LONDON (Alliance News) - Evocutis PLC saw its shares slide by a third Wednesday after it finally sold its assets after months of talks, leaving it as an investment shell.
In a statement, Evocutis said it had sold all the intellectual property rights for its Labskin product and SYN1113 investigational acne product, as well as related equipment. Clinical research organisation Venn Life Sciences separately said it had bought the assets for GBP210,000 in shares plus future royalties on sales of the acquired products.
Evocutis decided to sell its assets because it didn't have the funds to develop them into commercial products itself. It had held discussions with around 100 companies in the UK, Europe and US over the possible acquisition of the whole company between December 2012 and September 2013, but despite advanced discussions with a number of these companies, it did not find anyone to make a takeover offer.
As it ran out of money, it issued redundancy notices to all of its employees other than its board last December and started negotiating an exit from its property lease to further reduce costs.
It then began talks to sell its intellectual properties.
LabSkin is a skin substitute that the company claims looks, behaves and feels like human skin and performs a similar barrier function. Critically, it is not tested on animals.
"Since March 2013, it has become illegal to sell skincare or cosmetic products within the European Union that have been tested on animals. The Board of Venn believes that this regulatory change has opened a significant market opportunity for LabSkin," Venn Life Sciences said in a statement.
"Venn is acquiring the intellectual property and know-how to produce LabSkin, perform the specialised portfolio of contract research assays, in vitro skin models, skin microbiology expertise and clinical trial support services all focused entirely on dermatology" it said,
"In addition, Venn will acquire the novel anti-acne compound SYN1113, which is a clinically proven and patented technology. Venn will out-license this technology through its division InnoVenn," it added.
Venn said it will pay Evocutis a royalty of 7.5% on gross sales of Labskin for three years from the acquisition, and a 25% royalty on future sales of, or out-licence agreements for, SYN1113.
The deal is expected to be completed on March 31, Venn said.
Evocutis will for now be an investing company, and will look at businesses focused on commercialising intellectual property and showing the potential for significant growth over the short to medium term. It expects to acquire one company and develop it.
"It may be considered appropriate to take an equity interest in any proposed business, which may range from a minority position to 100% ownership. Any investment is likely to be made into an unquoted company and structured as a direct acquisition," the company said in a statement.
"As the company's financial resources are likely to be invested in just one investment, this acquisition is also likely to be deemed to be a reverse takeover pursuant to Rule 14 of the AIM rules. The company does not currently intend to fund any investment with debt or other borrowings, but may do so if appropriate," it added.
Evocutis shares were down 33.33% at 0.2 pence Wednesday morning, the biggest decline on AIM. Venn Life Sciences was flat at 23.5 pence.
By Steve McGrath; stevemcgrath@alliancenews.com; @SteveMcGrath1
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