RNS Number:8325H
RII PLC
27 January 2005
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN OR IN TO
THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA
27 January 2005
RII Plc ("RII" or "the Company")
Proposed Acquisition of BioPartners Limited
Placing of 400,000,000 Ordinary Shares at 0.75p per share
Approval of Rule 9 Waiver
Admission of the enlarged Share Capital to trading on AIM
Change of name to Minster Pharmaceuticals plc
and
Notice of Extraordinary General Meeting
1. Introduction
The Board of RII ("the Board" or "the Directors") announced today that the
Company has entered into a conditional agreement to acquire the entire
issued share capital of BioPartners and to change its name to Minster
Pharmaceuticals plc ("the Proposals"). In addition, it has, subject to
approval at EGM, effected the Placing of 400,000,000 Ordinary Shares of
0.1p each in the capital of the Company at a price of 0.75p per share
(the "Placing") and is applying for the entire issued share capital of the
Company to be admitted to trading on AIM.
2. Background to RII
The Company was listed on AIM in September 1995 as Riceman Insurance
Investments plc. The principal activity was to be the establishment and
management of insurance companies in the Commonwealth of Independent
States. Associated offices were set up in Moscow, Tashkent, Baku, and
Tiblisi. The business developed until the Russian economic crisis in 1998,
after which it went into decline. On 13 March 2001 the Company sold its
entire operating business for a total consideration of US$300,000.
Robert Stubbs was appointed Chairman and Chief Executive on 17 October 2003
with a view to seeking an acquisition of a suitable business which would
provide a basis to build shareholder value. The Company changed its name to
RII plc on 21 October 2003. In order to make the Company a more attractive
proposition to an incoming business, the Company raised #450,000 before
expenses on 6 April 2004. This was achieved by way of a placing of
27,536,231 Ordinary Shares at 0.345p per share and the issue of convertible
loan notes.
The Company now has no business or employees.
In late 2004 the Board identified BioPartners as a potential acquisition
for the Company. Negotiations were commenced and terms were agreed in
principle leading to this announcement.
On 17 January 2005, the Company announced that it was in discussions
regarding a transaction that would constitute a reverse takeover, pursuant
to the AIM Rules, if concluded. Trading in the Ordinary Shares was then
suspended.
3. BioPartners Limited ("Biopartners")
History and background to BioPartners
BioPartners was established in January 2001 as a drug development company.
Its aim was to acquire potentially valuable compounds from major
pharmaceutical companies, academia and the biotech industry and progress
them to proof of concept stage, with a view to then seek partnering for
further development or selling the rights to exploit the compounds.
BioPartners outsources development work, including clinical trials, and
exploits the development and project management skills of the founder and
CEO, Dr Paul Sharpe, and other specialist contributors. It operates from
leased premises near Saffron Walden, south of Cambridge.
Its first assets were two licences granted by SmithKline Beecham plc ("SB")
(a member of the GlaxoSmithKline group ("GSK")) in 2001. These licences
gave BioPartners exclusive rights to develop and exploit the compounds
Sabcomeline and Tonabersat ("the Compounds") on a worldwide basis.
Sabcomeline is targeted primarily at schizophrenia. The rights granted to
BioPartners in relation to tonabersat are being addressed to pre-emptive or
prophylactic treatment of migraine. In the last few months a possible
additional use for sabcomeline in the treatment of insulin resistant
diabetes has been identified. Dr Sharpe had managed the development work on
the Compounds during his time at SB up to the end of 1998. The patents of
the Compounds are currently held by SB subject to the licences to
BioPartners.
Since it was established in 2001, BioPartners has raised approximately
#600,000 to progress its business. The majority of its funds have been
directed to the further development of the Compounds. BioPartners has had
no revenues as yet from the exploitation of products derived from the
Compounds. It is anticipated that, at the appropriate time, it will
negotiate development and marketing agreements with partners in respect of
products derived from the Compounds.
The directors of BioPartners and the Board now consider it appropriate that
BioPartners attains a public quotation on a market for smaller growth
companies, such as AIM. Such a quotation is expected to raise the profile
and standing of BioPartners with potential licence partners and other
business groups and suppliers and to provide access to institutional and
other potential investors.
