York Pharma PLC Acquires Two Marketed Specialist Wound Care Products from Celltran Limited and £510,000 Institutional Placing
Published: Oct 28, 2008
The acquisition expands further York Pharma’s product offering in dermatology, providing two specialised, marketed products for the treatment of chronic wounds and burns, Myskin™ and Cryoskin™, and a rich pipeline of associated products and technologies. Myskin™ and Cryoskin™ are directly complementary to Flammazine® and Flammacerium®, both recently acquired by York Pharma, and will be co-marketed by York Pharma’s sales team for the acute treatment and subsequent regeneration of the skin associated with burns and wounds. The acquisition consolidates York Pharma’s growing position in the fast-growing £6 billion chronic wound care market.
Concurrently, an institutional placing led by FinnCap has raised £510,000 (before expenses) at 14.4 pence per share to provide additional working capital for the integration, operation and further development of the assets within York Pharma’s business.
• Celltran (in administration) is a Sheffield-based biotechnology company specialising in cell-derived wound care therapies. Two products, Myskin™ and Cryoskin™, have been approved and launched. These marketed products and the associated development pipeline are protected by fourteen granted patents, thirty four pending patents and associated trademarks
• York Pharma will acquire these assets for consideration of £70,000 plus the payment of royalties on future sales for a period of five years (at the greater of £100,000 (£20,000 per year) or 10% of future revenues generated by the products over such period)
• The assets are expected to be self-financing within 12 months following acquisition and provide a growing income stream to York Pharma during that period at no incremental sales team costs
• Prior to Celltran going into administration over £5 million had been invested in developing its products and in excess of a further £10 million had been invested in the development of the pipeline product, Lyphoderm™, prior to its acquisition by Celltran
• Myskin™ is an autologous product derived from a small skin biopsy taken from the patient and later provided in the form of a ‘biological dressing’. The cells are delivered using proprietary surface coating technology. The dressing can be placed onto a wound or burn site, providing epidermal cover and promoting healing of the wound
• Cryoskin™ delivers donor keratinoctyes in a cryopreserved form, providing an immediate first line treatment for burns and wounds. Cryoskin™ can be stored long term and represents the most advanced biologically derived therapeutic option currently available to the UK burns community • With the acquisition of the assets, York Pharma has also acquired the Human Tissue Authority (HTA) licensed tissue bank and Medicines and Healthcare products Regulatory Agency (MHRA) accredited Good Manufacturing Practice (GMP) production facility for Myskin™ and Cryoskin™ whilst retaining a small number of key technical staff for its continued operation
• The pipeline acquired includes:
o Lyphoderm™ - a true ‘off-the-shelf’ cell-based medicinal product for the treatment of chronic wounds. Lyphoderm™ has successfully completed a Phase II trial conducted in 194 venous leg ulcer patients. o Ulcodress™ - a state of the art hydrogel wound dressing providing protease modulation. York’s existing expertise in protease modulation through its Skin Barrier Repair platform will accelerate value creation from this product. o Myskin™ Vitiligo – a pre-clinical development product using the Myskin™ technology to treat vitiligo, an intractable condition of skin depigmentation and one which York already has a presence with its marketed product, Vitix™. o Myskin™ Cornea – a product in pre-clinical development and using the Myskin™ technology to treat corneal damage using autologous cornea cells delivered to the patient on a specially developed contact lens.
3,541,140 York Pharma 5p ordinary shares (the “Placing Shares”) have been conditionally placed at a price of 14.4 pence per share, raising a total of £510,000 before expenses. Application will be made to the London Stock Exchange plc for the Placing Shares to be admitted to trading on AIM. It is expected that the allotment, issue and admission of the Placing Shares to trading on AIM will become effective and that dealings in such shares will commence on 28 November 2008.
The Company remains in discussions with one additional investor, who has previously supported Celltran, regarding a small further equity investment that may or may not be completed shortly. Due to time constraints this investor was unable to meet the deadline for this placing round, but wishes to continue to support the development of the products and technologies in the future under York Pharma’s management.
