The marriage furthers the transformation of ML Labs from a pharmaceuticals company with a range of specialty products to one with a firm focus on respiratory treatments, a function that has been fulfilled to date largely by its subsidiary Innovata Biomed. In tandem with the purchase of Quadrant, ML Labs has bought all remaining shares of the subsidiary for £1.85m, and plans to rename itself Innovata plc.
The deal will likely be welcome news for ML Labs' shareholders, who have watched the company decline from its height in 2000, when it was valued at around £1 billion.
Last year the company admitted it had become increasingly dependent on milestone payments from licensing partners, and could no longer expect short-term milestone income to fund existing development plans. It dropped some products from the pipeline, but the measures were not enough to prevent a slow decline in the company's fortunes that led to a shareholder revolt - and the removal of the management team led by Stuart Sim, earlier this year.
ML Labs' new management, led by new chief executive Kieran Murphy and executive chairman Ian Kent, said the enlarged business 'has a full complement of capabilities to tackle new products for respiratory disease and inhaled therapeutics'.
Quadrant has a particular emphasis on developing dry powder drug delivery systems for pulmonary diseases and is profitable, with a royalty stream from a licence with Baxter relating to stabilisation technologies and income generated from other pharmaceutical company collaborations with the likes of Bristol-Myers Squibb and GlaxoSmithKline. Its expertise in formulation will also throw up some cost-saving options for the combined company, according to ML Labs.
In addition to its formulation and stabilisation technology platforms, Quadrant also has a inhaler device, dubbed the S2, designed to be easy to use whilst at the same time being inexpensive to produce. The S2 for multidose applications is licensed exclusively to Valois SAS whilst disposable or reusable unit dose rights remain with Quadrant
For its part, ML Labs' dry powder inhaler Clickhaler has won its first European approvals for use with budesonide and formoterol respectively - two widely prescribed asthma therapies. The company also has a licensing agreement with a leading European generic manufacturer for the development of a respiratory treatment using Innovata Biomed's C200 inhaler, and has partnered the Clickhaler in Japan.
"The acquisition of Quadrant is a transforming transaction for ML with a compelling strategic logic, said Murphy. "We believe that the combination of the two companies will enable us to participate in the significant upside potential of the fast growing market for inhaled therapies and respiratory disease."