Bioglan Pharma, the crisis-stricken skincare specialist, has sold off its most promising drug product in a last ditch attempt to stave off bankruptcy.
The company is talking with its bankers and one outside investor about a refinancing deal, but said yesterday it needed to take drastic action to boost working capital in the meantime.
Bioglan is transferring, or "novating", the US marketing rights to Solaraze, a skin cancer prevention gel, to Quintiles Transnational of the US for a payment of £15m. But £8.6m of that will be handed over to SkyePharma, the company which invented the product, as part of the deal in which Bioglan acquired the marketing rights at the start of this year.
Bioglan, headed by the entrepreneur Terry Sadler, was given permission by the UK Listing Authority to go over the heads of shareholders to agree the deal, because of the urgent need to raise cash.
A company statement said: "If the novation and related amendments had not been effected immediately, the company would have been unable to meet its financial commitments as they fell due and consequently would have been unable to continue to trade, resulting in the appointment of receivers."
Bioglan's US salesforce will be paid by Quintiles to market Solaraze, while the US firm will put market muscle of its own behind the launch. Bioglan keeps the rights to Solaraze in Europe, where it has been rolled out in the UK, Germany and Sweden.
SkyePharma shares soared 3.75p to 58.25p because it has managed to extract an extra £5.2m in payments from Bioglan and Quintiles as part of the deal, on top of the £6.9m milestone payment due from Bioglan this month. In return, it has dropped its threat of legal action for Bioglan's alleged breach of its marketing obligations.
Michael Ashton, SkyePharma's chief executive, said the deal laid to rest fears that had dogged his share price as the Bioglan crisis unfolded. It ensured Solaraze could be launched in the US next month as planned, compensated SykePharma for recent delays, and brought in a powerful new sales partner, he said.
"Launching a product in the US is quite a sizeable event and Bioglan had a salesforce that was designed to grow but, under their present financial circumstances, they couldn't do it. We are happy with the Quintiles agreement and with how much marketing effort they are going to put behind Solaraze."
Bioglan shares fell 2p to 9.5p.
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