California-based Fortune 500 and a clinical-stage biotechnology company StemCells and UK-based stem cell research and development company Stem Cell Sciences have entered into a definitive agreement pursuant to which StemCells will acquire the operating subsidiaries and certain related assets of Stem Cell Sciences (SCS) for 2,650,000 shares of StemCells common stock and approximately $715,000 in cash.
StemCells will acquire upon completion of the acquisition:
- proprietary cell technologies relating to embryonic stem cells, induced pluripotent stem (iPS) cells, and tissue-derived (adult) stem cells;
- expertise and infrastructure for providing cell-based assays for drug discovery and screening, including automated robotic production and manipulation of stem and progenitor cells;
- patented gene insertion technology, with broad utility in drug screening and for applications in cell and gene therapy;
- the SC Proven ® media formulation and reagent business, including the iSTEM ®, 2i, 3i, Passaid™, HEScGRO™, and EScGRO™ proprietary media;
- a portfolio of over twenty patent families claiming a range of technologies relevant to cell processing, reprogramming and manipulation and gene targeting; and
- existing business and license relationships respecting SCS technologies entered into by several major life science companies, such as Merck and Millipore, among others.
Under the terms of the asset purchase agreement, StemCells will acquire substantially all of the operating assets and liabilities of SCS, including its research and development operations in Cambridge, UK and near Melbourne, Australia, and substantially all of its intellectual property portfolio. It is expected that most of SCS’ approximately 20 full-time current staff will remain with StemCells upon completion of the transaction.
As consideration for these assets, StemCells will issue 2,650,000 shares of common stock to SCS. In addition, upon completion, StemCells will waive certain loan obligations of SCS to repay approximately $715,000 in cash made available by StemCells to SCS for its working capital purposes. The actual number of shares delivered to SCS at completion will depend on the acquired subsidiaries having at least an agreed-upon target amount of working capital. A portion of the consideration shares will be held in escrow for release in 12 months, subject to any claims for indemnification StemCells may make under the terms of the agreement.
The transaction has been unanimously approved by the board of directors of each of the companies and is subject to customary closing conditions, including the approval of the shareholders of SCS in general meeting. Members of the SCS Board and other significant stockholders representing over 30% of the SCS shares outstanding have irrevocably agreed to vote in favor of the transaction. Approval by StemCells’ stockholders is not required.
Martin McGlynn, President and CEO of StemCells, said: “The industrial logic of this acquisition is compelling. StemCells has established itself as a world leader in tissue-derived stem and progenitor cells for therapeutic uses, while Stem Cell Sciences has focused on non-therapeutic applications for embryonic and tissue derived stem cells, such as cell-based assays for drug discovery and screening.
“This proposed acquisition will combine three distinct stem cell platforms, adult, embryonic and iPS cells, for both therapeutic and drug discovery applications, and will position StemCells to diversify and pursue near-term commercialization opportunities while continuing to develop our cell-based therapeutic products.”
The transaction is expected to close within two months, after which SCS expects to wind down its operations and distribute proceeds from the sale of the acquisition shares, less its transaction and wind-down expenses, to its stockholders.
