* Afexa asks shareholders to take no action pending review
* Bid comes as drug companies look to expand portfolios
* One of two takeover offers Paladin has in play
(Adds details, industry comment, share prices)
By Pav Jordan
TORONTO, Aug 19 Afexa Life Sciences Inc
FXA.TO, maker of the popular Cold-FX flu medicine, urged
shareholders on Friday to take no action on a hostile takeover
offer from Paladin Labs PLB.TO, saying it undervalues the
company at C$56.7 million ($57.3 million).
In an earnings report that trumpeted a bright future for
Cold-FX in Canada and abroad, Afexa said a special committee of
the board would review the offer and would make a
"The board strongly urges Afexa shareholders not to deposit
any shares to the Paladin offer and not to take any action with
respect to the Paladin offer until the board has completed its
full review and consideration of the offer," the company said.
The bid for Afexa is one of two acquisition deals being
pursued by Montreal-based Paladin, and highlights the growing
competition in the industry for access to approved and
Labopharm Inc DDS.TO, a Canadian biotech company
specializing in controlled-release drugs, said earlier this
week it agreed to be bought by Paladin after a months-long
search for a suitor.
"Both the big pharma and the specialty pharma, which
includes Paladin, are all looking to increase their top line
revenues and want other good products to sell, and there's a
lot of competition for these products," said Cheryl Reicin,
head of the life sciences group at Toronto law firm Torys.
Paladin is offering 55 Canadian cents a share or 0.013 of a
Paladin share for each Afexa share it does not already own.
The Aug. 10 offer came just weeks after Paladin announced
in July that it held more than 15 million shares of Afexa, or
Days later, Afexa adopted a poison-pill defense preventing
any shareholder from acquiring more than 15 percent of the
company. It also said it would discontinue a share buyback
while it was subject to the hostile bid from Paladin.
Afexa shares were down 1.75 percent in early afternoon
trade in Toronto, at 56 Canadian cents a share. Paladin shares
also edged down, to C$38.47 a share.
For the April-June quarter, Afexa's net loss narrowed to
C$3.1 million, or 3 Canadian cents a share, from C$4.1 million,
or 4 Canadian cents a share, a year ago.
Revenue for the Edmonton, Alberta-based Afexa rose to C$4.6
million from C$1.8 million last year, with most of that coming
from Cold-FX, Canada's top selling over-the-counter cold and
Afexa also said it was looking to start selling Cold-FX in
(Additional Reporting by Bhaswati Mukhopadhyay in Bangalore;
editing by Rob Wilson)