Bioworld International Correspondent

LONDON - Evolutec Group plc is throwing in the towel, winding down the company and giving its £5.5 million (US$10.9 million) cash back to shareholders following the failure of its lead product in January.

The Reading, UK-based company said it reached the decision after a thorough strategic review including considering a number of offers for a reverse takeover or merger. Following consultation with major institutional shareholders, it intends to go into voluntary liquidation and return the remaining cash.

Evolutec will delist its shares from the Alternative Investment Market in London Stock July 9. The decision to close up shop is subject to shareholder approval.

The £5.5 million that is left over represents a return of £0.213 per share.

"The disappointing clinical results with rEV131 earlier this year made it difficult to continue in the public market," said Mark Carnegie Brown, CEO, in a statement. "While this outcome is a disappointment to the board and shareholders, it remains the best solution given the company's market capitalization and the time to value for its remaining programs."

In January, rEV131 failed its second Phase II trial in a month in the treatment of inflammation following cataract surgery.

The news pushed the share price down by £0.025 to £0.155. That followed the failure of the compound, a recombinant version of a naturally occurring anti-inflammatory protein extracted from tick saliva, in the much larger indication of allergic rhinitis in December, when the shares fell from £1.34 to £0.43.

After the failure of rEV131, there was not much following on behind in the Evolutec portfolio. Although the company has rights to a number of anti-inflammatory and anti-coagulant compounds originally discovered by scientists at Oxford University in the saliva of ticks and other biting insects, it has taken a conservative approach to development, raising money in small tranches against stated objectives.

The low-risk approach helped Evolutec to nudge the IPO window open in Europe in July 2004, when it raised £5.1 million at £1.25 per share.

It subsequently raised £9.5 million in March 2005, £10 million in October of the same year and £2.8 million in October 2006. As a private company, Evolutec raised about £6.3 million in three rounds.

The only other significant product, rEV576, is a complement inhibitor, which has demonstrated activity in preclinical models of the autoimmune diseases myasthenia gravis and Guillain-Barré syndrome, and asthma and acute myocardial infarction.

In addition, the company has a license with Merial Ltd. covering the use of its vaccines technology in animal health.