Medeva problems
Celltech Falls on Concern Over Unit Sale, Drug Blow
(Update1)
By Inga Kolvik
Celltech Falls on Concern Over Unit Sale, Drug Blow (Update1)
(Adds comments by CEO from 2nd paragraph, closes shares in
5th, adds details on vaccine production and sale of U.S. units from 8th.)
London, March 22 (Bloomberg) -- Celltech Group Plc shares
fell 10 percent amid concern the U.K. drugmaker and biotechnology company may have difficulty selling a vaccine unit it acquired in taking over Medeva Plc, and after a setback for a key drug.
Chief Executive Peter Fellner said in an interview Celltech
is in talks with an ``established vaccine manufacturer' to sell the vaccine business, which analysts estimate could fetch about $70 million. The companies may also ``enter into an arrangement' over marketing of products as well as royalty payments, he said.
Celltech agreed to buy Medeva Plc, a mid-sized drug company,
last year for 658 million pounds ($1.07 billion), gaining Medeva's sales force for the cancer and arthritis drugs it's developing. Celltech sees the vaccine unit as surplus to requirements, but its shares fell amid concern it may not be easy to sell. ``I suspect it's going to be more difficult to sell than we first thought' as it's unprofitable and has suffered production problems, said Robin Gilbert, an analyst at WestLB Panmure who has a ``neutral' rating on Celltech.
The shares fell 122 pence to close at 1,093p after Celltech
also said it dropped development of its Hepagene drug for use against chronic hepatitis B after trials failed to meet
expectations, although it's expected to be launched in some
European Union countries this year for prevention of the disease.
`Disappointing'
``It's a bit of a surprise,' said analyst Gilbert of the
drug's discontinuation. ``It's certainly disappointing.'
CEO Fellner said the main goal for Celltech now is to ``turn
into a unified business,' he said. ``We're not really a vaccine company.'
The vaccine unit makes Fluvirin -- for influenza -- at a
plant near Liverpool, north-west England. Production difficulties with the vaccine hurt sales of the therapy, which declined to 15 million pounds last year from 29 million in 1998. The plant will still produce the Hepagene treatment for the prevention of hepatitis B, a company spokesman said.
Two further Medeva subsidiaries in the U.S. are also to be
sold in 2000: Medeva's Boston unit, formerly known as Armstrong Pharmaceuticals Inc., and Inhalon Pharmaceuticals Inc., based in Bethlehem, Pennsylvania. No further details on the sales were disclosed by the company.
As well as the problems with Fluvirin, sales and profit at
Medeva's pharmaceutical business -- to be known as Celltech Medeva in the merged company -- were also hurt last year by generic competition for hyperactivity drug methylphenidate in the U.S.
U.S. Acquisition
Sales of the treatment fell to 37 million pounds last year
from 70 million in 1998, as Medeva's sales fell to 281 million pounds from 321 million, Celltech said today. Medeva's operating profit declined to 42 million pounds from 71 million, and net income to 22.8 million from 30.7 million.
On its expansion efforts in the U.S., Celltech said it agreed to buy Cistron Biotechnology Inc. for $8.75 million in shares, to pay for intellectual property rights, plus $9.25 million to equal cash remaining within Cistron. The U.S.-based company is a ``virtual' entity controlling intellectual property rights for drug discovery targets used in the treatment of chronic inflammatory disorders.
``We're rather pleased to have found this company,' said
Peter Allen, Celltech chief financial officer, in an interview, adding that the purchase price represented good value.
``It's a useful purchase for the long term,' said analyst
Gilbert, indicating the acquisition could assist Celltech in the further development of antibodies.
CEO Fellner also said Celltech received U.S. Food and Drug
Administration approval of its Mylotarg treatment for leukemia in the over-60 age group. The drug, developed with American Home Products Corp., can also be used by younger patients unable to take chemotherapy, he said.
Expansion Drive
Mylotarg sales are expected to be in region of $150 million
to $250 million a year, Fellner said, citing analysts' estimates. He also indicated Celltech would receive ``high royalties on sales.'
Celltech launched its expansion drive last year with the
purchase of rival drug development company Chiroscience Group Plc for 331 million pounds in stock, doubling its size.
Slough, England-based Celltech, also today gave 1999 figures
for its own performance, separately from those of Medeva.
Celltech Chiroscience, as the company was then known, had net income of 36.6 million pounds, or 24.3 pence per diluted share, in the 15 months to Dec. 31, after a loss of 19.7 million pounds, or 13.9p per share, in the 1998 accounting year to Sept. 30. Celltech last year decided to change its accounting year to Dec. 31. Sales were 55.4 million pounds in the 15-month period, compared with 36.5 million in the 12 months to September 1998.
At its current share price Celltech has a market value of 2.9 billion pounds ($4.6 billion). The shares have more than doubled this year, compared with a 66 percent rise in the Bloomberg U.K. Biotechnology Index. |
