Ardana 'close to being sold' after year in administration

Published on Sunday 14 June 2009 21:42

ADMINISTRATORS of biotech firm Ardana believe they may finally be close to a sale of the business – almost a year after their appointment.

Hailed as one of the brightest biotechnology prospects in Scotland, Ardana was developing high potential treatments for reproductive health conditions.

In late 2007, the Edinburgh-based company, which was listed on the London Stock Exchange, had a market capitalisation of almost 80 million.

But it ran out of cash last year as investors refused to pour money into drugs which were years away from commercial release.

Ernst & Young was appointed as administrator at the end of June, but despite holding meetings with "literally dozens" of potential investors, none had put in a credible bid for the company.

In recent weeks, E&Y has begun "a series of interesting discussions" with a group of investors who administrator David Duggins believes could make a serious bid.

He said: "These are a group of people who know the business well enough to be interested, but it has just taken a long time to attract enough other people with money.

"But it now seems that they have got to that point."

Duggins said Ardana was already facing problems before it ran out of cash and the credit crunch sapped what remaining investor appetite remained, making finding a buyer "an extremely challenging process".

He said: "It's been next to impossible, because of the way that the market has gone and the credit crunch, to find anyone that's got money that are willing to invest."

While he warned it was still possible the talks could fall apart, Duggins said he was growing in confidence.

"For the first time almost since we were appointed, it feels like we're close to getting a deal through."

He declined to discuss the identity of the potential investors or how much E&Y was seeking for the business.

Ardana specialised in developing treatments related to reproductive health, and had two potential 'star' treatments – Teverelix, which can regulate the release of sex hormones the body releases, and a testosterone replacement cream.

Teverelix, in particular, underpinned the market's confidence in the company, with analysts at Piper Jaffray saying in 2007 that it "ticks all the boxes necessary to make it a blockbuster drug".

However, investors were unwilling to invest in treatments requiring millions to develop them fully, with no certainty that they would reach the market.

Despite a large number of enquiries, Duggins said all of the previous contacts had been "inconclusive and have gone nowhere".

Apart from Teverelix and the testosterone cream, all of Ardana's other assets have been sold or handed back to previous owners.

Last week, it announced the sale of intellectual property related to Secretagogue, a diagnostic test for growth hormone deficiency, for $232,000 (141,000) to Qubec-based biotech company Aeterna Zentaris.