Paramount to acquire 58% of BioValve subsidiary, Valeritas

By Lisa Kerner

Charlotte, N.C., Aug. 28 - Paramount Acquisition Corp. entered into a definitive agreement with BioValve Technologies, Inc. to acquire a 58% interest in the company's recently formed medical technologies subsidiary, Valeritas, LLC.

Initially, under the terms of the transaction, Paramount will receive up to 11.9 million membership units in Valeritas, or approximately 58%.

BioValve and its wholly owned subsidiary corporation, BTI Tech, Inc., will initially receive 8.633 million membership units in Valeritas, or approximately 42%.

Holders of Valeritas' $6.9 million in senior bridge debt will receive warrants to purchase 644,860 shares of Paramount common stock at an exercise price of $5.35 per Paramount share.

In exchange for its equity in Valeritas, Paramount will pay BioValve $10 million in cash and will contribute the balance of its funds to Valeritas.

Paramount will also receive warrants to acquire 19.5 million additional membership units that must be exercised one-for-one as the 19.5 million warrants issued in Paramount's initial public offering are exercised, and an option to acquire 425,000 membership units and warrants to acquire 850,000 membership units. That option must be exercised if the option issued by Paramount to EarlyBird Capital, Inc. is exercised. Paramount will also receive membership units equal to the number of shares issued for warrants on the bridge debt or in exchange for the bridge debt.

All cash received by Paramount upon exercise of the outstanding warrants or options would be contributed to Valeritas in exchange for the additional membership units.

BioValve will earn $15 million upon the redemption or exercise of all of Paramount's outstanding public warrants and is entitled to a 4% royalty on Valeritas' sales, up to $25 million.

Up to 15.750 million membership units may be issued to BioValve for commercialization of the h-Patch.

Once the transaction is completed, Paramount said it will change its name to Valeritas, Inc. and seek a Nasdaq listing. It is currently listed on the OTC Bulletin Board.

The formation of Valeritas included BioValve's contribution of medical technology assets and Valeritas' assumption of liabilities related to those assets.

Valeritas will develop and commercialize medical technologies for the treatment of diabetes and other diseases, including the h-Patch daily disposable basal bolus delivery system for insulin management.

"Paramount's financial resources will allow us to rapidly expand our manufacturing facilities and grow our marketing and sales capabilities so that we can commercially launch our h-Patch product in the second half of 2007," BioValve president and chief executive officer Robert R. Gonnelli said in a company news release.

"We intend to market h-Patch directly to endocrinologists, top-tier primary care physicians and long-term care facilities while continuing our discussions with potential global marketing partners to co-market h-Patch pre-filled with insulin on a worldwide basis."

The global diabetes market is estimated at $19 billion and is expected to grow over the next five years at an annual rate of 12%, officials said.

Members of BioValve's management team intending to join Valeritas include company founder. president and chief executive officer Robert R. Gonnelli along with chief scientific officer William Van Antwerp.

BioValve is a life sciences company developing and commercializing pharmaceutical assets and several proprietary medical technologies.

Medical technology company Valeritas is a wholly owned subsidiary of BioValve.

Paramount is a special purpose acquisition company located in New York.

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