Plethora Solutions Holdings Plc Regulatory News (PLE)

5 Apr 2007 07:36

Maelor PLC05 April 2007 5 April 2007 Maelor plc ("Maelor" or the "Company") Acquisition of Acorus Therapeutics Ltd The Board of Maelor plc (AIM:MLR), the specialist critical care company, ispleased to announce the acquisition of specialist pharmaceuticals and devicescompany, Acorus Therapeutics Ltd ("Acorus"), for a total consideration of £13million (subject to adjustment). The initial cash consideration will be satisfied out of the issue toinstitutional investors of 80,000,000 new Ordinary Shares of 10 pence each at 10pence per share. A conditional placing will raise £8 million (before estimatedexpenses) which was undertaken by Noble & Company Ltd ("Noble"), and wasoversubscribed. Completion of the acquisition of Acorus is expected to takeplace (subject, inter alia, to shareholder approval) on 10 May 2007. Highlights • Maelor has agreed to acquire Acorus, a specialist pharmaceuticals and devices company for a total consideration of £13 million. The consideration comprises £7 million in cash and £1 million of new Ordinary Shares at the placing price of 10 pence, together with a £5 million deferred consideration payable over five years funded from ongoing cash flow. The deferred component is payable subject to the achievement of minimum sales hurdles • Following the completion of a strategic review by Maelor's new management team in mid 2006, the Company has been implementing a strategy of building a hospital specialist medicine business focused on commercialising late stage or launched, and therefore low risk, pharmaceuticals and devices, with a focus in critical care and neurology • The acquisition of Acorus is in line with the Company's strategy to build a solid platform for further acquisitions and gain additional critical mass to drive shareholder value • Acorus is a successful specialist pharmaceuticals and devices company, which is profitable and growing and which has a portfolio of assets primarily focused in critical care and neurology • Acorus was established in 2000 and has been built as a virtual company; integration is therefore straightforward and inexpensive • The acquisition will create a substantial AIM listed hospital specialist company and will be immediately earnings enhancing. Commenting on the acquisition Tim Wright CEO said: "The acquisition of Acorus is a transforming transaction for Maelor, creating astrong, profitable business with positive cash flow. The integration risks,costs and distractions are minimal due to the virtual nature of Acorus and thecombined product portfolios offer a high degree of synergy in terms of customerbase and distribution channels. We now have a product portfolio and pipelinecapable of delivering strong future growth" Chairman Geoff McMillan said; "This acquisition is a further demonstration of the commitment of the Board ofMaelor to add shareholder value through the focused strategy communicated lastyear and the ability of our new management team to deliver this strategy." - Ends - For further information, call: Maelor plc Tim Wright, - 01244 625150 Noble & Company Limited Matthew Hall - 020 7763 2200 Financial Dynamics Billy Clegg/Edward Westropp, - 020 7831 3113 5 April 2007 Introduction Maelor has today announced that it has conditionally agreed to acquire theentire issued share capital of Acorus. Acorus is a privately owned, UK-basedpharmaceutical company focused on specialist pharmaceuticals and medicaldevices. The consideration for the Acquisition is to be satisfied by a cashpayment of £7 million, the issue of 10,000,000 Consideration Shares at a priceof 10 pence per share, and the issue of up to £4.88 million of Loan Notes to theVendors. In order to satisfy the cash component of the acquisition price and toenable it to implement its strategy, the Board is also proposing to raise £8million (£7.16 million after estimated expenses) by way of the Placing of80,000,000 new Ordinary Shares at 10 pence per Placing Share. The Placing hasbeen arranged by Noble. The Acquisition constitutes a reverse takeover under the AIM Rules and istherefore subject to the approval of the shareholders of the Company. Suchapproval is being sought at the Extraordinary General Meeting which has beenconvened for 4 May 2007. If the Resolutions are duly passed at the EGM and the other conditions set outin the Placing Agreement are met, the Enlarged Share Capital will be admitted totrading on AIM. Background and reasons for the Acquisition Following the introduction of a new management team and completion of astrategic review in 2006, Maelor's Board seeks to transform the Company into amajor player within the specialist pharmaceutical and medical devices market.The Acquisition is in line with the strategy to build a solid platform forfurther acquisitions and to gain additional critical mass to drive shareholdervalue. Acorus is a growing business that to date has been run as a virtualorganisation. The Directors of Acorus believe the Company is approaching a levelthat is too large for a virtual business model and consequently, they will beunable to continue to exploit the upsides of Acorus' product portfolio. The Directors believe the Acquisition represents a low risk to investors as thetarget provides access to a synergistic and profitable product portfolio whichcan be easily integrated into Maelor's existing infrastructure. Acorus is cashgenerative and with a late stage product portfolio. The Acquisition will enablecash generation for future growth by means of investment, further acquisitionsand product development. Information on Maelor Maelor is a specialist pharmaceuticals and medical devices company, focused inthe critical care market. The Company, which has expertise in developing andcommercialising both pharmaceuticals and medical devices, was admitted to AIM on21 November 1997. The new management team is committed to delivering the vision of establishing asignificant business, in hospital specialist medicine initially focused in thecritical care and neurology sectors. This vision will be realised throughaggressive acquisition, development and organic growth of late stage andlaunched products, to drive turnover and profit. The business model is intentionally structured away from expensive and high riskearly