Circassia Pharmaceuticals to Buy Sweden's Aerocrine, U.K.-based Prosonix

NEW YORK (The Deal) -- U.K. biotech Circassia Pharmaceuticals on Friday announced its first acquisitions since its March 2014 initial public offering with deals totaling up to $371 million for companies in Sweden and England.

Circassia, of Oxford, agreed to pay up to 1.78 billion Swedish kroner ($214 million) for Stockholm-listed Aerocrine AB, which sells and develops products to diagnose and manage asthma. In the U.K. it has arranged to buy venture capital-backed Prosonix Ltd., also of Oxford, which is working on treatments for asthma and chronic obstructive pulmonary disease, for up to £100 million ($157 million).

Circassia plans to raise £275 million through a share placing to fund the acquisitions. CEO Steve Harris said Aerocrine's "commercial infrastructure" will help with the launch of Circassia's Cat-SPIRE allergy immunotherapy, which is in phase III trials, while the products Prosonix is developing will boost its pipeline.

Aerocrine, a Karolinska Institute spinout, launched its first product in 2001: Niox, which measures airway inflammation. In 2014 it had revenue of Skr166.2 million and made an operating loss of Skr228.2 million. Prosonix generated an operating loss of £400,000 in the year ended March 2014. It hopes to get first approval from the U.K.'s Medicines and Healthcare Products Regulatory Agency,or MHRA, for its first drug, which is a rival to GlaxoSmithKline's Flixotide asthma treatment, in the second half.

"These proposed acquisitions and associated fundraising significantly accelerate Circassia's strategy to become a self-sustaining specialty biopharmaceutical company focused on allergy and asthma," said Harris in a statement. "The combined organisation will give us both the capability and resources to commercialise our enlarged late-stage pipeline of potential new allergy and asthma products, once approved, and thereby generate significant shareholder value."

Aerocrine's shares in Sweden were up more than 13% at Skr2.46, just below the Skr2.55 value of the Circassia offer. The offer is recommended by the Aerocrine board and has the backing of Novo A/S and Investor AB, which together hold about 50% of the Solna, Sweden-based company.

Circassia shares in London were down almost 10% at 289 pence, valuing the equity at £547.4 million. A Circassia shareholders' meeting to gain backing for the Aerocrine purchase and the share offering will take place on June 10. Three Invesco Asset Management clients accounting for 57% of the stock have said they will vote in favor of the acquisition and the offering.

Invesco and client Woodford Investment Management plan to buy new shares offered in the placing.

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