Vivalis and Intercell have agreed to the terms of a merger to create a new European biotechnology company called Valneva that will specialize in vaccines and antibodies.

Vivalis currently specializes in cell-based solutions for the biotechnology and pharmaceutical industry. Intercell is a vaccine company seeking to develop and commercialize immunomodulatory biologicals. Together, the companies are seeking to create a “leading” biotechnology company with greater scale and diversification, and a strengthened financial portfolio, with a combined cash balance of EUR 94 million ($124 million) as of Sept. 30, 2012.

The combined companies’ portfolio will comprise a range of partnered product candidates, including a pandemic influenza vaccine in Phase III, a Pseudomonas vaccine in Phase II–III and a Tuberculosis vaccine in Phase II, as well as several validated and commercialized technology platforms, including the EB66 cell line for human and veterinary product development.

Vivalis is acquiring Intercell for an undisclosed amount. Upon completion of the merger, Intercell shareholders will receive 13 new Vivalis ordinary shares and 13 new preferred shares for every 40 Intercell shares they own. According to a press statement, the merger consideration implies a 31.7% premium for Intercell shareholders based on the average share prices in the last three months.

Following the completion of the merger, which is expected in May 2013, Valneva intends to launch a EUR 40-million ($52 million) rights issue. Shareholders will have the right to subscribe on a pro rata basis.