UK biotechnology company, Xenova, has been bought by newly formed private equity investment fund, Celtic Pharma, in a £20 million pound deal.

Under the terms of the agreement, Xenova shareholders will be able to select one of three options – a secured loan note offer worth 6.044 pence per share, a cash and secured loan note alternative, which is worth 5.747 pence per share, or a cash offer of 4.5 pence per share. The deal represents a premium of as much as 48% on Xenova’s closing share price yesterday of 3.875 pence. News of the agreement sent the UK firm’s share price up by some 29% during early morning trading in London.

David Oxlade, Xeova’s chief executive officer, commented: “In the context of the current financing environment for biotechnology companies, this is the right solution for all Xenova stakeholders.”

Xenova currently has nicotine and cocaine addiction vaccines in development [[14/07/04f]], [[14/06/04c]], and its main product, TransMID for brain cancer could reach the market as early as 2007 [[14/08/03b]]. However, the firm has never really recovered from the collapse of its share price back in 2003 after it stopped clinical trials of its lead cancer drug tariquidar on toxicity concerns [[13/05/03a]], [[24/02/03b]], and earlier this year, investors grew concerned that the company would not have sufficient funds to finance its products through late-stage trials [[04/03/05d]].

Celtic Pharma separately announced the launch of a new $300 million dollar pharmaceutical investment fund. It has been set up to invest directly in the acquisition of late-stage pharmaceutical products, and aims to assemble a diversified portfolio of 12 to 18 late-stage drug development programmes which it will fund and manage through the final stages of clinical and regulatory approval, including establishing manufacturing arrangements and other preparations for market launch. It aims to grow the fund to over $1 billion by 2006/7.