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Minster Pharmaceuticals/Proximagen Neuroscience
- BY: Andrew Hore |
- POSTED: 04/01/2010 |
Proximagen Neuroscience is using some of its cash pile to bid for Minster Pharma.
Proximagen is a consolidator in the area of neurological treatments and is offering 6p a share for Minster, which values the drug developer at £4.3m. Proximagen already has the support of 55.84% of the share capital of Minster.
Shares in Minster rose 1.675p to 5.8p on the back of the bid. There was a 1p dip in the Proximagen share price to 109p, valuing the company at £62.5m – little more than the cash it has in the bank.
Minster had cash of £4.84m at the end of September 2009, a decline of £1.5m over six months. Costs have already been cut by £250,000 a year but the current cash figure is probably below the bid valuation. One of the conditions of the bid is that there should be at least £3.5m of cash in the balance sheet at the time of the first closing date of the offer.
Even so, Proximagen is not paying much for the work and investment that has been put into Minster’s treatments. The stated NAV was £17.4m, including £12.4m of intangible assets.
Minster makes it clear that it would be difficult to finance the development of its drugs on its own and it would require additional cash. It even says that it considered selling the rights to the development of sabcomeline.
Minster’s management had said at the time of its interim figures that it was going to focus on sabcomeline for treatment of cognitive decline in schizophrenia and to seek a partner to help finance tonabersat’s further development. A Phase IIb study announced in February 2009 failed to show that tonabersat had any effect on reducing migraines. However, positive peer study results for the treatment of migraine with aura using tonaberset were subsequently published in The Lancet Neurology.
Proximagen’s strategy is to acquire and in-licence later stage drugs. Proximagen raised £49m after expenses in June 2009 and already had cash in the bank. The structure of Proximagen’s first deal, which was to acquire Cambridge Biotechnology, means that it didn’t make an initial dent in the £57m cash pile. Proximagen will pay the vendor a percentage of future revenues generated from the acquired drug development programmes.
Proximagen is interested in developing tonabersat as a potential treatment for epilepsy.
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