PowderJect to begin auction after £450m offer from US
Monday 21 October 2002
PowderJect Pharmaceuticals, the controversial vaccines company which is supplying smallpox jabs to the Government, will admit this morning that it has attracted bid interest from at least three companies.
Its bankers, CSFB, are set to launch an auction of the company, with the bidding starting at £450m, or 500p a share, after an indicative offer from the US company Chiron. That represents a 96 per cent premium to last week's share price, and would net PowderJect's founder and chairman, Paul Drayson, £36m for his stake.
The company dismissed Chiron's bid as opportunistic, and said it would not agree a deal at that price.
PowderJect shares have collapsed from 566p at the start of the year to just 255p, as it has become embroiled in a political row over suggestions of cash-for-contracts. Mr Drayson gave £50,000 to the Labour Party just weeks before the Government awarded PowderJect a £32m contract to supply the smallpox vaccine for use in the event of a bioterrorist attack. The group has also had to issue a profit warning after recalling its BCG jab for tuberculosis. Mr Drayson established PowderJect in 1993 to commercialise novel technology for needle-free injections which had been developed at Oxford University, and which has proved disappointing so far. The business was floated in 1997 and has since bought a string of vaccines companies that transformed it from a cash-burning biotech to a company expected to make £20m this year.
PowderJect is one of an elite band of profitable biotechs, but it is still pouring money into research on a novel, needle-free device for injecting powdered DNA-based vaccines through the skin.
California-based Chiron is an $8bn (£5.2bn) pharmaceuticals group listed on Nasdaq. Its products include blood screening kits and cancer drugs, as well as vaccines. Its offer is seen as the most far advanced of the three to have been made so far, but none has begun due diligence.
PowderJect will warn shareholders that talks with potential bidders are at an early stage and that there is no guarantee formal offers will be received. A spokesman said: "Until these offers came in, PowderJect saw itself as the predator, not the prey. It has made a number of acquisitions in the past, and was planning to make a number more."
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