Stock Update (OTHEROTC:INSV): Insite Vision Inc. to Merge With Canadian Biotechnology Company QLT Inc.


Insite Vision Inc. (OTCBB:INSV) announced that it has reached a definitive agreement with QLT Inc. under which QLT will acquire InSite in an all-stock transaction that will create an ophthalmic specialty pharmaceutical company with a diversified portfolio of products, full R&D capabilities and innovative platform technologies. The transaction is expected to drive shareholder value by accelerating both companies’ development pipelines, increasing product diversity and improving balance sheet strength.

The newly formed company will be incorporated in Canada and led by a combined InSite Vision and QLT leadership team. With operations in Alameda, California and Vancouver, British Columbia, and headquarters in Vancouver, the new company will retain the name of QLT, and will continue to trade on NASDAQ under the ticker “QLTI” and on the Toronto Stock Exchange (TSX) under the ticker “QLT”.

InSite Vision plans to promptly file a New Drug Application (NDA) later this week with the U.S. Food and Drug Administration (FDA) for marketing approval of its drug candidate BromSite™ to reduce post-operative inflammation and prevent pain following cataract surgery, and continued progression of a Phase 3 clinical trial of QLT091001, QLT’s Orphan Drug and FDA Fast Track designated retinoid product candidate for the treatment of inherited retinal diseases in the first half of 2016. The merged companies expect to file a second NDA for InSite Vision’s DexaSite™ for the treatment of blepharitis in 2016.

The combined company expects to have approximately $70 million in cash after the closing of the transaction and completion of other investments and dividends announced today by QLT, all of which dividends will be effected after the completion of the merger and include distributions to prior InSite shareholders as new QLT shareholders.

“The new company created by this merger will be a well-funded pure play ophthalmic specialty company with a robust pipeline of late-stage drug candidates, a strong cash balance with access to a broader investor base and the opportunity for increased shareholder value,” said Timothy Ruane, Chief Executive Officer of InSite Vision. “The combination of InSite Vision with QLT will create a unique new company with multiple potential value creation events in the near- and medium-term, the potential to file multiple NDAs over the next several years, execute on the development of a potential successful ophthalmic retinoid product and advance a diversified pipeline of promising product candidates for unmet eye care needs.”

“The merger with InSite Vision is an excellent opportunity for QLT shareholders to benefit from the combined strengths and assets of both companies,” said Jason Aryeh, Chairman of QLT. “The InSite Vision team has repeatedly demonstrated its ability to efficiently execute on ophthalmic drug development, and I am excited to see our retinoid product have the opportunity to progress in a similar manner under our combined leadership. With a strong balance sheet and diversified late-stage pipeline, I am excited about the future of the company and its potential for additional value creation.”

Combined New Company Pipeline
ProductCategory & IndicationClinical StagePartner StatusPatent Life/Exclusivity
AzaSite® (1%)Antibiotic; Bacterial conjunctivitisApproved: US/CanadaPre-MAA: EU/MEA

Phase 1/2

Akorn: US & CanadaNicox: EU/MEASenju: Japan

Retain ROW rights

Issued; 201910-years post-approvalIssued; 2020
BromSite™NSAID; Post-cataract surgeryNDA filing this weekPre-MAA: EU/MEARetain USANicox: EU/MEARetain ROW rightsIssued; 2029
DexaSite™Steroid; Blepharitis2016 NDA plannedRetain global rightsPending; 2029-2034
QLT091001Retinoid; LCA/RP (Orphan Drug); Potentially IDAPhase 3 ready: EU/USPlanned MAA filing for conditional approval in EURetain global rightsIssued; 2025Pending; 2029-2034
DexaSite™Steroid; Post-cataract surgeryPhase 3 readyRetain global rightsPending; 2029-2034
AzaSite Plus™Antibiotic/steroid combination; Bacteria-related blepharitisPhase 3 readyRetain global rightsIssued 2019Pending; 2031
ISV-101NSAID; Dry eye disease due to inflammationPhase 1/2 readyRetain global rightsIssued; 2029
AzaSite Xtra™ (2%)Antibiotic; Neonatal infection prevention (Orphan Drug) & bacterial conjunctivitisIND readyAkorn: US Canada optionNicox: EU/MEARetain ROWIssued; 2027-2033
BromDex™ (DuraSite® 2)New NSAID/steroid combination; post-cataract surgeryIND planningRetain global rightsIssued; 2029
ISV-104(DuraSite® 2)Immunosuppressant; Dry eye diseasePre-INDRetain global rightsIssued; 2029
DuraSite® 2 PlatformPlatform formulation technology; front of eye & retinal indicationsPre-INDRetain global rightsIssued; 2029

Terms of Proposed Transaction

Under the terms of the agreement, a wholly owned subsidiary of QLT will be merged with and into InSite Vision. Shareholders ofInSite Vision will receive 0.048 QLT shares for each InSite Vision share. For InSite Vision shareholders, the transaction represents a 27% premium based on the closing stock prices of InSite Vision and QLT as of June 5, 2015, the last trading day prior to the announcement of the merger. Upon completion of the merger, QLT shareholders will own approximately 89% and former InSite Vision shareholders will own approximately 11% of the combined company. In addition, the merged company’s board will include two seats to be filled by the CEO of the merged company and one director nominated by InSite.

Approvals and Further Details

The transaction, which has been unanimously approved by the Boards of both companies, is subject to the approval of InSite Visionshareholders, a condition that the FDA has not refused to accept the BromSite™ NDA for review within 60 days after InSite Vision’s filing of the NDA, a condition that the FDA has not indicated that it will require InSite Vision to conduct additional clinical studies prior to approval of BromSite™ within 74 days after InSite Vision’s filing of the NDA, and other customary closing conditions. QLT will not require a shareholder vote to conclude the transaction; InSite Vision will file a proxy statement with full disclosure of the transaction and will schedule a shareholder vote to approve the transaction. QLT will provide InSite Vision with a line of credit until the transaction closes. The transaction is expected to close in the third quarter of 2015 and to be taxable to InSite Vision shareholders. Shares of the new company will trade on NASDAQ under the ticker “QLTI” and on the TSX under the ticker “QLT”.

Advisors

Guggenheim Securities, LLC served as financial advisor to InSite Vision, Roth Capital Partners provided an independent fairness opinion and Jones Day served as legal advisor. (Original Source)

Shares of Insite Vision Inc opened today at $0.14 and are currently trading up at $0.165. INSV has a 1-year high of $0.36 and a 1-year low of $0.12. The stock’s 50-day moving average is $0.14 and its 200-day moving average is $0.18.

On the ratings front, Roth Capital analyst Scott Henry reiterated a Buy rating on INSV, with a price target of $0.70, in a report issued on May 19. The current price target represents a potential upside of 311.8% from where the stock is currently trading.

According to TipRanks.com, Henry has a total average return of 30.5%, a 68.2% success rate, and is ranked #34 out of 3612 analysts.

InSite Vision Incorporated is an ophthalmic product development company committed to advancing ophthalmic pharmaceutical products to address unmet eye care needs.