stage development to ensure a low risk proposition for Shareholders. Inline with this focus, non-specialist products and early stage technologies inthe portfolio are leveraged through efficient partnerships. The benefits of focusing on the secondary care market, with an estimated size of£15 billion within the EU, are the low costs associated with sales and marketingas well as high value niches, such as critical care. Critical care patientsinclude those undergoing emergency or elective surgery, who are commonly caredfor in intensive care units and high dependency units and who require supportfrom a wide range of specialist drugs and devices. Primary customers areanaesthetists, intensive care specialists and pharmacists, as well as accident &emergency and neurology physicians. The new management team took a significant first step in the realisation of itsstrategy with the successful re-acquisition and re-launch of Volplex, a productMaelor originally developed and licensed. The process of re-launching theproduct was achieved ahead of schedule and the Company is seeing the benefits ofconsistently growing sales in the market. Primarily used in operating theatresand wards to maintain blood volume, Volplex competes with Gelofusine (B Braun)the only other succinylated gelatin colloid available in the UK. Withsubstantial room for market share growth, the management team is confident thatthey can continue to win new accounts and grow sales of Volplex. On completion of the strategic review of the business, the new management teamstated its intention to grow its specialist product portfolio aggressivelythrough development and acquisition. Recent activities have includedcommencement of the development of two new late stage products, ISOplex andAquiHex as well gaining a licence to sell unlicensed medicines, "specials" andconclusion of a deal to gain distribution rights for a selection of criticalcare fluids. ISOplex - ISOplex in common with Volplex will be used in situations where anincrease in blood volume is required. ISOplex has been designed to mimic naturalblood plasma, particularly in the balance of electrolytes. The use of these "isotonic" formulations is an area of significant interest amongst critical careclinicians. The introduction of ISOplex will support Maelor's strategy ofdriving both market share and market size in the gelatin segment of the UK bloodvolume replacement market. Given Maelor's experience and existing data in thissector it is anticipated that development will be relatively rapid andinexpensive for a pharmaceutical product. The Company anticipates regulatoryapproval by the MHRA for ISOplex by the end of 2008. Specials - the Company has succeeded in gaining a licence from the MHRA to sellun- licensed medicines. Generally known as "specials" these products can berequested by physicians for use in patients where there is a specificrequirement which is presently unmet by any medicine licensed in the UK. Inaddition to establishing closer relationships with the critical care communitythis strategy will enable Maelor to gauge demand for products and where thisdemand is sufficient, progress these products to licence in the UK. Themanagement team have recently gained distribution rights to a selection of fluidand volume replacement products from Germany and in addition have recentlydeveloped a new product AquiHex. AquiHex is a topical anti-bacterial productwhich will be used in critical care settings. The management will continue to select strong partners to commercialise theheritage portfolio of products and technologies that do not fit directly withthe Company's specialist strategy, in particular its catheter flushing solutionsOptiFlo* and Contisol and its proprietary early stage nanotechnology. The Company's ability to enter into successful partnerships with majordistributors is exemplified by the successful commercialisation of OptiFlo, theUK brand of the Company's catheter flushing solutions in conjunction with BardLimited which has now grown to be the market leading catheter flushing solutionin the UK. ContiSol is the Company's international brand name of this range. Similarly the management recently licensed part of the Company's proprietarymicelle nanotechnology, which solubilises insoluble active pharmaceuticals, toPlethora solutions Holdings plc, a specialist urology company. The agreementinvolves milestone payments by Plethora during development and royalty paymentson commercialisation. Micelle lidocaine will be developed for interstitialcystitis, a distressing condition which affects over 2 million women in the USand the EU. Maelor is a strong business with a clear, focused strategy and an ambitious,experienced management team determined to grow rapidly through a strategy ofacquisition, consolidation and organic growth of products and portfolios. Information on Acorus Therapeutics Limited Acorus was established in 2000 and commenced trading in 2001, specialising inacquiring or developing and marketing unique specialist pharmaceuticals andmedical devices. The two founders identified that many important products werenot being developed, and were even discontinued, because the commercialopportunity is too small for the big pharmaceutical companies. The company hasbeen run as a virtual organisation, thus making it a straightforward business tointegrate. Acorus's portfolio, which is highly synergistic with Maelor'sportfolio and strategy, is as follows: Cryogesic - A fast-acting cryo-analgesic that is used in a number of specialistclinical settings, particularly by anesthetists, a target customer group ofMaelor, to numb the skin before minor procedures. Registered as a medical deviceacross Europe, the product is available in the UK and Ireland in a range ofpresentations and has seen steady growth since introduction, from littlepromotion. Recently conducted market research suggests further growth potentialfrom active promotion and expansion into new specialist niches. Dermogesic - A non-flammable version of the above product has been developed andregistered across Europe as a medical device. Haemopressin - A specialist injectable used in critically ill patients sufferingfrom esophageal varices(uncontrollable bleeding from the oesophagus) andhepatorenal syndrome, serious conditions affecting