Newron Risks Top Drug in NeuroNova Deal, Shareholder Says

Newron Pharmaceuticals SpA’s proposed acquisition of NeuroNova AB is too expensive and may derail the introduction of Newron’s most promising drug, according to the company’s largest shareholder.

The takeover will distract Newron from ensuring its experimental treatment for Parkinson’s disease, safinamide, gets to market as soon as possible, said Mauro Saponelli, the chief financial officer of Zambon Company SpA, which owns 12 percent of Newron. Zambon and other investors are scheduled to vote on the deal at a meeting next week.

“A transaction like this is very dangerous for the development of safinamide,” Saponelli said in an interview in Milan yesterday. “We have many doubts about at least the timing of the transaction, and the price. Those were the questions that we put to the management.”

The replies have been unsatisfying so far, he said.

Newron fell 7.5 percent to 8.23 Swiss francs in Zurich, the biggest drop since May 2, giving the company a market value of 65.8 million francs ($70 million).

Zambon, a family-owned maker of pharmaceuticals and chemicals, paid 20 million euros ($26 million) for the rights to safinamide and a 9.1 percent stake in Newron in May.

A month later, Bresso, Italy-based Newron proposed to issue new shares to buy closely-held NeuroNova of Stockholm in a deal that valued the Swedish company at 18 million Swiss francs based on Newron’s share price at the time. It’s now worth 32 million francs, based on today’s price.

The number of shares issued in the deal should be renegotiated, according to Saponelli.

“We are making a gift of 15 million euros to NeuroNova shareholders,” he said. “We ask at least to re-evaluate the price.”

One Product, One Partner

NeuroNova’s owners include HealthCap, a venture capital fund manager with more than 900 million euros in investments, and Investor AB, the holding company of the Wallenberg family that also controls SEB AB, Sweden’s fourth-largest lender. The two companies, which hold more than 90 percent of NeuroNova between them, are based in Stockholm.

NeuroNova would leapfrog Zambon to become Newron’s biggest shareholder with a 31 percent stake. Newron would get two experimental drugs against Parkinson’s and Lou Gehrig’s diseases, and 16 million euros to help develop safinamide.

“No company in our industry can afford to depend on one product and one partner,” Stefan Weber, Newron’s chief executive officer, said in a telephone interview today. “Sooner or later you will be in trouble.”

Voting No

Still, safinamide remains Newron’s top priority, according to Weber.

“There is not going to be any reduction of attention and care for safinamide,” he said. “If we were putting safinamide at risk, the party that would have the most damage is us.”

The deal will require Newron to invest 19 million euros in NeuroNova next year, and a further 87 million euros by 2018 to develop the two products, Saponelli said, citing a report by KPMG LLP. Weber contests that estimate.

Newron needs investors with at least two-thirds of the shares represented at the Sept. 19 meeting to back the deal after too few holders turned up for the vote to proceed at a gathering in July. Zambon, based in Bresso like Newron, plans to vote against the deal unless it is convinced otherwise, Saponelli said.

That means Newron’s management needs the support of investors holding at least 25 percent of the stock to achieve the two-thirds majority needed for the NeuroNova deal to proceed.


Zambon will “carefully evaluate” what to do with its Newron stake if the deal goes through, Saponelli said. The company hasn’t considered buying all of Newron, he said.

The Zambon deal was a lifeline for Newron after Merck KGaA, which bought the rights to safinamide in 2006, handed them back in October, citing “strategic considerations.”

“The company was in trouble,” Saponelli said. “It was quite close to liquidation, and they were lucky to find a company like Zambon that in a very short period of time was able to put on the table a significant amount of money.”

Merck’s move prompted Biotie Therapies Oyj of Finland to scrap a plan to buy Newron, caused investors including Great Point Partners LLC to sell the stock, and sent the shares to a record low of 1.82 Swiss francs on Nov. 23. The stock has more than quadrupled since then.

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