Shares in CeNeS Pharmaceuticals have leapt almost 65% on the news that it is in talks that may lead to a sale of the UK company.
CeNes is keeping pretty tight-lipped about the move and issued just a short statement confirming that it is “in discussions which may or may not lead
to an offer for the company” and that Nomura Code Securities is acting as financial advisor. Chief executive Neil Clark was not available for comment.
The firm’s share price has performed miserably over the last year as investors have become increasingly impatient about CeNeS’ inabilit
y, or just bad luck, in getting a licensing partner for its lead product, M6G (morphine-6-glucuronide) for post-operative pain. A lack of any concrete deal has reduced CeNeS’ value considerably which has created a vicious circle that has reduced its bargaining power.
Robin Davison, an anal
yst at Edison Investment Research, told PharmaTimes World News that as CeNeS market capitalisation is only £6.5 million,even after the latest hike, the chances of signing a lucrative partnership deal are slim to none now. “Why pay a licensing fee of £10 million when you can buy the company for £10 million?,” he asks.
However, Mr Davison notes that CeNeS is “quite a nice little company”, and believes that as well as M6G, which is ready for regulatory submission in Europe and on the verge of going into Phase III trials in the USA, it has some interesting products in its pipeline. Chief among these is CNS5161 for neuropathic pain, which is in Phase II trials, and it also has earlier-stage programmes for a short-acting sedative (partnered with Japan’s Ono) and a catechol-o-methyltransferase inhibitor for Parkinson’s disease.
As for potential buyers, Mr Davison said that a group of investors or current management could take the firm private and reports have suggested CeNeS chairman Alan Goodman and his Avlar Bioventures group could be interested. Other firms linked with a possible offer include the pain specialists Endo and Mundipharma and bigger players Abbott and Boehringer Ingelheim.
It will be interesting to see what price the CeNeS board can get if it chooses to sell. A December research note from Keith Redpath at JMFinn Capital Markets valued the company at £90 million in terms of its future cash flows which may seem a trifle ambitious given its present financial situation.
Dr Redpath acknowledged that while CeNeS share price weakens its bargain position but also pointed out that “most biotechnology companies are within 18 months of running out of money and many succeed in closing successful transactions”.