critically ill patients withchronic liver disease. Acorus has distribution rights in the UK and Ireland andthe product is currently progressing through the regulatory process. It has beensuccessfully launched in Germany. Mysoline - A long established treatment for epilepsy which sees stable sales inthis segment, as epilepsy sufferers once controlled are unlikely to be changedto different medications. This is due to the significant physical and life-styledistress that experiencing a fit can cause, for example, the loss of a drivinglicence. Increasing use is being seen in the field of Essential Tremor, a conditionmanaged by specialist neurologists which affects 1 in 20-25 of over 40 yearolds. Mysoline is one of only two treatments recommended for managing thischronic condition. No direct promotion is currently undertaken in this area andmarket research suggests the potential for further growth. Acorus markets thebrand directly in the UK and Ireland and through a network of distributors interritories across Europe. Gentispray - A spray treatment in late stage (phase III) development for thetreatment of outer ear infections. The product combines the most commonly usedformulation of ear drops, in a popular ear spray delivery system to create a newproduct. Specials - Like Maelor, Acorus supplies unlicensed medicines for areas of unmetneed. Products in this portfolio include an antidepressant syrup for patientsthat are unable to take tablets, Acoranil, (Which is progressing through theregulatory system) and 5-FU an oral treatment for cancer. Acorus is a profitablebusiness, with low overheads. All operational tasks such as research,development, manufacturing and logistics are contracted out to third partycompanies. Strategy of the Enlarged Group In the opinion of the Board the acquisition of Acorus by Maelor, is directlyaligned with Maelor's stated strategy of building a focused specialistpharmaceutical and medical devices business. The Board believes that theEnlarged Group will provide a platform to build a comprehensive specialistsecondary care portfolio through rapid organic and acquisitive growth. The growth strategy will therefore be based upon driving sales and developingfurther products from the existing portfolio, as has been demonstrated withVolplex. In parallel, the management team will seek to acquire complementaryproduct portfolios. Geographically, the UK is currently the Company's primary market. Theacquisition of Acorus and the already established distributor network willenable the Company to build its presence in the major European markets, whichtogether with North America represent the majority of the pharmaceutical andmedical device market. In addition the Enlarged Group will continue itsestablished relationship in China, where Volplex is currently in the regulatoryprocess. Maelor audited results for year ended 31 March 2006 The Company announced its preliminary results for the year ended 31 March 2006on 1 June 2006. These results showed that during the year ended 31 March 2006,Maelor reported a turnover of £1.86 million (year ended 31 March 2005: £1.64million). This revenue generated gross profit of £0.74 million in 2006 (2005:£0.60 million) and the Company made a loss after tax of £0.66 million (2005:loss of £0.66 million) Maelor unaudited results for the six months ended 30 September 2006 The Company announced its unaudited results for the six months ended 30September 2006 on 2 November 2006. During this period Maelor generated aturnover of £1.33 million (six months ended 30 September 2005: £0.92 million),gross profit of £0.62 million (six months ended 30 September 2005: £0.36million) and the Company made a loss after tax of £0.08 million (six monthsended 30 September 2005: loss of £0.40 million). Acorus audited results for year ended 30 September 2006 Acorus reported turnover of £3.04 million for the year ended 30 September 2006(year ended 30 September 2005: £1.59 million). This revenue generated grossprofit of £2.13 million in 2006 (2005: £1.10 million) and made a profit aftertax of £0.62 million (2005: profit of £0.04 million). The majority of theoperating costs in Acorus relate to bought in services in respect of researchand development, administrative expenses and service charges, the majority ofwhich are currently provided by the existing Maelor infrastructure. Thus a largemajority of Acorus' costs are not anticipated to recur in the Enlarged Groupmeaning that a substantial proportion of the gross profit generated in thefuture should fall to bottom line. Current trading and future prospects Maelor The Board is confident that Maelor is now delivering against clear objectives,an achievement which is reinforced by continued positive trading since theannouncement of 2006 interim results, with good progress being made in theimplementation of its new strategy: The building of a specialist hospital medicine business In 2006 the management team has focused on growing sales of Volplex. The resultsof these efforts have seen a number of new hospitals purchasing Volplex within-market sales up 43 per cent. versus H1 2005. There remains substantial roomfor market share growth and the management team is confident that, in addition,the Company can continue to win further new accounts to grow sales of Volplex. Maelor is intent upon on adding new products to the portfolio either throughin-licensing or development of late stage opportunities, which reinforce theCompany's development and commercial expertise and presence. As a result ofcustomer research the decision has been taken to develop ISOplex, an isotonicproduct designed to mimic natural blood plasma, particularly in the balance ofelectrolytes. The introduction of ISOplex will support Maelor's strategy ofdriving both market share and market size in the gelatin segment of the UK bloodvolume replacement market. Over the last 12 months Maelor has succeeded in obtaining a licence from theMHRA to sell unlicensed medicines known as "Specials". Maelor intends theseproducts to fulfil niche areas of unmet need and to be a support service tocritical care patients and physicians. An agreement has recently been concludedto offer a portfolio of fluid support products, currently licensed in Germany.In addition, the Company has recently developed AquiHex, an aqueous solution