The EGM and GM
An Extraordinary General Meeting of the Company will be held on 27 November 2008 (“EGM”) at which resolutions will be proposed to increase the authorised share capital of the Company, to authorise the directors of the Company to allot relevant securities for the purposes of the Companies Act 1985 (the “Act”) (including the allotment of the Placing Shares and certain other relevant securities relating to the acquisition of Flammazine® and Flammacerium® and the financing announced by the Company on 1 October 2008), to authorise the directors of the Company to allot equity securities pursuant to the Act as section 89(1) of the Act did not apply to such allotments (subject to certain limitations), to increase the borrowing limits of the Company under its articles of association and to approve an extension to the subscription period under the terms of the Company’s warrant instrument dated 16 February 2004 (as amended on 22 March 2004) (the “Instrument”) from 16 February 2009 to 16 February 2012.
In addition a General Meeting of the holders of the Company’s warrants to subscribe Ordinary Shares granted pursuant to the Instrument (“AIM Warrants”) will be held on 27 November 2008 (“GM”) at which an extraordinary resolution will be proposed to approve an extension to the subscription period under the terms of the Instrument. A circular will be dispatched to shareholders and the holders of the AIM Warrants on or before Friday 31 October containing notices convening the EGM and the GM.
Announcement of Preliminary results
The Company expects to announce its preliminary results for the year ending 30 September 2008 on Friday 23 January 2009.
Terry Sadler, Chief Executive of York Pharma, commented:
“We are delighted to have secured the acquisition of two further marketed products to add to our existing dermatology and wound care portfolio. Myskin™ and Cryoskin™ are both leading edge patented technologies approved for the treatment of chronic wounds and directly complement the recently acquired Flammazine® and Flammacerium®. Our expertise in protease modulation and skin barrier function will enable us rapidly to build further value into the Celltran assets.
“The associated fundraising also demonstrates continuing investor confidence in the market opportunity for these novel products and the ability of York Pharma to deliver new innovative treatments to the market."
For further information please contact:
York Pharma plc Tel: +44 (0)870 067 2563 Terry Sadler, Chief Executive Officer
FinnCap Tel: +44 (0)207 600 1658 Stephen Norcross
Collins Stewart Europe Limited Tel: +44 (0)207 8000 8350 Nick Ellis
Financial Dynamics Tel: +44 (0)207 831 3113 David Yates Ben Brewerton Emma Thompson
About Celltran Limited
Celltran Limited (in administration) (“Celltran”) is a biotechnology company specialising in the treatment of chronic wounds and burns using regenerative skin cells and cell derived products. Celltran was founded in 2000 by two University of Sheffield Professors, Sheila MacNeil and Robert Short. Celltran has raised over £5.0m in funding from a number of early stage investors. This funding has been used to develop Myskin™, an autologous wound treatment, together with establishing a GMP clean room laboratory and human tissue bank. In October 2006, Celltran merged with a Belgian biotechnology company, XCELLentis. This merger provided Celltran with a number of complementary products and supporting technology. The most notable of these is LyphoDerm™, a freeze-dried cell-derived treatment for ulcers and other chronic wounds, which has also benefited from development funding in excess of £10.0m. Celltran had a broad portfolio of products at various stages of development, each with significant commercial potential. The business is based in Sheffield, United Kingdom and employs a small but highly skilled team of staff. Celltran’s production facilities are fully licensed by the HTA and Celltran holds a GMP compliant Manufacturer’s (special) Licence issued by the MHRA.
About the wound care market The global wound care market presents a substantial opportunity for York Pharma and was estimated to be valued at US$10 billion in 2007¹. The majority of the market is made up of ‘traditional’ wound treatments such as gauzes, bandages and other dressings. Advanced wound care therapies, a market in which Myskin™ and Cryoskin™ will compete, make up a significant proportion of this market. More significantly, the advanced wound care market is growing rapidly, as there is a gradual transition from older traditional remedies to advanced cell-based treatments. Current therapies for the treatment of chronic wounds are largely unsatisfactory, both from a clinical and economic point of view. There are estimated to be 13 million patients per annum suffering from chronic wounds and approximately 40% of these wounds fail to heal, even with current standard therapies. Furthermore, the overall annual treatment costs for wounds such as chronic ulcers are considerable, ranging from £7,000 to £20,000 per case, depending on the severity of the wound. This is of serious concern to governments that seek to limit health care expenditures.
¹ The Global Market for Advanced Wound Care Products 2008; Epsicom Healthcare Intelligence, April 30, 2008.
About York Pharma plc York Pharma is an AIM-listed strategic acquirer, developer and marketer of pharmaceutical products in the field of dermatology. Its portfolio now embraces skin diseases that make up approximately 87% of the global US$10.6bn dermatology market. For further information, please go to www.yorkpharma.com.