Proximagen Neuroscience is looking to acquire fellow UK firm Minster Pharmaceuticals in a deal valued at £4.3 million.

Under the terms of the deal, Proximagen is offering six pence per share for Minster, which represents a premium of nearly 45.5% of the latter’s closing price on December 31. Minster’s board has unanimously recommended the offer and chief executive John Russell said it “represents a good premium”.

He added that the deal “provides a more certain investment outcome for shareholders since the prospects for Minster, without the funding it needs to progress its business plan are extremely uncertain”. The company’s principal pipeline assets are tonabersat and sabcomeline, and worldwide rights to both compounds were acquired from GlaxoSmithKline.

Tonabersat is “the leading compound in an exciting new class of selective drugs”, the firms stated, known as neuronal gap junction blockers. Sabcomeline, a muscarinic partial agonist, has potential in the treatment of cognitive decline in schizophrenia and both compounds “benefit from comprehensive safety tolerance data as a result of investment by GSK”.

Minster noted that following “the disappointing TEMPUS trial result in February last year”, it has made “every effort to find ways of extracting value” from the two aforementioned compounds. It had looked at a stand-alone sale of sabcomeline to a third party, but exploratory talks came to nothing.

Furthermore it added that “raising further equity finance in the current environment would be both difficult and highly dilutive” to existing shareholders. While it has enough cash to continue trading through to the end of 2011, “the absence of news flow caused by minimal development expenditure and the reduction of Minster’s cash balances” would see the share price continue to drift down.

For its part, Proximagen’s chief executive, Kenneth Murray, said the firm is particularly interested in tonabersat, “which we believe has potential for the treatment of epilepsy, one of the most common of the serious neurological disorders”.

Proximagen raised £50 million in June “to pursue its strategy of acquiring attractive drug programmes in its preferred therapeutic area of the central nervous system”. Since then, it has acquired Cambridge Biotechnology from Sweden’s Biovitrum of Sweden.