Drayson promises first payout at bid target Powderject

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The Independent Online

Powderject Pharmaceuticals, the biotech group turned vaccines maker, yesterday promised to pay its first dividend – but the payout may also be its last, since the group said bid talks with Chiron of the US were at an advanced stage.

The company, led by the controversial Labour Party donor Paul Drayson, admitted last month that it was in takeover talks and Chiron is believed to be ready to pitch a formal offer at about 540p a share. This would value the company at £500m.

PowderJect was told by shareholders in October – when Chiron made a first abortive attempt to agree a deal – that they would be likely to back a bid of more than 500p-a-share. Mr Drayson, his wife and father-in-law will share a £100m windfall if a new deal is agreed at the mooted price.

There was some disappointment that Chiron had not formalised its approach in time to coincide with yesterday's full-year results, which were in line with analysts' forecasts. Agreement is now likely early next week.

Chiron, which makes vaccines against rabies, polio, measles and mumps, is keen to expand into the lucrative US flu market. A big leap in sales of its flu vaccine, Fluvirin, helped PowderJect to pre-tax profits of £23.5m in the year to March, up from just £100,000 the year before.

Andy Smith, biotech fund manager at 3i, said it was sad that such good results would be followed by the company's takeover. He said: "This is a great little UK biotech who can compete with the best in the world and we need to encourage other companies to do the same thing as they have done."

Mr Drayson said PowderJect had become "sustainably profitable" and was able to pay a maiden dividend of 3p a share. He said: "We believe the payment of a dividend is the right thing to do. We are a strong commercial business ... and businesses should make profits and pay dividends to their shareholders."

The results marked the 10th anniversary of the foundation of PowderJect, based on a needle-free injection technology developed by Mr Drayson's father-in-law at Oxford University. The payment of the dividend also underlines its transition from a cash-burning technology business to a vaccines group, thanks to a string of acquisitions. The needle-free device lives on in PowderJect's early stage research and development work but the profits are derived elsewhere.

The group said it had delivered the final doses of smallpox vaccine ordered by the Government in a £32m contract last year. PowderJect is one of three bidding for a larger UK smallpox vaccine supply that will be used as a stockpile in case of bioterrorist attacks, but there was disappointment that only one modest further contract for the vaccine in Europe was announced yesterday.

The award of the first UK contract attracted the attention of the National Audit Office after it was revealed Mr Drayson had made a second £50,000 donation to Labour during its negotiation. The NAO found the Department of Health had been unaware of the donation.

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