ofchlorhexidine, an antibacterial product used in critical care settings whichwill be sold as a special while UK regulatory approval is sought. Leverage non-critical care portfolio through efficient partnerships OptiFlo, the UK brand of catheter flushing solutions distributed by Bard Limitedhas continued to perform well, with sales up 10 per cent. in H1 2006 versus H12005, and remains the UK market leader with market share of 54 per cent. in H12006 versus 49 per cent. in H1 2005 in a market that has itself grown by 5 percent. in 2006. H1 2006 turnover incorporates a licensing milestone for the Company'sproprietary micelle nanotechnology, micelle lidocaine. The agreement withPlethora, a specialist urology company, is progressing well. Under the terms ofthe agreement Plethora is responsible for product development and distributionand Maelor is entitled to milestone and royalty payments. Micelle lidocaine is in development for the treatment of interstitial cystitisand painful bladder syndrome. These conditions are estimated to afflict up totwo million women in the United States and Europe. As identified in the recent strategic review, a primary activity of recentmonths has been to provide clarity and focus to the business. The productportfolio has been rationalised in line with this plan as has the geographicalfocus to prioritise efforts in the UK. While assessment of the opportunity forContiSol in the US and regulatory process for Volplex in China continue, theseactivities are considered secondary to the focus of building a specialisthospital medicine business in the UK. The Directors believe that Maelor is now well positioned to grow its businessand that completion of the Acquisition and the Placing will provide the EnlargedGroup with a stable platform for growth. Acorus The Acorus portfolio of products has been steadily developed over a number ofyears. Audited sales of the Cryogesic range of fast acting freeze analgaesicshave seen healthy growth and further growth potential remains from activepromotion of the brand and exploitation of new niche markets. Mysoline was acquired by Acorus in 2004 and is already marketed in a number ofEuropean markets and further launches are planned for 2007. Market research shows upside potential in promotion of the brand in the area ofEssential Tremor which affects 1 in 20-25 of over 40 year olds. Mysoline isindicated for Essential Tremor in the UK, while in other territories regulatoryapproval will be required. Going forward, the formulation of a strategy torapidly grow the product in this sector will be a key activity. The company has concentrated on progressing Haemopressin through the regulatoryprocess and gearing up for a launch in 2008. It will additionally be progressingthe late phase III development of Gentispray. The strategy of commercialising specials and where sufficient opportunity isidentified, making a full licence application will continue, as is the case withAcoranil anti- depressant syrup. Enlarged Group The synergy between the two companies and the lack of integration issues due tothe virtual nature of Acorus will enable the Enlarged Group to rapidly stabiliseand commence driving growth from the enlarged portfolio. The emphasis remains onfocusing on late stage low cost / risk specialist products The Board believes that the demand for Maelor's specialist pharmaceuticalproducts into the critical care market will continue to grow and that there willbe ongoing opportunities for the Enlarged Group to cross sell its products toexisting customers. Increased emphasis will be put on growing Cryogesic through active promotion andpreparing for launch of Haemopressin as the Company interacts with the samecustomer group to which it will be promoting Volplex, fluid specials andISOplex. Active promotion of Mysoline for Essential Tremor to specialist neurologists, inthe UK, will commence in parallel with the assessment of potential lineextensions to further develop this substantial market. A detailed review of theongoing Gentispray study will be conducted in order to evaluate the mostappropriate route to securing registration. In line with the Company's focus inthe specialist, secondary care market it is likely that a partner will be soughtfor this product. Both Acoranil and 5-FU the oral cancer treatment will be managed within theexisting specials portfolio, which incorporates fluid and volume replacementproducts as well as AquiHex. The Enlarged Group will continue actively to seek additional specialist productsand portfolios to consolidate into the business Principal terms of the Acquisition The Company has agreed to acquire the entire issued share capital of Acorus. Theacquisition price is to be satisfied by a cash payment of £7 million, the issueof 10,000,000 Consideration Shares at a price of 10 pence per share and theissue of up to £4.88 million of Loan Notes to the Vendors, contingent uponAcorus achieving certain revenue targets. The Acquisition Agreement is conditional, inter alia, upon: a) First Admission, Second Admission and Third Admission occurring on or before 25 May 2007; b) no fact or circumstance having occurred which would amount to there having been a material adverse change in the business carried on by Acorus; and c) successful conclusion of the Placing. It is expected that completion of the Acquisition and Third Admission will takeplace on 10 May 2007. Board of the Enlarged Group The Board of Maelor currently consists of Geoff McMillan, Timothy Wright, NigelGoldsmith, Ann Hardy, John Gregory and Peter Murray. The Board, following ThirdAdmission, will continue to consist of the following:- Geoff McMillan Non-Executive Chairman Geoff was appointed as Non-Executive Chairman of Maelor in January 2006following the retirement of his predecessor. Currently Chief Executive Officerof Speciality European Pharma Limited and non executive director of GalapagosNV, Geoff has over 25 years' experience within the pharmaceutical andbiotechnology industry. Having worked for Smith and Nephew, Roche, Xenova Groupplc, Elan, and Biofocus plc. Geoff brings a record of deal making, ranging fromproduct and technology licensing to mergers and acquisitions and collaborativedrug discovery to the Board of Maelor. Tim Wright Chief Executive Officer Tim was appointed Chief Executive