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Whilst the share price of Proximagen Group (LSE:PRX) has hovered around the 140.00p region for three years, since March of this year the charted increase in share price looks like the launch of a space shuttle. Following today’s release of interim results and the pending acquisition of the company by US pharmaceutical company Upsher-Smith Laboratories (USL), the share price shot up 56.00 pence (20%) to 331.00p.
What’s Happening
Upsher-Smith, already a 16% stakeholder in Proximagen, proposed acquiring complete ownership of the company. [4] USL has offered a 16.4% premium on top of yesterday’s Proximagen closing price. The offer includes an upfront cash settlement of £223 million and up to an additional £133 million in contingent value rights (CVRs) , where USL will issue one CVR per share. The ultimate value of the PCRs is tied to the success of Proximagen’s VAP-1 and PRX00933 programs. VAP-1 is a new treatment for rheumatoid arthritis, whilst PRX00933 is a anti-obesity drug. Proximagen also has a pipeline that includes potential treatments for Parkinson’s disease, epilepsy, cognition and neuropathic pain. Proximagen’s board unanimously approved the USL offer and the IP Group, which holds a 7.6% stake in the company, was equally receptive to the offer. All told, USL has already received commitments to vote to accept the bid from shareholders holding 72% of the total outstanding shares.
The influx of USL capital is a breath of fresh air to Proximagen shareholders following the six-month interim report that the company was suffering declining revenues and increased losses as at 31 May 2012. Pre-tax loss was £4.55 million versus £3.65 million for the same period last year. Total revenue came in at £0.13 million, down from £0.19 million. Loss per share as 6.30 pence, whilst operating costs escalated by nearly £1 million
Executive Comments
Kenneth Mulvany, CEO of Proximagen, said that “The strategic fit between Proximagen and Upsher-Smith is particularly complementary and we believe that the Acquisition represents a very good opportunity for Proximagen’s portfolio of programs to benefit from the extensive resources of Upsher-Smith and the consequent progress in their development. Proximagen and Upsher-Smith have been strategic partners since 2008 and, having worked closely with Upsher-Smith for more than four years, I am confident that Proximagen’s staff and programs will be in very good hands and have a very bright future in the Enlarged Group.” He added that, “This deal demonstrates that the UK biotechnology sector can, with supportive investors, bring together scientific excellence and business acumen and generate significant returns for shareholders. On these terms, the deal returns significant value to our investors who have continually been committed to Proximagen and believed not only in Proximagen’s business model but also in the UK’s ability to generate commercial returns from great science and innovation.”
Upsher-Smith CEO Mark Evenstad said that his company has been “very impressed with the quality and breadth of Proximagen’s portfolio of programs, and the commitment and expertise of Proximagen’s employees. Having worked closely with Proximagen as both a commercial partner and a strategic shareholder since 2008, we believe that Proximagen has significant potential and we are excited about the opportunity of bringing new therapies to market that will benefit patients.”
Company Spotlight
Proximagen Group plc is a clinical stage drug development company specialising in developing new therapeutic treatments for diseases of the central nervous system. Proximagen is committed to a strategy of pursuing “opportunities that improve upon current therapies” that also represent significant commercial value to the company.
References
↑ Proximagen Annual Report 2011
↑ Official Company Information
