ProStrakan raises £4m from sale of stake in Belgium's Galapagos

Published on Sunday 10 August 2008 22:05

PROSTRAKAN is believed to have raised about 5 million (£3.9m) by selling its stake in Belgian drug development company Galapagos.

ProStrakan acquired the stake at the end of 2006 when it sold its Paris-based drug development business, ProSkelia, in a deal that focused it purely on late stage development of treatments.

The Galashiels-based pharmaceutical group placed its 7 per cent stake in Galapagos with Belgian bank Fortis last month.

In line with other early stage pharmaceutical companies, shares in Galapagos have dropped since the deal, cutting the value of ProStrakan's stake.

In 2004, Strakan merged with ProSkelia in a deal influenced by Warburg Pincus, the largest shareholder in both companies, matching the Scottish company's expertise in commercialisation with the French company's strong drugs pipeline. The merger helped the company lure Wilson Totten from FTSE 100 pharmaceutical group Shire to become chief executive.

However, the board later decided the company's future lay in licensing late-stage drugs over a higher risk strategy of developing drugs from scratch.

Under the terms of the 2006 sale, ProStrakan was in line to receive milestone payments for drugs already in development at ProSkelia, and has already received several payments. The sale of the shares does not affect possible future milestone payments.

A spokesman for ProStrakan confirmed the sale had taken place but the price has not been officially disclosed ahead of its interim results, due to be released on 25 August.

While the company is believed to have sufficient cash to take it through to profitability, the sale will provide extra headroom. Shares in ProStrakan closed at 91.25p on Friday, their highest since April 2007, valuing the company at 183.6m.

ProStrakan also hopes to receive approval from the US Food and Drug Administration for it to sell Sancuso, a treatment to alleviate nausea associated with chemotherapy. Staffing issues have been blamed for repeated delays in a decision by the FDA, but ProStrakan insists it is as confident as ever that approval will eventually be forthcoming.