Officer of Maelor in September 2005. With over15 years' experience in the pharmaceutical industry, Tim has held seniorcommercial positions at Pfizer and SmithKline Beecham both domestically andinternationally. His most recent roles were with Elan Pharmaceuticals where hewas general manager for Ireland and vice president, international marketing.During his time at Elan, Tim was instrumental in the establishment, significantgrowth and ultimate successful divestment of their European business. Nigel Goldsmith Finance Director and Company Secretary Nigel joined Maelor in June 2006. He spent over nine years at KPMG, latterly assenior manager, prior to moving into industry in 1996. He now has ten yearsexperience working in the pharmaceutical and life sciences sectors, where he hasheld senior financial positions at Life Sciences International plc and mostrecently at Almedica International Inc where he was chief financial officer forfive years. Ann Hardy Operations Director Ann was appointed to Maelor's Board in July 2004. Ann has over 20 years'experience in the pharmaceutical industry, where she has held senior positionsin operations, quality and technical management for Glaxo Pharmaceuticals, EvansMedical Limited and Medeva Pharma Limited. Ann holds a BSc with Honours inBiology and has a Diploma in Company Direction. She has responsibility for bothcommercial and technical operations within Maelor. John Gregory Non-Executive Director John joined the Maelor Board in June 2000. Currently non-executive chairman ofNoble VCT plc and a non-executive director of The AIM VCT plc, John is also anon-executive director or chairman of a number of private companies and was,prior to these appointments, an executive director of Noble Fund Managers.John's earlier career was in the City of London and included posts as a directorof Singer & Friedlander Holdings and managing director of Henry Ansbacher & Co.John is currently chairman of the remuneration committee of Maelor. Peter Murray Non-Executive Director Peter joined the Maelor Board in April 2003. With over 20 years' experience indiagnostics and devices, Peter left Napp Laboratories to form CambridgeLaboratories in 1987, leading it to profitability and ultimately tointernational status. In 1996 he formed High Crane Limited, focusing onmanagement consultancy and in 2000 he co-founded Acorus, to provide nichehospital orientated pharmaceutical products and medical devices. Peter iscurrently chairman of the audit committee of Maelor. 12. Share Option Plans Maelor currently has two Existing Share Option Plans in place, an UnapprovedPlan and an Enterprise Management Incentive Plan. In addition, the Company is seeking approval for the adoption of the New EMI andUnapproved Plan at the EGM on 4 May 2007. 13. Corporate governance The Directors acknowledge the importance of the principles set out in theCombined Code. Although the Combined Code is not compulsory for AIM companies,the Directors intend to apply the principles as far as practicable andappropriate for a relatively small public company as follows: Board After the Acquisition, the Board intends to continue to meet regularly and willbe responsible for strategy, performance, approval of major capital projects andthe framework of internal controls. The Board intends to have a formal scheduleof matters specifically reserved to it for decision. To enable the Board todischarge its duties, the Directors will receive appropriate and timelyinformation. It is the intention that briefing papers will be distributed to allDirectors in advance of Board meetings, while all Directors will have access tothe advice and services of the Company Secretary, who is responsible forensuring that procedures of the Board are followed and that applicable rules andregulations are complied with. The articles of association provide thatDirectors will be subject to re-election at the first opportunity after theirappointment and each member of the Board will voluntarily submit to re-electionat intervals of three years thereafter. Audit committee The audit committee is currently made up of Peter Murray (Chairman), JohnGregory and Geoff McMillan, although following the Acquisition this will bereviewed. The committee will meet at least twice a year and meetings will bearranged in conjunction with the publication of the Enlarged Group's financialstatements. The committee will, inter alia, monitor the financial integrity ofthe Enlarged Group, review financial information, review accounting policies,clarity of disclosures, internal controls and risk management systems and theEnlarged Group's internal audit requirement and oversee the relationship withexternal auditors. Remuneration committee The remuneration committee is made up of John Gregory (Chairman), Peter Murrayand Geoff McMillan, although following the Acquisition this will be reviewed.The committee will meet not less than twice a year. Appointments to thecommittee will be for a period of up to three years which may be extended fortwo further three year periods. The committee will determine and agree with theBoard the framework for the remuneration of the Chairman, the executiveDirectors and such members of the executive management team as it is designatedto consider. The remuneration of the non-executive Directors will be a matterfor the executive Directors. The committee will review the appropriateness ofthe remuneration policy in the light of all relevant factors and will haveregard to the provisions and recommendations of the Combined Code, the AIM Rulesand associated guidance. The remuneration committee will also be responsible foradministering the Share Option Plans. Internal controls The Board will be responsible for establishing and maintaining the EnlargedGroup's system of internal controls and places importance on maintaining astrong control environment. The key procedures which the Board intends toestablish with a view to providing effective internal controls are expected tobe as follows: • the Board will be responsible for identifying the major business risks faced by the Enlarged Group and for determining the appropriate courses of action required to manage those risks; • the Enlarged Group's organisational structure will have clear lines of responsibility and reporting and; • the Enlarged