BioWorld International Correspondent

LONDON - Three former Shire Pharmaceuticals Group plc executives have raised $7.1 million to acquire nasal drug delivery technology from West Pharmaceutical Services Inc. (WPS), along with $40 million for product development, as the foundation of a new company, Archimedes Pharma Ltd.

And the three have a promise of more money from lead investor Warburg Pincus to fund the acquisition of a European pharma or biotech company with marketed products and a sales and marketing infrastructure.

Richard de Souza, CEO, told BioWorld International, "The strategy is to grow through the acquisition of companies or products that are close to registration in Europe. At the same time, we will develop our own pipeline of products based on the nasal delivery technology."

The business model is based on previous experience of setting up specialty pharma companies around acquired products.

"Once you have launched a product everyone asks, What next?" de Souza said. "In order to be sustainable you need three parts - a very confident sales and marketing operation, products that are approaching registration and a development pipeline feeding in."

De Souza and his co-founders, Charles Marchetti, chief financial officer, and Michael Clark, marketing director, intended to acquire a European company first as the basis for Archimedes but were offered the nasal portfolio from WPS, of Lionsville, Pa., after the U.S. company decided to divest the drug delivery unit in December.

"The result is we are going in as a burn company as opposed to cash generating, but we have the means to fund it through to market," de Souza said.

Apart from $7.1 million cash, WPS gets 14 percent of Archimedes' equity and is entitled to royalties of up to $19 million.

De Souza did not want to give details of the seven programs, three of which are partnered, but WPS previously announced Phase I trials of a nasally administered formulation of leuprolide for treating endometriosis and Phase I trials of nasally administered morphine. The first product should be ready for launch in 2008.

The nasal delivery group is based in Nottingham, UK, and will remain there, while Archimedes will be headquartered in Reading.

Archimedes has yet to identify a European acquisition.

"Suitable companies are getting fewer - there used to be a plethora. Now there are none in the UK," de Souza said. However, there are some suitable targets, which must be based in the European Union and have products on or close to market.

De Souza said Warburg has agreed to support the acquisition. "Obviously they will still need to do due diligence, but Warburg bought into the entirety of the plan."