Licences
In addition to royalties on sales of products derived from either of the
Compounds, the Company is obliged under the two licences to make
non-refundable and non-recoverable milestone payments to GSK as set out
below:
For tonabersat:
#5 million on the initiation of the first Phase III Clinical Trial; and
#10 million on the first commercial sale of a product containing tonabersat
in a major market.
For sabcomeline:
#3 million on the initiation of the first Phase III Clinical Trial; and
#10 million on the first major market filing for a product containing
sabcomeline.
These milestone payments are not expected to become due in the 12 months
following Admission.
The Compounds
(1) Tonabersat
* Tonabersat is aimed at the prevention and treatment of migraine. In a
Phase II program conducted by SB in the late 1990s in over 800
patients with established migraine headache, tonabersat showed, in the
opinion of Dr Sharpe and others, clear evidence of activity and was
well tolerated, with few side effects and no apparent significant
cardiovascular liability. Development work on the Compound was
discontinued at about the time of the merger of SB with Glaxo Wellcome
in 2001.
* GSK has continued to develop compounds of the same class for
indications including migraine.
* BioPartners believes that there is a potential role for tonabersat in
the management of migraine. When BioPartners acquired the licence the
mode of action of tonabersat was not well established and indeed, it
is only relatively recently that the basic mechanism of action of this
class of benzopyran compounds has been discovered. Studies at GSK have
led to a clearer understanding of the precise mode of action of these
compounds, which are now described by GSK as 'gap junction blockers'.
The effects demonstrated for these benzopyrans on brain function,
including inhibition of cortical spreading depression, indicate
potential for the prevention of migraine as well as the treatment of
established headache.
* Currently, clinical trials of tonabersat in migraine have involved
single dose acute treatment only. Establishment of tonabersat in
prophylactic therapy will involve chronic administration to patients
over a period of months.
(2) Sabcomeline
* Sabcomeline is a direct muscarinic cholinergic agonist with functional
selectivity for M1 and M4 receptors. It had been progressed by SB
through development for Alzheimer's Disease, including clinical trials
in over 2,500 patients. As a result, there is a substantial dossier
showing the compound to be well tolerated with few significant side
effects when taken for up to a year. Although the compound was not
taken forward by SB for Alzheimer's Disease because it failed its
primary endpoints, an improvement in secondary behavioural endpoints
was observed in some of those receiving sabcomeline. Clinicians
supported the view that this was indicative of a potential role for
sabcomeline in management of schizophrenic patients. Dr Sharpe
believes that the safety and tolerability profile of sabcomeline would
potentially be attractive for schizophrenic patients where long term
continuous therapy is often indicated, but is frequently not achieved
as a result of patient non-compliance, reflecting in part the side
effects of existing drugs.
* Since the grant of the licence in respect of sabcomeline, BioPartners
has conducted an exploratory Phase II clinical trial which has shown
some evidence of activity, predominately against negative symptoms of
schizophrenia and associated cognitive decline. GSK conducted studies
in parallel with those carried out by BioPartners. Having reviewed the
data from studies, GSK concluded that it did not wish to elect to take
back the development and marketing as permitted under the terms of the
licence.
Current activities of BioPartners
BioPartners has undertaken limited studies on tonabersat. These have included a
study to evaluate the extent of binding of the compound to the HERG potassium
channel. This study was undertaken as a prelude to further clinical development.
The Directors of BioPartners are in discussions to formulate plans for
mechanistic studies with key opinion leaders and are also developing plans for
proof of concept studies with contract research organisations.
BioPartners is at present exploring options with other parties for the further
development of sabcomeline in the indications of schizophrenia and type 2
diabetes.
Future Business Strategy
BioPartners aims during 2005 to initiate a clinical programme to progress
tonabersat to the stage of proof of concept. At the same time, BioPartners may
initiate a preliminary programme on the possibility of using sabcomeline for
diabetes, probably through a development partner. BioPartners will also seek a
development partner for sabcomeline in the schizophrenia indication. Depending
on the availability of future funds, the Company may seek further assets to
which it can apply its development expertise, primarily but not exclusively, in
the field of CNS compounds.