Group will prepare a comprehensive annual budget that is approved by the Board. Monthly results will be reported against the budget and variances will be closely monitored by the Board. The Directors recognise, however, that such a system of internal controls willonly provide reasonable, not absolute, assurance against material misstatementor loss. The Board has reviewed the effectiveness of the system of internalcontrols as it will be operated by the Enlarged Group. AIM Compliance Committee In line with new regulations, the Company intends to establish an AIM compliancecommittee in the near future. Dividend policy In the short term, the Board does not intend to declare a dividend but willreconsider this as and when the growth and profitability of the Enlarged Groupallow. The declaration and payment of any future dividends by the Enlarged Groupand the quantum thereof will be dependent upon the Enlarged Group's results,financial position, cash requirements, future prospects, profits available fordistribution and factors deemed by the Board to be relevant at the time. Reasons for Placing and use of proceeds The net proceeds of the Placing receivable by the Company will be approximately£7.16 million (after estimated expenses). These proceeds will be used to financethe acquisition of Acorus and to enable it to implement its organic andacquisitive growth strategy. The Placing Shares will represent 64.4 per cent. of the Enlarged Share Capitalof the Company immediately following Third Admission. The Placing Pricerepresents a discount of approximately 21.6 per cent. to 12.75, the closingmid-market price on 4 April 2007. The New Ordinary Shares will, on the relevant Admission, rank pari passu in allrespects with the Existing Ordinary Shares and will have the right to receiveall dividends and other distributions thereafter declared, made or paid inrespect of the issued ordinary share capital of the Company. It is expected that the proceeds of the Placing will be received by the Companyon or around 10 May 2007. In the event that First Admission becomes effective by 8.00 am on the Long StopDate but Second Admission does not, or that First Admission and Second Admissionbecome effective by 8.00 am on the Long Stop Date but the Acquisition fails tocomplete (whether by reason of the Third Admission failing to become effectiveor otherwise) by 5.00 pm on the Long Stop Date, the proceeds relating to FirstAdmission and/or Second Admission, as the case maybe, will be invested on ashort term basis while the Board considers how best to return such proceeds tothe relevant Placees. Bank facility Subject to Admission, the Company will enter into a bank facility with HSBC Bankplc totalling £2.0 million. This facility may be used by the Company for generalworking capital purposes and/or towards the funding of future acquisitions. Admission to AIM and dealings The Acquisition constitutes a reverse takeover under the AIM Rules and istherefore dependent upon the approval of Shareholders being given at theExtraordinary General Meeting. A resolution will be proposed at the EGM, interalia, to approve the Acquisition. If the Resolutions are duly passed at the EGM,and the other conditions set out in the Placing Agreement are met, applicationwill be made for the Enlarged Share Capital to be re-admitted to trading on AIM. It is anticipated that First Admission will become effective and that dealingswill commence in the Existing Ordinary Shares and the New VCT/EIS Shares at 8.00am on 8 May 2007, that Second Admission will become effective and that dealingswill commence in the Protected VCT Shares and the Non-VCT Shares at 8.00 am on 9May 2007 and that Third Admission will become effective and that dealings willcommence in the Consideration Shares at 8.00 am on 10 May 2007. If the Acquisition is not completed but First Admission has become effective(but Second Admission has not), the Existing Ordinary Shares and the New VCT/EISShares will continue to be traded on AIM and the Protected VCT Shares and theNon-VCT Shares will not be issued or admitted to trading on AIM. If betweenSecond Admission and the date on which the Acquisition is expected to complete(being 10 May 2007), the Acquisition terminates, the Protected VCT Shares andthe Non-VCT Shares will also continue to be traded on AIM. Extraordinary General Meeting The Extraordinary General Meeting of the Company is to be held at the offices ofMorrison & Foerster MNP, Citypoint, One Ropemaker Street, London EC2Y 9AW at11.00 am on 4 May 2007. At the EGM, the following resolutions will be considered by the holders of theExisting Ordinary Shares and, if thought fit, passed: 1. an ordinary resolution to approve the acquisition of Acorus by Maelor, in accordance with the terms of the Acquisition Agreement; 2. an ordinary resolution to increase the authorised share capital of the Company from £8,000,000 to £20,000,000 by the creation of an additional 120,000,000 Ordinary Shares, representing an increase of 150 per cent. of the current authorised share capital; 3. an ordinary resolution authorising the Directors, for the purposes of section 80 of the Companies Act, to allot relevant securities up to an aggregate nominal amount of £9,000,000 (90,000,000 New Ordinary Shares) pursuant to the Placing and in connection with the Acquisition (representing approximately 263 per cent. of the number of Existing Ordinary Shares and approximately 72 per cent. of the Enlarged Share Capital immediately after Third Admission) and assuming no new Ordinary Shares are issued pursuant to the Share Option Plans; 4. an ordinary resolution to approve an amendment to Rule 6.1(b) of the Enterprise Management Incentives Plan (established by the Company in August 2000) such that the words "five per cent. (5%)" be replaced by the words " twelve point five per cent. (12.5%)"; 5. an ordinary resolution approving the adoption of the New EMI and Unapproved Plan; 6. an ordinary resolution to authorise the Directors of the Company, at their discretion, to allow employees and Directors who currently hold unexercised share options under the Maelor plc Enterprise Management Incentives Plan or the Unapproved Plan, under which the exercise price payable on those share options is in excess of the market value of the shares which they might acquire