LONDON - PowderJect Pharmaceuticals plc is acquiring the vaccines business of Celltech Chiroscience plc for #55 million (US$79.2 million), a move which PowderJect says will shorten time to profitability and make the firm a fully integrated vaccines company, with R&D, manufacturing and marketed products.
The business will be merged with PowderJect's U.S. subsidiary, PowderJect Vaccines, of Madison, Wis.
The deal covers a number of marketed vaccines against infectious disease, including flu, yellow fever and tuberculosis, plus the rights to a hepatitis B vaccine and a production facility in Liverpool that includes a contract manufacturing arm. The facility PowderJect is acquiring is one of the few in the world to have FDA and EU approval for handling live viruses in vaccines manufacture, and is also suitable for producing DNA vaccines.
Celltech is retaining the European sales force and will continue to sell the vaccine products for three years, receiving fixed annual payments and commissions for doing so.
Paul Drayson, CEO of Oxford-based PowderJect, said, "Combining the existing range of vaccines with PowderJect's innovative vaccines R&D pipeline will create a significant vaccines business, which is ideally situated to capture a significant share of the rapidly transforming vaccine market."
The payment will consist of #30 million in cash, which will be raised by a placing and open offer at #6 per share, and #25 million by unlisted convertible loan notes. The companies said #20 million of the payment is for stocks of flu vaccine for use this winter; PowderJect estimates that the proceeds from selling this vaccine stock will be #30 million.
In the year ended Dec. 31, 1999, the vaccines business lost #11.6 million, compared to a profit of #12 million in 1998. The drop was the result of problems with manufacturing the flu vaccine. At the end of 1999, net assets were #85 million.
PowderJect's share price rose by 12 pence to #6.39 when the deal was announced on Sept. 7. Celltech's fell by 22 pence to #14.30.
Celltech, based in Slough, said it had "no current intention" to list the loan notes, though they can be converted to new ordinary shares in PowderJect in 12 months. The company will add the #30 million cash to its existing resources.
Peter Fellner, CEO of Celltech, said that with the sale, the company has now divested most of the non-core assets it acquired through the mergers with Chiroscience plc and Medeva plc. This will, he said, "enable [Celltech] to fully focus its resources upon its strategic priorities."
PowderJect was formed to commercialize a needle-less injection system that accelerates powdered drug particles through the skin with a supersonic jet of gas. The company plans to develop powdered formulations of existing drugs and vaccines, and is already working on a powdered flu vaccine. The company also says its system is particularly suited to the delivery of DNA vaccines, a field where it has a significant collaboration with Glaxo Wellcome plc, of London.