BioWorld International Correspondent
LONDON - After two years of corporate strife - and just weeks away from bankruptcy - biogenerics manufacturer GeneMedix plc was rescued by the Indian company Reliance Life Sciences Pvt Ltd, which will invest £14.6 million (US$28.6 million) immediately for a 74 percent stake, and up to £32.1 million over the next five years.
At the same time, the Newmarket, UK-based company will delist from the main market in London and from the Singapore Stock Exchange, and join the Alternative Investment Market in London.
GeneMedix has been trying to find a partner since early 2004, when it raised £1.9 million in an emergency placing. Since then it has persuaded investors to make further emergency cash infusions and agreed a $10 million loan. In November 2005, the company was forced to sell its inactive GM-CSF (granulocyte macrophage colony stimulating factor) manufacturing facility in Shanghai, China, a deal that was completed just a month after CEO Paul Edwards resigned.
However, GeneMedix has managed to maintain progress with its erythropoietin (EPO) facility in Tullamore, Ireland, which was given GMP accreditation recently. And it now faces a very different regulatory environment for biogenerics, or biosimilars as they are termed in Europe, with the first products getting European approval in 2006, and brightening prospects for a U.S. pathway to market.
Julian Attfield, acting CEO, said the investment by Reliance provides a strong route forward, bringing an end to the uncertainties surrounding funding of development programs and the company's financial position. "Not only will the significant investment allow GeneMedix to continue to develop its existing portfolio of products at an accelerated pace, but will also allow us to bring new biopharmaceutical products under development."
The highly dilutive deal is subject to shareholder approval, but has the support of investors representing more than 50 percent of the current equity. The company has accumulated so many debts that it is in breach of the limits imposed by the UK Companies Act, and the investment will allow it to repay or restructure most of its borrowings.
GeneMedix is maintaining the AIM listing to enable it to raise funds from external investors in the future, and although it is de-listing in Singapore, it says it will provide investors there with a means to trade their shares.
The money invested by Reliance will fund the EPO and an in-licensed GM-CSF program through to market, without GeneMedix needing to find a marketing partner. The agreement opens the way for GeneMedix to market Reliance's biosimilar products in Europe, and to use Reliance's Indian manufacturing facilities.