BioPartners expects to remain for the foreseeable future a development company,
reliant on outsourcing its clinical trials and contracting for the services and
facilities needed to progress the development of its compounds. It will recruit
further senior management as required and retain the services of its present
scientific advisors, who include internationally acknowledged experts in the
field of migraine. BioPartners may recruit further advisors in the CNS and
diabetes fields if needed for its development programme.
Potential market
(1) Tonabersat
* According to a report from pharmaceutical and health-care researchers
Decision Resources Inc., the migraine drug market will double from
US$2.86 billion in 2002 to about US$5.6 billion in 2012 in the United
States, France, Germany, Italy, Spain, the United Kingdom and Japan.
The report also predicts that the triptan drug class will hold 75 per
cent. market share through 2012.
* In these seven markets, more than 74 million people suffered from
migraine in 2002, according to this report, but up to 65 per cent. of
those afflicted in these markets remain undiagnosed. Diagnosis rates
are on the rise, however, due to advertising campaigns from the drug
makers and other awareness campaigns.
* In a trial conducted jointly by key international opinion leaders and
GSK a majority of migraineurs were able to predict the onset of an
attack up to 48 hours or even earlier before the onset of the
headache. BioPartners is therefore considering positioning the
Compound for the prophylactic or pre-emptive treatment of migraine.
Recently, topiramate (sold as Topamax by Johnson & Johnson) has shown
a significant reduction in frequency of migraine, which could expand
the prophylactic market.
(2) Sabcomeline
* Schizophrenia is a chronic condition. Age of onset is typically late
teens or early 20s and, while some recover, in many it is a
progressive condition. The National Institute of Mental Health has
estimated that schizophrenia affects 1.5 million people in the U.S.
This remains a very difficult condition to treat and the older drugs
have significant side effect issues and, whilst the newer drugs are
better, there is still room for improvement. However, even with
sub-optimal treatment, the markets' drug spend continues to grow at
over 15 per cent. per annum.
4. Patents
The patents and other intellectual property to the Compounds are owned and
currently maintained by GSK. Tonabersat is covered by three worldwide
patent filings, one provides generic protection for the Compound and its
use in treating migraine, the second covers a process of production and the
third provides specific protection for the current form of the Compound.
The patents of the third case expire in the US in 2015 but may be extended
for up to 5 years. No third party issues have been identified which would
inhibit commercialisation of the Compound.
The original patents to sabcomeline owned by GSK expire in April 2010 in
Europe and October 2011 in the USA, but Biopartners has been advised that
it should be possible to extend the patent life for five years. Eli Lilly
has obtained grant of claims to the use of xanomeline and sabcomeline for
the treatment of schizophrenia and other psychotic conditions in the USA,
but could not commercialise sabcomeline without infringing the rights of
GSK/BioPartners.
5. The Acquisition and the Placing
Acquisition Agreement
The consideration for the Acquisition is a maximum of 1,613 million new
Ordinary Shares.
Financing the new business
The Company has raised from investors #2,695,000 (net of the cash expenses
of these Proposals) via the Placing, which is conditional upon, inter alia,
RII shareholder approval. The Placing will provide additional working
capital for the Company for the next 12 months.
With the funds available to the Company, it is proposed to commence a Phase
II clinical trial with tonabersat. This will be outsourced and project
managed by the Company. At the same time, the Company proposes to seek a
development partner in order to set up some initial studies on the possible
use of sabcomeline in diabetes. The balance of the funding will be used to
repay a bank overdraft of #260,000 and other creditors amounting in total
to about #391,000 and for additional working capital.
Although the Directors are of the opinion that the Company, following the
completion of the Placing, will have sufficient working capital at
Admission for its present requirements, that is for at least the 12 months
following Admission, the Company may need to raise further funds after this
period in order to implement fully its business plan and, in due course, to
satisfy the milestone payments under the licences. Milestone payments may
be funded wholly or in part by partnering arrangements or by other external
funding methods including the issue of further Ordinary Shares.
Change of name
To reflect the new direction of the Company, it is proposed, subject to RII
shareholder approval, that the Company changes its name to Minster
Pharmaceuticals plc.
