, then it probably isn't triple-A material," Mr Blake said.
"Globally, in the past six months there has been a steady stream of biotech acquisitions taking advantage of good prices.
"The fact Avexa has not been able to sell its compound shines a light on the quality of that asset," he said.
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