deCODE genetics requests court approval of asset sale procedures

By Caroline Salls

Pittsburgh, Nov. 19 - deCODE genetics, Inc. requested court approval of the bid procedures for the proposed sale of its Iceland-based subsidiary Islensk Erfdagreining and its drug discovery and development programs to Saga Investments LLC, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Saga was formed in September by Polaris Venture Partners and ARCH Venture Partners for the express purpose of purchasing the deCODE assets.

The purchase price under the stalking horse agreement is comprised of three components, including a base cash price equal to the greater of $11 million or a Saga debtor-in-possession loan amount. A minimum of $3 million of the base cash price must be paid in cash.

The second component is an additional cash price consisting of 25% of the net cash proceeds from the sale, license or other monetization of the purchased compounds received within 24 months of the closing date, minus $3 million.

The third component is a non-cash price consisting of non-voting junior convertible non-redeemable preferred membership interests in Saga with a non-participating liquidation preference of $7.15 million.

Based on the DIP loan amount, the company said it projects a closing date consideration of $14.12 million, including refinancing of a bridge loan in full plus $3 million in cash.

If Saga is not the high bidder, deCODE will pay it a break-up fee of 3.5% of the base cash price and reimburse up to $500,000 of its sale-related expenses.

Competing bids, which are due by 5 p.m. ET on Dec. 17, must be at least equal to the purchase price, plus the amount of the break-up fee, expense reimbursement and a $250,000 initial overbid protection amount.

Subsequent bids at auction must be made in increments of at least $100,000.

The auction will be held on Dec. 21.

As previously reported, deCODE withdrew its original bid procedures motion on Tuesday. However, the key terms of the bid procedures did not change under the new motion.

A hearing on approval of the bid procedures is scheduled for Dec. 4.

deCODE, a Reykjavik, Iceland-based biopharmaceutical company, filed for bankruptcy on Nov. 16. The Chapter 11 case number is 09-14063.

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