Regent Pacific Agrees to Buy Remaining 70% of Plethora Solutions
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Hong Kong-listed investment company Regent Pacific Group has agreed in principle to buy out the remaining 70% of Plethora Solutions Holdings, a small-cap biotech listed on London's Alternative Investment Market.
The bid values Plethora's fully diluted share capital at £122.6 million ($189 million), more than four times Regent's own market value. It comes after Regent switched its investment focus to biopharma -- where Plethora is its only significant investment -- having started out as a financial services investor before changing to mining two years before the start of the credit crisis. Regent and concert parties together own just under 29.9% of Plethora's stock.
Regent is proposing to offer Plethora shareholders 15.70706 of a Regent share per Plethora share, which it says is equivalent to 12.5 pence, or more than four times more than Plethora's closing price of 2.75 pence in London on Tuesday. Plethora shares by early afternoon in London were up 150%, or 4.13 pence, at 6.88 pence.
The companies are closely linked, with Regent co-Chairman James Mellon, a career fund manager and entrepreneur, also chairman of Plethora, and Plethora's CEO, Jamie Gibson a director of Regent. Plethora's only independent director, Michael G Wyllie, backs the offer in principle. Both companies suggested Plethora will otherwise run out of funding to develop and commercialize its PSD502 treatment for premature ejaculation, which gained marketing authorization in the European Union two years ago.
"This possible offer is about optimizing growth and realizing the potential of an innovative product that can address a known medical condition affecting almost one in four men. With increased investment and commercial innovation, we see huge scope for the product initially in Europe where it has approval, and in the important U.S. market and in the fast growing Asian market in due course," said Mellon in a statement.
"We view the possible offer as taking account of PSD502's prospects, while also providing a compelling premium of more than 38 per cent. to the price at which Plethora last issued shares in August 2014 and we believe it will create significantly more future value than Plethora could achieve independently," he added.
PSD502 is a topical aerosol applied just before intercourse. A spokeswoman said the EU approval relates to a 20-dose can and that Plethora is also seeking approval in the EU for a six-dose can. Plethora is also planning a U.S. clinical development program and ultimately to file a new drug application, or NDA, in the U.S.
Both companies noted that Plethora's cash coffers had shrunk to £1 million as of Oct. 30 from £2.8 million on June 30. Plethora made a loss of E493,000 in the six months ended June.
Under Takeover Panel rules, Regent has until 5.00 p.m. London time on Dec. 2 to announce a firm intention to bid or retreat. Regent was incorporated in the Cayman Islands in 1991 and listed in Hong Kong in 1997. It has a market value of HK324.2 million ($41.8 million). Its shares closed down 2.1%.