Cytomyx sells subsidiary; to focus on US biorepository business
In another stage of its restructuring, Cytomyx Holdings plc (CYX.L) said it has sold its subsidiary Cytomyx Limited to Serologicals UK for $7m.
Cytomyx chief executive Mike Kerins (pictured) said "The disposal will strengthen the company's balance sheet and allow us to focus on our US biorepository business, which is already working with many of the world's leading pharmaceutical companies and which has significant potential for growth."
The sale is subject to shareholder approval. But they are unlikely to be disappointed with the deal. The share price was dragged off its recent lows, jumping 50%, or 1.25p, to 3.75p on the news.
The company has said 40.5% of shareholders, including the directors who hold collectively 2.25% of issued capital, have indicated they will vote in favour of the sale at the upcoming EGM.
About $6.2m of sale funds will be used to repay inter-company debts owed by Cytomyx Limited to its former parent. The balance will be sued as working capital.
Focus on Massachusetts biorepository business
The company will focus on providing to the pharmaceutical industry high quality human tissue samples through Cytomyx LLC, its biorepository business based in Massachusetts. Corporate headquarters will remain in the UK, which will also be the focus of the European sales of its biorepository business.
Cytomyx LLC maintains a large and diverse human tissue biorepository, which contains more than 140,000 samples, all with extensive associated clinical data. Samples are bar-coded for tracking purposes and are annotated with associated clinical data in an on-line database. This collection has been created through supply agreements with an extensive network of donor sites in the USA.
Cytomex's has a September year end. In its last set of results, it reported an operating loss of £0.87m on turnover of £0.96m for 2004/5. At that time, it had net liabilities of £2.79m.
The company has been restructuring operations for some time. In February last year it sold the business assets of Cytocell Technologies to a management buy out team for £0.6m. Also in 2004/5 it sold Cambridge Bioscience which was deemed to be non-core to our business.
A strategic review resulted in emphasis on developing an infrastructure to focus on Cytomyx's core business of the provision of novel products and services for the drug discovery industry.
Chairman Bill Mason said in late December that the "formation of Cytomyx LLC as the US hub for all future Cytomyx commercial activities in the US has proved successful and both revenues and operations for the biorepository business are becoming well-established".
Cytomyx LLC is now working with pharmaceutical and biotechnology companies, providing them with samples that assist them in developing new drugs based upon a clearer understanding of patients' individual biochemistry.
The company said new drugs such as Herceptin, a new treatment for breast cancer, and Gleevec for the treatment of Chronic Myeloid Leukaemia, have already demonstrated the value of this approach.
"We believe that the prospects for the business to expand in this emerging area are substantial", Mr Kerins said.
14th March 2006
