BioWorld International Correspondent
LONDON - Strakan Group Ltd. is merging with ProSkelia SA, a spinout from Aventis SA, forming a company with 220 employees, cash of €60 million, marketed products and a pipeline of clinical candidates in bone and hormone-related disorders.
The merged entity, unnamed as of now, will be based at Strakan's headquarters in Galashiels, Scotland, with research and development carried out at ProSkelia's site in Romainville, near Paris. It will be 50 percent owned by Warburg Pincus, the private equity investor that has put £32.5 million (US$58.9 million) into Strakan and €60 million into ProSkelia.
Nick Lowcock, of Warburg Pincus, told BioWorld International Warburg did not force the merger.
"This is not about cost cutting; it is about growth," he said. "Our role was to be a facilitator. We know both companies very well, but the deal was done by the two management teams."
Each company represents 50 percent of the merged entity, and, as a result, Lowcock said no value was put on the deal.
The €60 million in cash gives the company money for about two years, but also it is likely to be an IPO candidate.
"When people speculate about European IPOs, Strakan and ProSkelia are always on the list," Lowcock said. "Clearly, the combined company is an even stronger candidate."
But Lowcock said Warburg Pincus is not looking for a fast exit, instead wanting to "build a company to last." He added that there are no firm plans for an IPO.
The new company will be headed by Harry Stratford, CEO of Strakan. Roland Baron, founder and chief scientific officer of ProSkelia, will be president and chief scientific officer.
Strakan focuses on women's health and skin disorders, and it has products for osteoporosis, angina and acne on the market in the UK. The company had sales of £7.6 million in 2003, but isn't profitable. Stratford founded the company in 1995 with John Kanis, professor of metabolic bone diseases at the University of Sheffield.
ProSkelia was formed in July 2002 as a spinout from Aventis' bone diseases group, with Aventis retaining a 42 percent share. The company has three products in clinical development: Trim Patch, in Phase III work for hormone-replacement therapy; PSK 3841, a topical anti-androgen for alopecia and acne; and PSK 3471, a form of estrogen in Phase I for osteoporosis.
The companies have known each other for some time, with Baron sitting on the scientific advisory board of Strakan. In addition to his duties at ProSkelia, Baron is director of biological research in the department of orthopedics at Yale University School of Medicine.