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Tuesday, March 31, 2009

Another imminent M&A in cell therapy?

Is another company with commercial cell therapy products about to be bought for a song?

York Pharma PLC (AIM:YRK) is a pharmaceutical Group established in 2003 specializing in the acquisition, development and commercialization of novel prescription dermatological products to market and supply branded prescription products to pharmaceutical wholesalers, hospitals and general practitioners within the field of dermatology.

University of Sheffield spin-out CellTran Ltd was incorporated in 2000 specializing in developing cell therapies to heal wounds. During its existence the company succeeded in bringing two cell therapy products into the UK market for the treatment of chronic wounds and burns: Myskin™ and Cryoskin™. CellTran majority shareholders were Biofusion plc, White Rose Technology Limited, The YFM Group, South Yorkshire Investment Fund, Partnerships UK and the Wellcome Trust.

In my December 12 post here on this blog, I reported the following:

One of the more important bits of news I'm late to the table for (announced at the end of October) is the acquisition of "certain of the assets and the continuing business of Celltran Limited (“Celltran”) from its administrators" by York Pharma plc (AIM: YRK) for what it describes - in the very undestated British way - a "compelling valuation".

This seems an apt description when one learns that despite the fact that "approximately £15 million has been invested in the Celltran portfolio of products" to-date, York bought the company's two commercial product plus "a rich pipeline of associated products and technologies" and the ongling business for - make sure you're sitting down - "£70,000 plus the payment of royalties on future sales for a period of five years (at the greater of £100,000 (£20,000 per year) or 10% of future revenues generated by the products over such period)".

The real reason this is such a compelling valuation is that Celltran had - and now York Pharma has - two cell therapies on the market (albeit only in the UK) in Myskin™ and Cryoskin™.

But the news does not end there. York also announced simultaneous to the acquisition that they had completed an institutional placing raising £510,000 (before expenses) to provide "additional working capital for the integration, operation and further development of the assets within York Pharma’s business." York, established in 2003, describes itself as a pharmaceutical group with particular focus on dermatological products which makes the two cell therapy products fit well in their existing portfolio.

Now York Pharma is on the ropes.

It was reported today that "shares in the AIM-listed York Pharma were suspended from trading after the company said that it still hadn’t managed to secure any short term funding and as a result would miss the March 31 deadline to publish its annual results. Earlier this month York said it was in talks with two potential offerors and that those discussions included the provision of short term funding facilities. The company said it needed the cash to allow it to continue trading through the period needed to complete any formal offer."

It was then reported later today that "one of the potential offerors has today entered into an agreement with the Company to provide the Company with a secured revolving Credit facility of up to US$1,000,000" and that "drawdown of the full facility should allow the company to continue trading through the period needed to complete any formal offer".

Now this begs the question: who is the suitor? One one hand this smacks of exactly the kind of move StemCells Inc has made more than once in the past. Would this fit with their other recent UK acquisition? With two products already on the market would this address STEM's need for immediate revenue to fund its ongoing therapeutic development programs? While the answers might be "yes", I doubt this kind of move is within STEM's bandwidth given the ink is not yet even dry on the SCS deal (not sure it is even closed). If not STEM, then who?

Certainly this would be a fit with Advanced BioHealing's portfolio or that of Karocell Tissue Engineering AB, FIDIA Advanced Biopolymers, or Forticell Bioscience (formerly Ortec International, Inc.). Would Genzyme or a pharma company pick this up? I have my doubts. Perhaps an Asian company like Japan Tissue Engineering Co., Ltd. (J-TEC)? It might also be quite compelling to merge this with Intercytex and create a company with several commercial cell therapy products and a rich pipeline of products.

It's likely none of the above but it is fun to speculate. I'm sure we'll find out in the next few days...

1 comment:

Lee Buckler said...

April 8: ULURU Inc. has apparently signed an offer letter to buy York Pharma.

ULURU Inc. (NYSE Amex: ULU) is a specialty pharmaceutical company focused on the development of a portfolio of wound management and oral care products to provide patients and consumers with improved clinical outcomes through controlled delivery utilizing its innovative Nanoflex(TM) Aggregate technology and transmucosal delivery system.

For more details: