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Unimpressed With Company, Ibex Says 'No' To Miraculins' Unsolicited Acquisition Offer

We’re just not that into you.
That’s the gist of the response Ibex gave to Miraculins after it announced late last week that it intends to make an unsolicited bid to acquire Ibex.
In a press release disclosing Miraculins’ offer, President Jim Charlton said that “the cancer diagnostic programs of Miraculins and Ibex are extremely complementary, and future opportunities for our companies are enhanced by this transaction.” 
But Ibex President and CEO Paul Baehr rejected the advance several weeks ago when Miraculins officials approached Ibex with an offer. He said Miraculins’ proposal undervalues the company, and that Miraculins is a smaller company financially. The public show of affection hasn’t changed his position.
Ibex “met with them and took a look at their technology, and we weren’t that impressed, and so we responded that we had no interest,” Baehr told ProteoMonitor sister publication GenomeWeb News this week.
But the door isn’t completely closed for Miraculins: An Ibex advisory committee could recommend it to be acquired by Miraculins. Ibex also faces possible delisting action by the Toronto Stock Exchange for failing to meet minimum listing standings, which could prompt investors and directors to consider an acquisition bid as an escape hatch.
Miraculins, based in Winniped, Manitoba, is currently validating validating biomarkers for several cancers for possible use for diagnostic tests. A year ago, it acquired the IP portfolio of Europroteome, including a number of biomarkers for cancers.
Ibex, based in Montreal, is a cancer and arthritis diagnostic firm.
Under the terms of Miraculins’ offer, Ibex shareholders would receive one share of Miraculins stock for every five shares of Ibex stock they own. The offer would value Ibex shares at CA$.182 ($.159), apiece, a 65-percent premium over Ibex’s average closing share price of CA$.11 during the 50 days prior to Nov. 16, when Miraculins announced its intentions.
At the close of the proposed acquisition, Miraculins shareholders would own 77 percent of the merged company while Ibex shareholders would own 23 percent.
“We believe that this offer represents an attractive value for the shareholders of Ibex and Miraculins, and is consistent with our strategy to focus on building a strong biomarker company and driving shareholder value,” Charlton said.
But in a response posted on its Web site, Ibex made it clear that it is underwhelmed by Miraculins’ offer. In valuing the company, Miraculins took into consideration only Ibex’s cash and cash equivalent and marketable securities but overlooked Ibex’s cancer diagnostic technology and $2 billion in sales from Ibex’s growing specialty enzyme and arthritis kit, Ibex said.
In addition, Ibex announced last week that it has entered into a non-binding letter of intent to acquire a private company based in the Montreal area and expects to close the deal by the end of the year. If completed, the acquisition “will substantially increase Ibex’s size,” the company said.
Ibex also noted that as of Aug. 31, the date of its most recent financial statement, Miraculins had $1.6 million in cash compared to $4.5 million in cash, cash equivalents, and marketable securities that Ibex had as of July 31.
Rebuffed. Now What?
According to documents filed with Canadian regulators, Miraculins’ total assets as of Aug. 31 were $2.2 million. Its liabilities totaled $77,069. The company posted a loss of $1.1 million for the nine months ended Aug. 31.
For fiscal year 2006, which ended July 31, Ibex posted a loss of $2.9 million. Its assets totaled $10.1 million while liabilities numbered $1.2 million
In its statement rejecting Miraculins’ overture, Ibex further said that Miraculins’ value has steadily declined since December with its share price down by about 50 percent with “negligible trading volume.”
“If their value was good, if their technology was good, if they were a well-traded stock, it might be different,” Baehr told GenomeWeb News.

Ibex “met with them and took a look at their technology, and we weren’t that impressed, and so we responded that we had no interest.”

Miraculins’ shares, traded on the TSX Venture Exchange, closed on Nov. 21 at $.95. Ibex, traded on the Toronto Stock Exchange, closed at $.15, up from $.10 since Miraculins disclosed its intent to purchase Ibex on Nov. 16 but down from $.17 on Nov. 17 when Ibex said it would reject Miraculin’s bid.
Miraculins next step is unclear now that Ibex has publicly rejected its offer. Miraculins did not respond to requests for an interview.
If it is looking for a reason that Ibex may reverse its stand, Miraculins may find it in the fact that Ibex was notified in late October by the Toronto Stock Exchange that the company could have its stock delisted for failing to meet minimum listing standards.
The exchange requires a company to have market capitalization of at least $3 million for 30 consecutive trading days. The company said it plans to meet with the exchange to demonstrate it can meet listing requirements. At the close of market on Nov. 21, Ibex’s market cap was $3.46 million.
Baehr also did not completely rule out an acquisition by Miraculins, saying the company’s board will consult with an advisory committee on the issue.
Formed in 2002, Miraculins is currently performing validation work on biomarkers for five cancers: pancreatic, stomach, breast, colorectal, and prostate [See PM 09/21/06].
Its last significant acquisition occurred in June 2005 when it purchased the IP portfolio of Europroteome after that company filed for bankruptcy. The portfolio included 14 patents and discoveries related to the diagnosis of several cancers [See PM 06/24/05].
Ibex is developing diagnostics for cancer and arthritis. Its cancer diagnostics are based on kallikrein, a novel family of genes. Its arthritis program is based on biomarkers of cartilage degradation and synthesis.
Baehr said the company may be moving toward a revenue-based business model from its kallikrein-based, long-term research-driven business model and had told Miraculins of the potential changes in the company.
— Matt Jones contributed to this article

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