upon the exercise of them, to agree formally with the Company to the cancellation of those options, with a view thereby to permitting further grants under the New EMI and Unapproved Plan within the permitted limits prescribed by EMI rules; and 7. a special resolution pursuant to section 95 of the Companies Act, empowering the Directors, subject to and with effect from First Admission, to allot equity securities (within the meaning of section 94 of the Companies Act) for cash as if section 89(1) of the Companies Act did not apply to such allotment provided that this authority is limited to the allotment for cash of 90,000,000 New Ordinary Shares pursuant to the Placing and in connection with the Acquisition (representing approximately 263 per cent. of the number of Existing Ordinary Shares and approximately 72 per cent. of the Enlarged Share Capital immediately after Third Admission) and assuming no new Ordinary Shares are issued pursuant to the Share Option Plans. The authority and the power described in paragraphs 3 and 7 above will (unlesspreviously revoked or varied by the Company in general meeting) expire on thedate 15 months from the passing of such resolutions or at the conclusion of thenext annual general meeting of the Company following the passing of theResolutions, whichever occurs first. The authority and the power described inparagraphs 3 and 7 above are in addition to any like authority or powerpreviously conferred on the Directors. The ordinary resolutions 1, 2, 3, 4, 5 and 6 will require a simple majority ofthose voting in person or on a poll by proxy in favour of the resolutions. Thespecial resolution 7 will require approval by not less than 75 per cent. of thevotes cast by Shareholders voting in person or on a poll by proxy. Irrevocable undertakings The Company has received irrevocable undertakings from Bluehone Investors LLP,Close Investments Limited and the Directors to vote, or to procure the votes ofOrdinary Shares held, in favour of the Resolutions to be proposed at the EGM inrespect of a total of 8,807,319 Ordinary Shares representing approximately 25.7per cent. of the Existing Ordinary Shares. VCT and EIS qualifying investment status On the basis of the information provided, HM Revenue & Customs has givenprovisional confirmation that Maelor will comply with the requirements ofSchedule 28B of the Income and Corporation Taxes Act 1988 and that the OrdinaryShares will be eligible shares for the purposes of VCTs. The status of theOrdinary Shares as a qualifying holding for VCT purposes will be conditional,inter alia, upon the Company and the VCT continuing to satisfy the relevantrequirements. Furthermore, on the basis of information provided to HM Revenue & Customs, theCompany has received provisional approval that the Placing Shares should beeligible for EIS purposes, subject to the submission of the relevant claim formin due course. Such a claim by the Company does not guarantee EIS qualificationfor an individual, whose claim for relief will be conditional upon hiscircumstances and is subject to holding the Placing Shares throughout the threeyear relevant period. In addition, for EIS relief not to be withdrawn, theCompany and the individual must comply with a number of conditions throughoutthe qualifying period relating to those shares, and no guarantee can be giventhat the Company will so comply. Related party transaction Under AIM Rule 13 the Acquisition is considered to be a related partytransaction by reason of the fact that Peter Murray is a non-executive Directorof the Company and a director of Acorus. With the exception of Peter Murray, theBoard considers, having consulted with Noble that the terms of the related partytransaction are fair and reasonable insofar as the Shareholders are concerned. Action to be taken Whether or not you intend to be present at the Extraordinary General Meeting, asa Shareholder you are requested to complete and return the Form of Proxyaccompanying the admission document, in accordance with the instructions printedthereon, as soon as possible and in any event so as to be received by the ProxyProcessing Centre, Telford Road, Bicester OX26 4LD, or, (during normal businesshours) by hand, to Capita Registrars, The Registry, 34 Beckenham Road,Beckenham, Kent BR3 4TU not later than 11.00 am on 2 May 2007. Completion andreturn of the Form of Proxy will not prevent you, as a Shareholder, fromattending the Extraordinary General Meeting and voting in person should you wishto do so. Recommendation The Directors, who have been so advised by Noble, consider the terms of theAcquisition to be fair and reasonable so far as Shareholders as a whole areconcerned. In giving its advice, Noble has taken into account the Directors' commercialassessments. Accordingly, the Directors unanimously recommend that Shareholders vote infavour of the Resolutions to be proposed at the EGM as they have irrevocablyundertaken to do in respect of their own beneficial shareholdings amounting to,in aggregate, 1,279,211 Ordinary Shares (representing approximately 4 per cent.of the existing issued share capital of the Company). DEFINITIONS In this announcement, where the context permits, the expressions set out belowshall bear the following meanings: "Acorus" Acorus Therapeutics Limited, a company incorporated in England and Wales under registered number 03976183 "Acquisition" the proposed acquisition, by the Company, of the entire issued share capital of Acorus "Acquisition Agreement" the conditional agreement, dated 5 April 2007, between the Vendors and the Company relating to the sale and purchase of the entire issued share capital of Acorus, "Act" the Companies Act 1985, as amended "Admission" First Admission and/or Second Admission and /or Third Admission, as the context may require or permit "AIM" AIM, an exchange regulated market operated by the London Stock Exchange "AIM Rules" the AIM Rules for Companies published by the London Stock Exchange from time to time (including, without limitation, any guidance notes or statements of practice) which govern the rules and responsibilities of companies whose shares are admitted to trading to AIM, as amended from time to time "Board" or "Directors" the existing directors of Maelor, being Geoff McMillan, Tim Wright, Nigel Goldsmith, Ann