By Matthew Willett
PowderJect Pharmaceuticals plc moved into the vaccine business Thursday with the #55 million (US$79.07 million) acquisition of Celltech Group plc's recently purchased vaccines manufacturing arm.
The deal is for a #30 million cash payment from Oxford, UK-based PowderJect, plus a #25 million balance payment based on sales of the flu vaccine Fluvirin, and will be accomplished through a stock offering and the issuance of convertible notes.
PowderJect will place up to 5.89 million shares privately, subject to UK "claw-back" rules, which provide current PowderJect shareholders an option to take promised stocks back from private institutional investors before the private placement is finalized.
The remainder of the acquisition cost represents payment for this year's flu vaccine supply, already manufactured by Celltech, and could vary according to actual sales. That payment will be raised by PowderJect through convertible loan notes.
The deal is for a vaccine portfolio that includes Fluvirin for flu, which is estimated to record sales of #30 million this year, Arilvax for yellow fever and BCG for tuberculosis.
PowderJect executives said they have sought a vaccine manufacturing arm for some time, but that the Celltech package was lacking when that company, based in Slough, UK, bought the vaccine manufacturing capabilities of Medeva plc, of Speke, UK.
"We've been looking for a vaccine position for some time," PowderJect Finance Director Steven Harris said. "It looked like a strategically good fit, but there were some problems in the company and we thought that it would be better to wait."
Celltech plc acquired Medeva last November, following its June 1999 $1 billion merger with Chiroscience Group plc, creating a market capitalized company of about $2.1 billion. (See BioWorld Today, June 15, 1999, p. 1; and Nov. 12, 1999, p. 1.)
Two months ago, however, satisfied that the Medeva problems had been solved, PowderJect began moving toward the acquisition.
The PowderJect deal is one that actually improves the Oxford company's cash position, Harris said, because it offers PowderJect immediate revenues from the sale of flu vaccine stock this year.
"In terms of the vaccines business, we're basically No. 6 in the world now that we have a vaccine side to our business and a drug side to our business," he said. "Our drugs in peptides and small molecules, I think, place us very well and can really take us to the next level.
"It's a growing market, and there's a limited supply, so there's a great opportunity for us with the yellow fever vaccine and the flu vaccine we've acquired here," Harris said. "There are considerable benefits, and it's quite a large market, so we think it's a very substantial growth opportunity for us."
Harris said the deal includes a distribution arrangement with Celltech that will last three years, enough time for PowderJect to build on it's current marketing capabilities to commercialize the products independently.
PowderJect focuses on developing drugs, biopharmaceuticals and vaccines, in addition to pairing those and other company's products with its PowderJect System, a needleless delivery method.