PPL Therapeutics, the former star of Scotland’s biotechnology industry, bowed to the inevitable yesterday as it put itself up for sale after failing to win sufficient backing from shareholders forits scaled-back business plan.
Analysts doubt a buyer will be found for the entire Midlothian company, made internationally famous for its hand in the creation of Dolly the Sheep, the world’s first cloned mammal. The most likely outcome is that PPL will be broken up or closed down and a small amount of cash split between long-suffering shareholders.
Geoff Cook, the chief executive, stood down from the board with immediate effect, along with four directors. His strategy to develop Fibrin 1, a surgical sealant that speeds up blood clotting, was rejected.
Cook said he had gained the backing of a majority of institutional shareholders, but failed to win over the “balance sheet investors” – taken to be hedge fund Metage Capital, which has a 21 per cent stake in PPL, and rogue shareholder Paul Scott, who have criticised the way PPL was being run and are eyeing the GBP 9.3m it still has in the bank.
The company was left to focus on Fibrin 1 after German pharmaceuticals giant Bayer pulled the plug in June on the joint development of recAAT, PPL’s emphysema drug.
Since then, PPL has slashed costs and headcount. Staff numbers have fallen from 161 to 55 and are still falling. It aims to bring cash-burn down to GBP 250,000 a month. But associated restructuring costs of GBP 8.1m doubled PPL’s pre-tax losses to GBP 13.5m in the first six months of the year on revenues of just GBP 400,000.
The sale is being managed by PPL’s four remaining directors, led by Chris Greig, the chairman, who are being advised by KPMG Corporate Finance.
Cook, the former business development director, took on the top job in early 2002 and set about focusing on fewer products. He leaves with a pay-off worth about GBP 170,000, the equivalent of a year’s salary.
“My only regret is that we were not able to execute a well- thought through sealants plan,” he said. “It was a tough job to come in and sort out PPL and we had bad luck along the way. We have to listen to shareholders and reconcile their views.”
Julie Simmonds, a biotech analyst at Evolution Beeson Gregory, did not hold out much hope of PPL finding a buyer, saying: “If anyone wanted to buy PPL, I think they would have done it by now. And if anyone is still interested [in parts of the business], why not just wait for them to shut it down completely?”
Scott said the decision had come a year too late for employees and shareholders and that millions of pounds had been frittered away by management. He recently sold most of his two million PPL shares to take advantage of the markets’ upturn that has seen many other shares double in price in the last few months. He said: “I got what I wanted, but I am not exactly shouting from the treetops that this is a victory.”
Analysts estimate shareholders would be left with no more than 6p a share after costs. PPL shares closed up 0.12p at 5.25p last night, valuing it at GBP 6.4m, down from more than GBP 500m in its heyday.