Hardy, John Gregory and Peter Murray, which will continue to be the same immediately after the Acquisition "Combined Code" the combined code on corporate governance issued by the Financial Reporting Council, as amended from time to time "Company" or "Maelor" Maelor plc, a company incorporated in England and Wales under registered number 3337415 "Consideration Shares" the 10,000,000 new Ordinary Shares to be issued to the Vendors as part of the consideration pursuant to the Acquisition Agreement "CREST" the computerised settlement system used to facilitate the transfer of title of shares in uncertificated form operated by CRESTCo Limited for UK, Irish and international securities "CREST Regulations" the Uncertificated Securities Regulations 2001 (SI 2001/3755), as amended "EIS" the Enterprise Investment Scheme "EMI Plan" or the Maelor plc Enterprise Management Incentives Plan,"Enterprise ManagementIncentives Plan" "Enlarged Group" the Group, including Acorus, following completion of the Acquisition "Enlarged Share Capital" ordinary share capital of the Company immediately following Third Admission, as enlarged by the issue of the New Ordinary Shares "EU" the European Union "Existing Ordinary the 34,280,833 Ordinary Shares in issue immediately prior to First AdmissionShares" "Existing Share Option the Unapproved Plan or the EMI PlanPlans" "Extraordinary General general meeting of the Company to be held the extraordinary at 11.00 am Meeting" or "EGM" on 4 May2007, at the offices of Morrison & Foerster MNP, Citypoint, One Ropemaker Street, London EC2Y 9AW "First Admission" the re-admission of the Existing Ordinary Shares and the admission of the New VCT/EIS Shares to trading on AIM becoming effective in accordance with the AIM Rules "Form of Proxy" the form of proxy for use by Shareholders in connection with the EGM "FSA" the Financial Services Authority "FSMA" Financial Services and Markets Act 2000, as amended "Group" Maelor and its subsidiary undertakings at the date of this announcement "Lewis Charles" Lewis Charles Securities Limited, which is authorised and regulated by the FSA "LIBOR" the London Inter-Bank Offer Rate "Listing Rules" the listing rules issued by the FSA (and amended from time to time) made pursuant to section 74 of FSMA "Loan Notes" the loan notes to be issued to the Vendors in accordance with the Loan Note Instrument "Loan Note Instrument" the instrument dated 5 April 2007 made by the Company pursuant to which the Company has agreed to issue £4,877,395 of fixed rate unsecured loan notes to the Vendors to satisfy part of the consideration due under the Acquisition Agreement "Lock-in Agreement" the conditional agreement dated 5 April 2007 between Noble, the Company and certain Shareholders pursuant to which such Shareholders have undertaken, inter alia, not to dispose of their Ordinary Shares for a period of 12 months following First Admission "London Stock Exchange" London Stock Exchange plc "Long Stop Date" 25 May 2007 "New EMI and Unapproved Maelor plc 2007 Enterprise Management Incentive (EMI) and Unapproved Share option plan, to be Plan" adopted at the EGM New Ordinary Shares" the 90,000,000 new Ordinary Shares in aggregate to be issued pursuant to the Placing and in connection with the Acquisition, being the Placing Shares and the Consideration Shares "New VCT/EIS Placing" the proposed placing of New VCT/EIS Shares pursuant to the Placing Agreement "New VCT/EIS Shares" the 35,725,000 new Ordinary Shares which are to be placed with certain VCTs (being those which raised funds on or after 6 April 2006) and/or with certain qualifying investors under the EIS "Noble" Noble & Company Limited, which is authorised and regulated by the FSA "Nomad Rules" the AIM Rules for Nominated Advisers published by the London Stock Exchange from time to time (including, without limitation, any guidance notes or statements of practice) which govern, inter alia, the eligibility, approval and continuing obligations of Nominated Advisers (as defined in the AIM Rules), as amended from time to time "Nominated Adviser the agreement, dated 5 April 2007, between the Company and Noble relating to the appointment of and Broker Agreement" Noble as nominated adviser and broker to the Company "Non-VCT Placing" the proposed placing of Non-VCT Shares pursuant to the Placing Agreement "Non-VCT Shares" the 21,375,000 Placing Shares other than the New VCT/EIS Shares and the Protected VCT Shares "Official List" the Official List of the FSA "Ordinary Shares" ordinary shares of 10 pence each in the capital of the Company "Panel" the Panel on Takeovers and Mergers "Placees" the subscribers of Placing Shares pursuant to the Placing "Placing" the placing, by Noble on behalf of the Company, of the Placing Shares at the Placing Price pursuant to the Placing Agreement "Placing Agreement" the conditional agreement, dated 5 April 2007, between the Company, the Directors and Noble relating to the Placing "Placing Price" 10 pence per Placing Share "Placing Shares" the New VCT/EIS Shares, the Protected VCT Shares and the Non-VCT Shares "Plethora" Plethora Solutions Holdings plc "Prospectus Rules" the Prospectus rules published by the FSA from time to time "Protected VCT Placing" the proposed placing of Protected VCT Shares pursuant to the Placing Agreement "Protected VCT Shares" the 22,900,000 new Ordinary Shares which are to be placed with certain VCTs (being those which raised funds prior to 6 April 2006) "Resolutions" the resolutions set out in the notice of Extraordinary General Meeting "Second Admission" the admission of the Protected VCT Shares and the Non-VCT Shares to trading on AIM becoming effective in accordance with the AIM Rules "Shareholders" holders of Ordinary Shares "Share Option Plans" the Existing Share Option Plans and the New EMI and Unapproved Plan "Takeover Code" the City Code on Takeovers and Mergers (as published by the Panel) "Third Admission" the admission of the Consideration Shares to trading on AIM becoming effective in accordance with the AIM Rules "Unapproved Plan" the Maelor plc 2000 Unapproved Share Option Plan, "VCT" venture capital trust "Vendors" Peter Murray and Stephen Jones * OptiFloTM is a trademark of Bard Limited This information is provided by RNS The company news service from the London Stock Exchange