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Midatech swoops for £19.5mln NASDAQ-listed DARA

Published: 02:31 04 Jun 2015 EDT

cancer-cell(brest)
The deal is expected to complete in the second half of the year

Midatech (LON:MTPH) will significantly increase its footprint in the US and in cancer care with the acquisition of NASDAQ-listed DARA Biosciences for up to £19.5mln.

The UK speciality pharma group is handing over an initial £15.8mln in shares, with the remainder paid out in cash dependent on the performance of the business.

The deal is expected to complete in the second half and will generate positive cash flows in early 2018.

Midatech, which listed on AIM last December, described DARA as a ‘good strategic fit’.

The US outfit has three leading products: a gel that manages pain caused by the inflammation of the mucus membrane; a soluble tablet for oral thrush; and a liquid version of the breast cancer treatment tamoxifen.

Midatech’s chief executive, Jim Phillips, said: “The acquisition of DARA provides Midatech with access to an impressive portfolio of products and the potential for a fast-growth revenue stream in our target therapeutic area of oncology.

“This acquisition also provides us with a commercial footprint in the US, from which we can launch our own products and thus retain more value.

“I am pleased to be delivering such scale and growth catalysts to Midatech as defined in the strategy at the time of our IPO in December. I look forward to working with our expanded team as we welcome DARA staff to Midatech.”

Midatech has two platforms – carbohydrate-coated gold nanoparticle and its sustained release system – that are about getting medicines to the right place in the right quantities at the right time.

The company’s gold nano-particles, or GNPs for short, promise a revolution in targeted therapies for cancer.

To radically simplify the process deployed (and being a non-scientist, I’m really simplifying it here) these GNPs act as guided missiles.

In treating cancer with traditional chemo-therapy, for instance, they are programmed to hit only a specific tumour type with their payload.

This highly targeted approach allows physicians to potentially administer lower doses and it also means there is little collateral damage.

Its Q-Sphera technology works in a different way to deliver the drug at the right time.

It is a sustained release platform and has adopted 3D and ink jet printing techniques to create particles that dissolve in a “certain way over a certain time-scale”.

Midatech also has a joint-venture with Monosol Rx of the US to develop a strip that slowly dissolves in the mouth to rapidly deliver insulin.

Potentially more effective and faster acting than the other non-injected forms of the medication, it provides a painless, easy to use alternative to pumps and needles.

The growing obesity epidemic means the diabetes market is a huge one valued at an estimated US$40bn - and it is expanding rapidly.

The insulin product is also the most advanced in the portfolio as it enters phase-II clinical trials later this year.

Unlike the traditional biotech, the company has multiple shots on goal in cancer, ophthalmology and neuroscience as well as endocrinology.

Seven of the treatments in development are repurposing drugs already on the market, so could be fast-tracked through the regulatory process.

DARA will be plugged into the oncology portfolio, which is targeting areas of unmet medical needs such as brain tumours, liver and pancreatic cancer that have what’s called orphan status, which means the time to market may also be truncated.

Midatech also has revenue generating partnership agreements with five blue-chip and specialist pharma companies that mark it out from the norm on the junior market.

It plans to be profitable within “four to five years”, but could break-even earlier if it lands acquisitions that bring in additional income, or perhaps even their own sales teams.

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