British Biotech, once the darling of the UK biotechnology industry but now suffering the after-effects of a string of major drug development failures, is having another go at bolstering its pipeline via a merger with fellow UK company RiboTargets in an all-paper deal which values the latter firm at around €38 million.
Last year, cash-rich but pipeline-poor British Biotech tried and failed to secure a merger deal with Germany's MorphoSys.
The new deal, which has been brewing since early January, does not bring any major new pipeline candidates into the British Biotech stable, as RiboTargets is just gearing up to start trials of a clinical drug candidate in the third quarter of this year. Rather, it provides the combined company with improved R&D capabilities. RiboTargets has established an innovative drug design and development engine focused on the use of structure-based design to improve the drug discovery process, and focuses on anti-infective drugs and cancer.
The newly formed entity will have a market capitalisation of €77 million and net cash totalling €76 million. British Biotech will hold a 50.01 per cent share and RiboTargets the remaining stake. Around £7.9 million of net cash will come from RiboTargets' shareholders. At current burn rates, this should be enough working cash for three years' operations, according to the companies.
British Biotech's chairman, Peter Fellner, will fulfil the same role at the new company, with RiboTargets' chief executive Simon Sturge also retaining this function. In fact, Sturge has worked with Fellner before as an executive at UK biotech bellwether Celltech, where Fellner remains chief executive.
Meanwhile, it appears that more M&A activity can be expected at the new company. Sturge told in-pharmatechnologist.com: "Our strategy for placing ourselves on a stronger commercial position will see us concentrate on both product acquisitions and possible merger activity. We will aggressively pursue this strategy over the coming months and years and are already looking at a number of options."