LONDON - There was further consolidation in UK biotech last week when the unquoted company CeNeS Ltd. said it was taking over the public drug-delivery company, Core Group plc.
The reverse takeover will be achieved by the issuance of 53.3 million new Core shares to CeNeS shareholders. The merged company, which is expected to be called CeNeS plc, will be 64.7 percent owned by existing CeNeS shareholders.
Both companies were formed by one of the leading figures in UK biotechnology, Alan Goodman, who is chairman of CeNeS.
Jim Pickard, CEO of Core, and two other executive directors resigned with immediate effect when the deal was disclosed last week. Daniel Roach, CEO, and senior managers from CeNeS, will run the merged company.
Roach told BioWorld International, "We always had big ambitions for CeNeS, and so this is great news. In addition to Core we intend to make further acquisitions and the listing will give us access to the funding we need."
Apart from helping CeNeS to achieve critical mass, there will be synergies between the two, especially in the area of pain management. Core's most advanced product is a controlled-release formulation of morphine, while CeNeS has a morphine derivative in clinical trials.
Trading in Core shares was suspended at 34.5 pence, leaving it with a market cap of about #10 million (US$16 million), with about 29 million shares outstanding. The company floated on the London Stock Exchange in March 1997 at #2.50 per share.
Pending approval from Core shareholders, Roach hopes the merged company will rejoin the stock exchange in December. In the meantime, a private finance round is taking place to raise several million pounds, via a private placing with CeNeS' existing shareholders, and an open issue to Core shareholders.
Roach said, "Our plan for Core is to maximize shareholder value and maximize the commercial potential of the technology." He said it was too early to comment on whether there would be any job losses or closures at Core's facility in Kilmarnock, Scotland.
Core had said on June 21 that it was looking to merge. Chairman Roger Brimblecombe said the proposed merger with CeNeS "should produce greater value to the shareholders in Core by enlarging its technology base and continuing the development of its current portfolio."
CeNeS, based in Cambridge, was set up in 1997 by Goodman and Roach. The two also were involved in the formation of Alizyme plc, Peptide Therapeutics plc, Oxford Biomedica plc and Chiroscience plc, among others.
The company specializes in central nervous system diseases, and currently has several products in the clinic: two pain killers licensed in from the British Technology Group plc; two dopamine D1 antagonists for the treatment of schizophrenia, one of which is also in Phase I in the treatment of sleep disorders, licensed in from Novo Nordisk; and sipatrigine for the treatment of stroke, which was licensed in from Glaxo Wellcome plc.
Its internal research capability is centered on ion channel research, where it has discovery projects in Parkinson's and Alzheimer's diseases. It also owns CANTAB, a computer-based cognition system, used for clinical assessments of diseases including Alzheimer's, Parkinson's and Huntingdon's, and of the effects of head injuries.
Since its formation CeNeS has raised #15 million. Its last round of funding in April 1999 raised #3.4 million, at which point it was valued at #31 million. The company had sales of #500,000 in 1998.
Core Group plc, founded in 1991, has two platform delivery technologies, one based on hydrogel polymers for rectal and vaginal delivery, and a microparticle bead system for sustained oral delivery.