PPL, Scotland’s former biotech flagship, has given up the fight to remain independent after investors rejected plans to re-organise the business around its Fibrin I surgical sealant.
The company has already been through a drastic downsizing after putting development of its flagship rAAT product on indefinite hold, and now the majority of its board of directors – including Geoff Cook, chief executive – are set to step down.
The announcement came in conjunction with news that PPL’s losses for the half-year to June 30 had ballooned to (pounds) 13.5m before taxes.
The company, based on the outskirts of Edinburgh, is best known for its role in the creat-ion of Dolly, the clone created from a single cell of an adult sheep. This was done in conjunction with the Roslin Instit-ute, headed by Professor Ian Wilmut.
Yesterday’s decision to put the business up for sale came as little surprise to most observers, as PPL has been struggling for more than two years to turn its cutting-edge science into fin- ancial returns for investors.
Some analysts blamed the situation on PPL’s inability to concentrate on a single area of research.
“I think there’s a feeling they tried to be all things to all men, rather than focusing on one project,” said Keith Redpath, an industry analyst at Panmure.
PPL has been under sust-ained fire since June of this year, when it and German partner Bayer said they would call a halt to work on rAAT, PPL’s lead product and the primary reason for the company’s formation in 1987. Produced from the milk of genetically-modified sheep, rAAT was aimed at treating hereditary emphysema and similar types of lung diseases.
The decision to put rAAT on hold brought with it the loss of more than 100 jobs at PPL, whose workforce now stands at 55.
It also gave further ammunition to certain groups that have been pressing for the break-up of PPL.
The most vocal on this front has been shareholder action group Willowdrive, which has been pushing for a trade sale and return of cash to shareholders since last autumn.
Metage Capital, the hedge fund which owns about 20.5% of PPL’s equity, is also seen as sympathetic to the share- holder value cause.
However, Metage’s Tom Sharpe yesterday refused to be drawn on whether his com-pany had blocked PPL’s efforts to reorganise around the Fibrin product.
“We’re not going to comment on what our position may or may not have been,” Sharpe said.
He added: “We have met with (PPL), and we are meeting with them again now about how to take the company forward.”
PPL said the majority of its institutional shareholders had supported the plan to focus on Fibrin I, a kind of glue used to stop bleeding and seal punct-ures during surgical proced-ures.
However, “the required level of support to go forward (with this plan) was insufficient”.
As a result, restructuring of the business will continue with the departure of Cook and fellow executive directors Martyn Breeze and Gordon Wright. Non-executives Hamish Hale and Roger Brimblecombe will also step down “with immed-iate effect”.
Advisers from the corporate finance arm of KPMG will join the remaining directors – non-executives Chris Greig and Hugh Thompson, together with chief financial officer Lindsay Dunsmuir and busin- ess development director Adam Christie – in the search for a buyer.
However, analysts were left wondering yesterday who might want to take over the PPL operation.
“That’s a very good quest-ion,” said Julie Simmonds, a biotech analyst with Evolution Beeson Gregory.
“There’s not a huge amount of logic given that the two bits (rAAT and Fibrin) don’t really go together, so I imagine you’re looking for two buyers.
“As to who they might be, I would not want to speculate.”
Shares in PPL closed unchanged at 5.25p.
