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Barr Ellison Solicitors – commercial property
3 January, 2006 - 14:35 By Staff Reporter

BioProgress enters pharma market with French acquisition

Pill-coating specialist BioProgress is days away from a move into the global pharamceutical market through the £8.6 million acquisition of French firm, Dexo SA.

Pill-coating specialist BioProgress is days away from a move into the global pharamceutical market through the £8.6 million acquisition of French firm, Dexo SA.

The acquisition will be followed in this quarter by the relocation of BioProgress’ HQ from March in Cambs to the Cambridge Science Park, placing it at the centre of Europe’s largest biotech cluster. Extra capital funding will be made available through a £5.77m fundraising round that will also be used to finance the Dexo deal.

The acquisition, which is being made through newly formed vehicle, Dexo BioPharm Ltd, signals a significant change to BioProgress from a drug delivery and material sciences company into an integrated speciality pharmaceutical and healthcare business, which is able to develop and market its core technologies in combination with other innovative products.

Richard Trevillion, CEO of BioProgress, said: “Our technology lends itself to rapid brand differentiation and improvement, particularly in areas of patient compliance and product life cycle extension.

“With France’s well known history of accepting innovative pharmaceutical formulations, we see this as a significant springboard to see maximum value for our company’s technologies.”

Current Dexo boss and former CEO of Sanofi Pharma France, Jean-Francois Sfarti, will continue as president of Dexo along with the existing team running the operations in France. He said: “BioProgress’ platform technologies will allow us to add significant value to our existing range of products and will enable us to access new product areas with significantly improved product profiles and differentiation.”

The consideration for the acquisition of Dexo is Euros 12.5m (£8.6m), Euros 8m (£5.5m) of which will be paid in cash and Euros 4.5m (£3.1m) in sterling denominated ordinary shares to be issued at the time of completion.

Dexo is a profitable private company with specific expertise in registering and marketing innovative branded products into the French healthcare system. The new Dexo BioPharm division will be immediately accretive in cash terms and creates the potential for near-term Group profitability.

Dexo operates in the area of registered pharmaceuticals and specialises in medicines to treat gastrointestinal illness, and products for ear, nose and throat ailments, along with a treatment for Wilson’s Disease.

For the year ended December 31 it is expected to generate turnover of approximately Euros 6.5m (£4.5m) with net margins above 30 per cent. Net assets of Dexo at completion are expected to be around Euros 3.0 (£2.1m).

BioProgress will use December’s placing of 12,285,328 new ordinary shares – representing approximately 10 per cent of the current issued share capital of the company – at 47p each to refinance the cash consideration for the Dexo deal and to provide additional working capital although the acquisition is not conditional on the fundraising.

BioProgress’ move to Cambridge is another step in the firm’s rapid restructuring and will decrease rental lease costs by over 70 per cent. The firm will also establish a presence in London to provide greater access to potential and existing partners and advisors in addition to housing its new Dexo BioPharm division.

BioProgress has also announced a new joint venture with private generics supplier Crescent Pharma through the newly-formed pharmaceutical division Dexo BioPharm, named Dexo BioGenerics Limited, which is 75.1 per cent owned by the BioProgess group.

Mohammed Al-Doori, Crescent Pharma CEO, said: “Dexo BioGenerics will offer patients an exciting new range of medicines by combining Crescent’s range of well established generic drugs with BioProgress’ cutting edge delivery technology. Crescent’s market experience will assist in ensuring the commercial success of the new product range.”

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