Investors in Swiss biotech company Cytos will benefit from its merger with publicly traded healthcare company Asklia. As a result of the merger, Cytos will apply to the Swiss stock exchange for registration and request to begin public trading on October 29. The transaction reflects the increasing creativity needed by venture capitalists to exit their investments by looking to routes other than a straightforward flotation or trade sale.
Following the merger Cytos’ business operations will remain unchanged as Asklia’s operational businesses have already been sold or are dormant. As a result of the transaction, Cytos will enlarge its group of shareholders and will benefit from the financial resources necessary to continue the development of its products into the clinical phase II/III.
Upon shareholder approval, Cytos will assume all of Asklia’s assets and liabilities under the provisions of article 748 of Swiss corporate law. The publicly traded Asklia will be dissolved as a result of the merger. Asklia shareholders will receive five Cytos shares with a par value of CHF0.10 each in exchange for one Asklia share with a par value of CHF20.
Cytos has raised a total of CHF106 million in three financing rounds from leading international VC firms. Its first round of CHF11 million was completed in 1999 from Global Life Science Holding, Credit Suisse Innoventure and Novartis Venture Fund. The second round in July 2000 Generated CHF50 million and included all first round investors and six new investors Lombard Odier & Cie, Alta Partners, Health Cap, New Medical Technologies, UBS Aventic and Private Equity Direct Finance (today managed by Swiss Life Private Equity Partners).
In its third round completed in January 2002, the company raised CHF45 million. The existing investors contributed 30 per cent to this round and HBM Bioventures, Equity4life, LCF E de Rothschild (Life Sciences Private Equity), Adamant Biomedical Investments, Bank Julius Baer and the Cantonal Bank of Zurich contributed as new investors.
Cytos’ most significant shareholders have agreed not to sell their shares during the 12 months following the merger.
With the application for registration of its shares on the SWX, Cytos will obtain improved access to the capital market, which will mean a significant increase in its flexibility for further product development in the capital-intensive biotechnology business. Assuming favourable market conditions, Cytos will increase its free float to at least 25 per cent by placing additional shares with the public after the merger.
The details and timing of this placement remain open at present. Wolfgang Renner, CEO of Cytos, said: “This step will enable us to expand our group of shareholders and to make ready the financial resources necessary in order to continue the development of our very promising candidate products into the clinical phase II/III. Furthermore, we will increase our visibility by becoming a publicly traded company.” Renner will continue to lead Cytos after the merger with an unchanged team.