India's Reliance to take 74% of GeneMedix for £14.6m; will shift it to AIM
Beleagured biopharma GeneMedix plc (GMX.L), developer of therapeutic proteins using recombinant DNA technology and novel cell culture, said today that it had reached agreement with India's largest private company, the Reliance Group, to recommend to shareholders that Reliance become the dominant shareholder and finance the continued development of its portfolio.
As part of the proposed deal, Reliance will make an initial investment of £14.6m by subscribing to almost 1.2 billion shares that will deliver it a controlling interest of 74% and which will enable GeneMedix to get rid of its long-term debt.
And by GeneMedix issuing a five year warrant for 1.4 billion shares Reliance may invest up to a further £17.5m over the next five years to match GeneMedix's expected funding needs to take its biosimilars through to launch in the EU and US.
The announcement ends a long period of uncertainty for the Cambridge-based company that has flagged negotiations with an until-now unidentified potential partner for some months now.
After the deal is approved by shareholders, GewneMedix plans to cancel its listing on the main board of the London Stock Exchange and apply for entry to AIM.
GeneMedix CEO Julian Attfield (pictured) said: "The investment by Reliance, subject to the approval of its shareholders, provides a strong route forward for GeneMedix and will bring to an end the uncertainties surrounding the funding of our programmes and financial position.
"Not only will the significant investment allow us to continue to develop our existing portfolio at an accelerated pace but will also allow us to bring new biopharmaceutical products under development.
"With the expertise within the GeneMedix and the enhanced infrastructure and support brought by Reliance, we are looking forward to an exciting period of integration and expansion over the coming year".
Mr Attfield said the proposal already has the support from shareholders holding more than half the company's share capital which will enable Reliance to move to a 74% holding without making a bid for the whole company, providing it operates under the listing rules of AIM, rather than the main LSE board.
He said that from the outset of its discussions, RLS made it clear that it wished to maintain GeneMedix as a publicly listed company so as to allow it to be able to raise funds from an external investor base in the future.
Portfolio
GeneMedix has been developing its range of generic biopharmaceuticals (known as Biosimilars) and has three of the largest market products under development:
chronic renal failure or undergoing chemotherapy, on which it has recentlyfocussed manufacturing activities;
• G-CSF, which is also a chemotherapy adjunct, but used to boost the generation
of white blood cells; and
• Interferon-alfa, used in the treatment of Hepatitis B and C.Biosimilars for some years.
The firm said it has been making "strong progress" despite being under severe financial constraints for a number of years. It hasn't achieved cash in-flows from product sales in the developing world, nor up-front milestones payments from licensing deals of sufficient size to run its programmes to conclusion or that properly reflect what the Directors believe to be the true value of the technology.
Reliance's involvement would also allow GeneMedix to introduce the Reliance portfolio of Biosimilars to market in the EU, use its commercial scale lower cost manufacturing facilities in India and use Reliance's animal testing centres and analytical testing facilities in India, which are also currently outsourced.
Due to the costs of its pivotal clinical programme and the new programmes to be introduced by Reliance, GeneMedix said it is likely to continue running at widening losses for the next two years after which it anticipates significant revenue from
product launches.
Reliance
Reliance Industries Ltd, which will do the deal through its Reliance Life Science (RLS) subsidiary, is a Fortune Global 500 company. It has global revenues of around $22 billion and has around 25,000 employees worldwide.
RLS is a new millennium initiative of the Reliance Group and is a research-driven, biotechnology-led, life sciences organisation. It is developing business opportunities in the domains of medical biotechnology, plant biotechnology, industrial biotechnology, clinical research services and contract manufacturing. These opportunities encompass biopharmaceuticals, molecular diagnostics, genetics, cell-based therapies, biofuels, clinical research services and contract manufacturing.
RLS has its own portfolio of Biosimilar products. It is building manufacturing facilities in India, which have a large infrastructure of analytical testing and animal testing facilities. IT is looking to introduce its products into the EU through collaboration with GeneMedix and to leverage its own manufacturing capabilities by making GeneMedix.
21st December 2006
