Shares in Biocompatibles have slumped by more than 400p over the last few weeks to 997p on concerns that a delay in concluding the deal meant the tie-up could fall through. An initial agreement to market its coating to J&J expired last month.
Julian Steadman, Biocompatibles' finance director, said yesterday that the talks were definitely ongoing. However, J&J's request to extend the negotiations to include Biocompatible's recently acquired range of modern stents, used to keep blood vessels open, as well as its coating had protracted the talks. "A deal is several weeks away. But J&J is such a big player in the US, it is important to conclude this properly." J&J controls 80 per cent of the fast growing US stent market. Erling Refsum, analyst at Yamaichi said: "It is clear that Biocompatibles is not in any difficulties over these negotiations. It is an even better sign that J&J has asked for the stents to be included in the negotiations."
J&J had wanted to market Biocompatibles unique coating, which resists infection and blood clots and can be used to deliver drugs, to boost sales of its own stent range. However, J&J has relatively old products and with competition increasing in the US, it has been losing market share.
As a result J&J is keen to acquire rights to Biocompatibles' new stent range. "It is clear that J&J needs Biocompatibles more than the other way round," said one analyst. Observers speculate that Biocompatibles can demand a princely royalty rate of at least 25 per cent on any products licensed to J&J.