6. Admission and Dealings
Application has been made to the London Stock Exchange for all the Ordinary
Shares in issue following approval of the Proposals by the RII Shareholders
and the waiver by the Panel on Takeovers and Mergers of any requirement for
a general offer to be made under Rule 9 of the City Code on Takeover and
Mergers to be admitted to trading on AIM. It is expected that Admission of
the Ordinary Shares will become effective and dealings will commence in
such shares on 25 February 2005. CREST accounts of placees, whose shares
are held via that system, will be credited on Admission and certificates
in respect of other placees will be sent to them within 21 days thereof.
7. Directors, Proposed Directors and Scientific Advisers
The Board of Directors of the Company is currently Robert Stubbs and Clive
McGuire.
At Admission Robert Stubbs will step down as Chairman of the Company, but
will remain as a Non-Executive Director. Dr Paul Sharpe will become the
Chairman and Chief Executive Officer of the Company, Robert Aubrey the
Chief Operating Officer and Peter Blower an Executive Director. Clive
McGuire will resign from the board.
The biographies of the Proposed Directors are set out below:
Dr Paul Sharpe, Chairman and Chief Executive Officer
Dr Sharpe MD(Lond) FFPM (UK) (aged 57 years) has over 30 years' experience
in pharma organisations and the Medicines Control Agency, now known as the
Medicines and Healthcare Products Regulatory Agency. From 1991 to 1998 he
was with SmithKline Beecham plc as Vice President, Neuroscience Project
Management. In this capacity he had major roles in the development of
Requip and Paxil/ Seroxat. He developed an R&D portfolio management process
at SB, which was featured in the Harvard Business Review, March-April 1998.
After leaving SB in 1998 he joined Oxis International Inc, a NASDAQ quoted
company, as CEO, leaving in 2001, before establishing BioPartners in 2001.
He is also Visiting Professor in Pharmaceutical Medicine at Imperial
College, London.
Robert Aubrey, Chief Operating Officer
Mr Aubrey MBA BSc (Eng) (aged 66 years) is a graduate of the NY Stern
Business School with extensive senior management experience in
international businesses, including Staveley Industries plc and
Westinghouse Electric Corp Inc. He has also taken general management roles
in venture capital start ups and is experienced in the commercialisation of
university technology spin outs.
Peter Blower, Executive Director
Dr Blower PhD DSc CBiol FIBiol (aged 56 years) has been involved in medical
research and development for over 30 years, his career having begun in 1969
when he joined Beecham plc's Research Division as a research biologist.
Subsequently Dr Blower moved through various roles within Beecham plc and
post-merger with SmithKline Beecham plc where in 1991 he was appointed as
Director, Gastrointestinal Product Support. This was followed by promotions
to Director, Product Support Programmes and then to Director, New
Neuroscience Products. In March 2000, Dr Blower left SmithKline Beecham and
has since then been providing independent advice on technical development,
market analysis and strategic marketing of therapeutic agents and
biotechnology devices to multinational companies, smaller start-up
companies and Governmental organisations such as the US Defense Advanced
Research Projects Agency.
It is intended that as soon as practical Dr Paul Sharpe will step down as
Chairman and an independent non executive chairman will be appointed in his
place. Following Admission it is also intended to appoint a finance
director to the board.
Scientific Advisers
BioPartners has a number of scientific advisers including those mentioned
below. The scientific advisers provide expert advice regarding developments
in understanding of migraine and similar phenomena or conditions of
interest. They also advise BioPartners on the design and implementation of
development programmes for BioPartners' assets.
Professor Stephen Silberstein
Prof Silberstein is Director of the Headache Centre at Thomas Jefferson
University Medical Centre, Philadelphia. He is a past President of the
American Academy of Neurology and President elect of the American Headache
Society.
Professor Richard Lipton
Prof Lipton is a consultant neurologist at the Albert Einstein College of
Medicine, New York and a past President of the American Headache Society.
8. Extraordinary General Meeting and Document Availability
A circular to shareholders, which comprises the Admission Document and
notice to RII Shareholders convening an Extraordinary General meeting to be
held at the offices of Beachcroft Wansbroughs, 100 Fetter Lane, London EC4A
1BN on 21 February 2005, is being posted today.
Copies of the Admission Document are available from the offices of the
Company at 56 Queen Anne Street, London W1G 8LA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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