BioWorld International Correspondent
LONDON - Vernalis Group plc simultaneously launched a placing and open offer to raise £14.1 million (US$22.7 million) and announced it was discussing offers for the company.
The placing of 44.5 million shares at 36 pence represents about 103 percent of Vernalis' existing share capital.
Peter Worrall, finance director, told BioWorld International, "The fund-raising is fully underwritten; we have had very good support from existing shareholders."
Vernalis, based in Winnersh, has been in discussions with a number of parties that said they were interested in making all-share offers for the company, but later withdrew interest. Talks continue with others, but as yet, there is no firm offer. "We are now technically in an offer period, so I can't say any more," Worrall said. "Discussions are ongoing."
When it announced its 2002 financial results on March 21, Vernalis said it faced a funding gap between now and 2004 as it awaited the payment of a $15 million milestone from its U.S. marketing partner, Elan Corp. plc, of Dublin, Ireland. The trigger for the payment is the first 12-month period in which net sales in the U.S. of Vernalis' migraine treatment, frovatriptan, exceed $100 million.
The decision to put up the "for sale" sign prompted CEO Robert Mansfield to leave the company he headed since 1992. Worrall has since taken overall responsibility for day-to-day operational matters.
Vernalis said last week that securing the additional funding will enhance its position in the takeover discussions. The announcement of the fund-raising had the unusual effect of pushing up the share price by 40 percent to 48.5 pence last week, boosting Vernalis' market capitalization to £20.7 million.
Frovatriptan was discovered by SmithKline Beecham plc, now GlaxoSmithKline plc, to which Vernalis owes a payment of $5 million in September. The rest of the proceeds of the £14.1 million funding will be used to carry out additional studies required to get frovatriptan approved for the treatment of menstrually associated migraine; conduct a Phase IIIb study of frovatriptan in adolescent migraine; complete Phase II studies of VML 670 in selective serotonin reuptake inhibitor-induced sexual dysfunction; and to progress the 5-HT2c agonist research program in obesity.