February 8, 2011 -- Summary of Disposal: The Company has entered into a formal sale agreement (the "Disposal Agreement") for the sale of certain assets which comprise the majority of its woundcare business carried on by the Group (the "Woundcare Business") to Crawford Woundcare Limited (the "Purchaser") (the "Disposal"), a wholly owned subsidiary of Crawford Healthcare Holdings Limited.
The consideration payable by the Purchaser shall be up to £2,700,000 comprising: (a) £765,000 in cash, which is payable on completion of the Disposal; plus (b) up to a further £1,935,000 payable upon the achievement of certain revenue and other milestones and events (the "Contingent Consideration").
The Company and the Purchaser have also entered into certain other commercial arrangements in respect of the Disposal.
Completion of the Disposal is expected to occur on 1 March 2011.
Background to and reasons for the Disposal and use of proceeds
The Board believes that the Disposal is in the best interests of the Shareholders for a number of reasons. The Disposal will generate cash for the ongoing business of the Group, with the proceeds helping to extend the current cash runway of the Group and thereby allowing the Company to deliver on a number of other short-term objectives. The Disposal will also enable the Company’s management to focus on the development and commercialisation of the core areas of the Group's activities and will lead to a further reduction in the fixed cost base where there are shared resources. In arriving at this view, the Board has taken into account the continuing growth and the potential future performance of the business and the investment required to deliver on this potential.
Martyn Williams, CEO of the Company commented "Crawford have impressed us with their expertise and plans for the future and we are delighted to have reached this agreement. In our strategic restructuring announcement of 9 September 2010, we identified a number of short term objectives, including the disposal of our woundcare business. We are pleased to deliver on the first of these."
Principal terms and conditions of the Disposal Agreement
Under the terms of the Disposal Agreement, the Company has conditionally agreed to sell the entire issued share capital of Patient Plus Limited (the woundcare business operating company) and certain assets (including certain intellectual property) used in the Woundcare Business which are owned by Ark Therapeutics Limited (the principal trading company of the Group). Under the Disposal Agreement the Company may also sell certain additional assets to the Purchaser.
By way of security in respect of the Purchaser's obligation to pay the consideration, the Company will take the benefit of: (i) a share charge granted by Crawford Healthcare Holdings Limited, the parent company of the Purchaser, over its shares in the Purchaser; (ii) a debenture granted by the Purchaser over the assets bought from Ark Therapeutics Limited; and (iii) a debenture granted by Patient Plus Limited in respect of all of its assets. In the event of any failure by the Purchaser to pay any of the consideration that is due and payable, or if it breaches any of its other obligations under the Disposal Agreement, the Company will be entitled to enforce this security accordingly.
Financial effects of the Disposal
As at 30 June 2010, the Company had £14,100,000 of cash. The net proceeds of the Disposal will be added to the Company’s cash balances and will be used to progress the Company’s core activities.
The value of the gross assets which is the subject of this transaction at 30 June 2010 was £1,153,000 and the losses on ordinary activities after tax attributable to such business was £428,000.(1)
In accordance with Listing Rule 10.4.2, further announcements will be made as and when appropriate.
Any statements made in this announcement that are not based on current or historical facts are forward-looking in nature. These forward looking statements speak only as at the date of this announcement. The Company and other members of the Group expressly disclaim any obligations or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any changes in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
This announcement is not intended to, and does not, constitute or form part of any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities.
The transaction constitutes a class 2 transaction for the purposes of the UKLA Listing Rules and as such shareholder approval is not required.
(1) Source of financial information: Extracted from the consolidated schedules used to prepare the unaudited consolidated interim results of the Company as at 30 June 2010.
For further information please contact:
Ark Therapeutics Group plc Tel: + 44 (0)20 7388 7722
Martyn Williams, CEO
Iain Ross, Chairman
Financial Dynamics Tel: +44 (0)20 7831 3113
Ark Therapeutics Group plc
Ark Therapeutics Group plc is a specialist healthcare group (the "Group") addressing high value areas of unmet medical need within vascular disease and cancer. These are large and growing markets, where opportunities exist for effective new products to generate significant revenues.
Ark has an early stage pipeline emanating from collaborations with University College, London and the AI Virtanen Institute in Kuopio, Finland, the development of which it intends to progress in collaboration with pharmaceutical and biotech partners.
In addition Ark has the ability to off-set a proportion of its R&D costs and to generate sustainable revenues through the exploitation of its proprietary technology platform, process development, scale-up and manufacturing capabilities on behalf of third parties.
Ark has its origins in businesses established in the mid-1990s by Professor John Martin and Mr Stephen Barker of University College London and Professor Seppo Ylä-Herttuala of the AI Virtanen Institute at the University of Kuopio, Finland, all of whom remain consultants on the Company's research and development programmes.
Ark's shares were first listed on the London Stock Exchange in March 2004 (AKT.L).
This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Group's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Group's products and services), and any statements preceded by, followed by or that include forward-looking terminology such as the words "targets", "believes", "estimates", "expects", "aims", "intends", "will", "can", "may", "anticipates", "would", "should", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group's control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. Among the important factors that could cause the Group's actual results, performance or achievements to differ materially from those in forward-looking statements include those relating to Ark's funding requirements, regulatory approvals, clinical trials, reliance on third parties, intellectual property, key personnel and other factors. These forward-looking statements speak only as at the date of this announcement. The Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, readers are cautioned not to rely on any forward-looking statement.
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