Antisoma signs £316m landmark deal with Roche

Antisoma, one of Britain's cash-strapped biotech companies, yesterday agreed a deal worth more than $500m (£316m) with Roche which grants the Swiss company exclusive rights to develop and market its products for the next five years.

The ground-breaking deal will see Roche taking a 10 per cent stake in the UK cancer specialist. Antisoma's shares more than doubled, rising 15.75p to 28.5p, as fears receded that the UK company would run out of cash before it could secure extra funding to develop its portfolio of cancer drugs, which include Pemtumomab, which is expected to be one of the most important treatments for ovarian cancer.

Glyn Edwards, chief executive of Antisoma, said: "The deal means that we are not cash strapped. It changes the whole risk profile of the company. We no longer need to get money from investors, this is the equivalent of doing four or five deals all at once."

As a result of the cash injections from Roche, which includes an upfront payment of $37m plus $6m for the equity stake, Antisoma said it would now consider increasing its investment in finding new drugs and developing them in their early stages.

Roche will also pay Antisoma money when drugs it chooses to develop over the next five years hit performance targets. Analysts estimated Antisoma could receive $50m for each successful drug, with about 10 proving effective in clinical trials in the next five years. Antisoma will also be paid a cut of the royalties from sales of successful drugs.

The deal breaks the mould of most tie-ups in the biotech sector, which usually involve companies either staging complete takeovers of smaller rivals or agreeing licensing deals over one drug at a time.

Dr Edwards said Roche had considered buying his company but stressed the licensing deal should provide more value for both sets of shareholders.

"This is a symbiotic relationship between a smaller, more nimble company and a big, powerful pharmaceuticals company," Dr Edwards said.

Antisoma has been "very good at finding new drugs in the academic community", Dr Edwards said. By remaining independent, the company would be able to continue its close relationship with academic contacts, he added.

Roche's initial payment to Antisoma is more than its entire market capitalisation before the deal was announced. But some analysts voiced concerns that the price may still be too low.

Julie Simmonds at Evolution Beeson Gregory said: "This will solve a lot of problems Antisoma had but possibly what they have done by selling a lot of stuff at the early stages is not to make as much as they might have done."