UK drug discovery company Pharmagene has agreed to the terms of a marriage with privately-held US group Asterand, in a move which aims to create a leading supplier of human tissue and human tissue-based research services. If the merger, which has been classed as a reverse takeover and is still subject to approval from both groups’ shareholders, goes ahead as planned, Pharmagene will change its name to Asterand plc.
According to Pharmagene’s directors, the new company will be able to provide: a tissue supply network of over 70 sites in the USA, the UK, western and eastern Europe and a biorepository of around 300,000 samples; a broad commercial offering including the supply of tissue samples, tissue derivatives and experimental research services; a client base in excess of 70 pharmaceutical and biotechnology firms, serviced by an international sales and marketing organisation; and a service business focused on revenue generation.
Under the terms of the merger, which is being implemented by means of a share-for-share exchange, Asterand will receive approximately 54.2 million Ordinary Shares representing 50% of the issued share capital of the new group. In addition, Deferred Consideration will be payable to Asterand Preferred Shareholders equivalent to five times the profit before tax of the merged entity for the financial year ending 31 December 2006, subject to certain adjustments, Pharmagene noted.
The new firm’s management will be led by Randal Charlton as Chief Executive Officer (currently Asterand’s CEO), Ronald Openshaw as Chief Financial Officer (Pharmagene’s Acting CEO & CFO) and Martin Stefanelli who will take on the role of Chief Operating Officer (sterand’s COO).
Pharmagene’s decision to push ahead with the merger follows a strategic review and reorganisation at the company, which posted a disappointing set of full-year results for 2004, with net loss of £6.7 million versus £5.8 million for 2003 [[24/02/05g]]. The trend seems to have continues for the first half of this year, ended June 30, as the group recorded an operating loss of £4.4 million compared to £3.9 million for the like, year-earlier period. However, Pharmagene notes that it has cut its cost based through a general tightening of financial controls and a 20% reduction in headcount, which should have a positive effect on financial results for the remainder of the year.