BioWorld International Correspondent

LONDON - ProStrakan Group plc signed a research and development collaboration with Amgen Inc. worth a potential $150 million and took the opportunity to raise £11.3 million (US$20.6M) in a placing.

The deal with Amgen, of Thousand Oaks, Calif., covers undisclosed compounds for renal diseases. Amgen paid $7 million up front and will pay all future development costs, which will be $1.1 million for the first year. ProStrakan would receive royalties.

The deal validates ProStrakan's lower-risk model of buying in near-market or launched products to generate revenue to invest in its early stage biotech discovery and development pipeline. At the same time, it is an endorsement of the company's discovery skills. As the main therapeutic focus is in bone diseases, women's health and treatments for age-related conditions, the renal compounds fall outside its field of interest.

Wilson Totten, CEO, said the deal recognized the world-class research carried out at ProStrakan's discovery unit. "[It also] helps take us closer to realizing our long-term goal to build a cash-generative sustainable pharmaceutical company."

ProStrakan, of Galashiels, Scotland, placed 12.4 million new shares with institutional investors at 91 pence per share. That represents around 6.7 percent of the existing share capital. The company came away with a much lower valuation than it had hoped for, when it cut back the target from £50 million and took £40 million in an IPO last year. The company said it will use the money to provide additional working capital.

ProStrakan was formed in 2004 around the merger of Strakan plc and ProSkelia, a spinout from Aventis SA from its bone diseases group. It had sales of £21.6 million in 2004, and said last week that sales in the first six months had reached £16 million. It had cash balances of £19 million at the end of June.

Totten said he was satisfied with the progress made in the 12 months since the company's IPO. "We remain well-positioned with a number of significant product launches to come in the near future. We are also well aware of the opportunities to develop our business by M&A and in licensing."