iBio: Why I Think a Buyout Deal is on the Table, Right Now.

iBio: Why I Think a Buyout Deal is on the Table, Right Now.

By Jim Tassano          6 June 2019 

In a previous article, Marc Keiser and I gave our argument that Kenneth Dart was actively working to sell the CDMO, iBio.

One of the most recent developments was an 8-K filed on May 30, 2019 showing that iBio was going to pay their CFO, James P. Mullaney, a $150,000 bonus. This is what it said:

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On May 30, 2019, the Compensation Committee of the Board of Directors of iBio, Inc. (the “Corporation”) approved bonus payments payable to James P. Mullaney, Chief Financial Officer of the Corporation, in recognition of Mr. Mullaney’s services in undertaking additional operational tasks for the Corporation outside his regular duties as Chief Financial Officer. Subject to Mr. Mullaney’s continued employment with the Corporation, the Committee approved the following bonus payments payable to Mr. Mullaney: (a) $50,000 payable promptly after May 30, 2019, (b) $50,000 payable on August 1, 2019, and (c) $50,000 payable on November 1, 2019. To earn and receive a bonus payment, Mr. Mullaney must remain actively and continuously employed by the Corporation through the applicable payment date. …”

Notice that it states “$50,000 payable promptly after May 30, 2019”. The form was filed May 30. That means he is getting paid right now for his “additional operational tasks”.

iBio announced the appointment of Thomas Isett on April 1, 2019. We can assume it took some time between his actual joining iBio and that press release. It is now early June. He has had over two months to work on his mission, which we believe is to arrange the sale of iBio CDMO, at the least.

Now, the CFO is being paid an amount of money basically equal to what Thomas Isett is being paid.

Why pay the CFO in case Tom Isett might find a deal? That would be excessive. But Mr. Isett has had two months to work on the project.

I think that iBio is paying the CFO, James Mullaney, the bonus, immediately, because there is at least one deal on the table. Thomas Isett has done his job, at least in part, and now the grindingly difficult work is needed by James Mullaney.

I suspect negotiations are ongoing, and maybe other buyers are entering the picture. But odds are high that Thomas Isett has succeeded in arranging negotiations for a merger, with at least one company.

When it is all hammered out, the announcement will be made. Kenneth Dart can pull a big rabbit out of a small hat. The rabbit may be in the hat now.

Further evidence is an article by Thomas Isett, 24 May 2019, Advanced Therapies: Landscape, the Road Forward, and M&A.

"The heat is on in biologics manufacturing M&A, too. Danaher grabbed GE’s BioProcess business for $21B to pair with their Pall Life Science holding. Meanwhile, a couple of CDMOs made grabs for viral vector capability and capacity. Thermo Fisher shelled out $1.7B for Brammer Bio, and Catalent paid $1.2B for Paragon Bioservices, within weeks of one another. It is remarkable that Paragon had only just held the grand opening of its new viral vector facility four days before its deal with Catalent was announced.

It’s hard to imagine the field getting any hotter over the coming years. However, with therapeutic proteins far from “mature,” cell and gene therapies just entering the growth stage of their life cycle and the field of biofabrication hardly even out of the gate, there’s almost certainly much more to come. So, hold on to your hat: there is plenty of activity in advanced therapies, bioprocess systems and biologics CDMOs in the forecast. "

That last sentence may be predictive, as Thomas Isett may know of a biologics CDMO about to be involved with a merger, soon.