SLN.L Regulatory News (SLN)

21 Jun 2005 06:45

SR PHARMA TO ACQUIRE ATUGENProposed acquisition and temporary suspension21 June 2005 - London - SR Pharma plc ("SR Pharma" or "the Company") is pleasedto announce that it has entered into a conditional agreement to acquire AtugenAG ("Atugen"), a biotechnology company based in Berlin, Germany.By virtue of its size, the transaction constitutes a reverse take-over underthe AIM Rules and as such requires the approval of SR Pharma shareholders. TheCompany expects to post a circular to shareholders later this week containingfull details of the transaction and convening an extraordinary general meetingof the Company to approve the acquisition. The Company has requested a shortsuspension of trading in SR Pharma's shares with immediate effect pendingpublication of the circular.BACKGROUND ON ATUGENAtugen is developing RNAi therapeutics as a new class of drugs with asignificant pharmaceutical market potential. Atugen has 30 staff and hasestablished core competencies in the field of RNAi therapeutics, where it isone of the market leaders.Atugen's proprietary technologies include atuRNAi (chemically stabilised siRNAmolecules) and atuPLEX a liposomal system for the in vivo delivery of thesemolecules. In particular, Atugen is focusing on systemic delivery applications.The Directors of SR Pharma believe that Atugen's technology has a number ofimportant advantages including a stability that makes intravenous use possibleand a high degree of specificity with regard to the target mRNA.Atugen has targeted the oncology sector as an appropriate market for itstherapeutic molecules and has a number of product candidates in pre-clinicaldevelopment.Atugen has benefited from approximately ¢â€š¬37m of venture capital investment andgovernment grant funding since its incorporation in 1998 to support thedevelopment of its product and intellectual property portfolio, which includesexclusive and non-exclusive licenses to more than 100 patents and patentapplications and approximately 50 of its own patent applications.Atugen has generated approximately ¢â€š¬20m of contract research revenues to datethrough its partners who have included, amongst others, AstraZeneca plc,Berlex, Inc., Altana AG and Sankyo Ltd. In addition, Atugen has been able toestablish drug development collaborations in the field of RNAi therapeuticswith Sanofi-Aventis and Quark Biotech, Inc. This revenue has contributed to thefunding of Atugen's substantial research and development expenditure.RATIONALE FOR THE ACQUISITIONSR Pharma is committed to enhancing shareholder value through becoming acredible European biotechnology company developing an exciting proprietaryproduct pipeline; establishing collaborations with leading pharmaceutical andbiotech companies; creating a revenue generating business and making furtheracquisitions of undervalued product and technology assets.In particular the Directors believe the benefits to shareholders of theacquisition of Atugen include: * providing SR Pharma with access to a technology platform already proven to be the source of innovative therapeutic candidates and a team of scientists experienced in the discovery and pre-clinical development of new therapeutic molecules; * providing SR Pharma with access to technology that is applicable to, and scientific personnel with capabilities and experience in, the oncology and inflammatory market sectors; * expanding SR Pharma's intellectual property portfolio by providing coverage for a new class of therapeutics and their delivery; * providing SR Pharma with access to third party collaborators and partners who could further enhance the development of SR Pharma's existing M.vaccae product and intellectual property portfolio; and * providing SR Pharma with a basis upon which it aims to build a sustainable revenue generating contract services business. Key Terms * The acquisition values Atugen at approximately ‚£6.2 million, based upon a price of 27 pence per SR Pharma ordinary share, being the mid-market price as at the close of business on 16 June 2005; * The consideration for the acquisition is principally in the form of new shares, with the current Atugen shareholders owning a maximum of 49 per cent. of the enlarged entity post completion; * Certain Atugen Shareholders, including Apax, MPM Capital and Novartis Forschungsstiftung, representing approximately 46 per cent. of the shareholders of the enlarged group, have agreed to a 12 month lock-up following completion of the acquisition. Timetable * Subject to approval by shareholders, the transaction is expected to be completed and the shares of the enlarged group re-admitted to trading on AIM by 12 July 2005 Proposed BoardIt is proposed that the current directors of SR Pharma, Iain Ross, (Chairman),Melvyn Davies (Finance Director), Peter Reynolds and Iain Rugheimer(Non-executive directors) will be joined by three members of the AtugenSupervisory Board, Jeremy Curnock-Cook, Dr David U'Pritchard and Professor DrBernd Wetzel, all three of whom will be non-executive directors.Upon completion of the acquisition, the other members of the Atugen SupervisoryBoard, Dr Jeremy Reffin, Dr Steven St. Peter and Dr Michael Steinmetz, willresign as directors of Atugen. Atugen's current Chief Executive Officer, DrPeter Buckel, will leave in September 2005.Executive management teamThe executive management team of Atugen will comprise Iain Ross and MelvynDavies of SR Pharma and Thomas Christƒ©ly and Dr Klaus Giese from Atugen, whowill be appointed Chief Operating Officer and Chief Scientific Officerrespectively.Commenting on today's announcement Iain Ross, Chairman of SR Pharma plc said:"SR Pharma's goal is to build a substantial European biotechnology company andto create an innovative product pipeline coupled with a sustainable revenuegenerating capability. We are seeking to acquire product and technology assetsandwe believe that the proposed acquisition of Atugen, will provide us with akey foothold in one of science's most interesting fields. We have targetedfurther acquisitions and intend to augment our existing cash reserves byraising substantial funding from new investors in order to fund our growthstrategy".Jeremy Curnock-Cook, Chairman of Atugen AG said:"The experience of the last 10 years has shown that a diversified,multi-dimensional, highly acquisitive strategy fuelled by innovative scienceand cash, is both appreciated in the public markets and achieves substantialcommercial success. The key to success is having experienced management and Ibelieve the combination of these two companies is a very exciting prospect".Enquiries:For further information, please contact the following:SR Pharma plc Atugen AG +44(0)20 7307 1620 +49 30 9489 2800 Iain Ross Chairman Thomas Christƒ©ly Melvyn Davies Finance Director Mulier Capital Bioscience Managers Limited Advisers to SR Pharma Advisers to Atugen +44(0)20 7821 6111 +44 (0)20 7225 4400 Pieter Mulier (pieter@mulier.com) Michael Forer Mobile: +44(0)771 031 8196 Zoe Appleyard Ley (zoe@mulier.com) Mobile: +44(0)7939 139460 Notes to editorsRNAi is a process whereby the production of disease causing proteins by atarget cell can be stopped by preventing the translation of the genes whichencode them, thus inhibiting or ``silencing'' their function. This RNAi processcan be initiated by the introduction into the target cell of short interferingRNA.ENDSR PHARMA PLC