BioWorld International Correspondent

LONDON - ProStrakan Group Ltd. raised £22 million (US$40.3 million) from existing shareholders, giving it the leeway to launch an initial public offering at the time of its choosing in 2005 and enabling former Strakan institutional investors to recalibrate their shareholdings following the merger earlier this year with ProSkelia SA.

Wilson Totten, CEO, told BioWorld International: "This is pretty much the amount we wanted. It is a top-up, and is not earmarked for anything in particular."

The funding was led by existing shareholders, LMS, 3i plc and Innoven Partenaires. Institutional investor Quest for Growth invested for the first time. The remainder came from employees and existing individual ProStrakan shareholders. Totten said Quest was admitted as a new shareholder because the institution "has been asking for some time if it could get in, and this will be the last opportunity."

To allow the former Strakan institutional investors to recoup some of the dilution incurred as a result of the merger with ProSkelia, it was agreed that the former ProSkelia shareholders, Warburg Pincus and Aventis SA (now Sanofi-Aventis Group), would not take part in the fund raising.

Following the round, Warburg, which previously put £32.5 million into Strakan and €60 million (US$76.5 million) into ProSkelia, will hold 44.3 percent of the equity. Aventis, which had a 42 percent share of ProSkelia, holds 16.5 percent of the merged company, while LMS has 10.7 percent. The 3i group has 10.2 percent, Innoven Partenaires 2.6 percent, Quest for Growth 0.7 percent, and directors, employees and other private shareholders 15 percent.

Totten, who became CEO in September through the merger, said the process now is nine-tenths complete. "This is not a difficult merger to understand: ProSkelia was a research-based company and Strakan was a product company that wanted to expand R&D. They were both in absolutely complimentary therapeutic areas. There are no substantial synergies to be pulled out or worries about making people redundant," Totten said.

ProStrakan, of Galashiels, Scotland, has 250 employees after the merger. The company's R&D continues to be based at the former ProSkelia facility in Romainville, near Paris.

Strakan focuses on women's health and skin disorders and has products for osteoporosis, angina and acne on the market in the UK. The company had sales of £7.3 million in 2003, but was not profitable. It was founded in 1995 by Harry Stratford, also founder of Shire Pharmaceuticals Group plc, with John Kanis, a professor of metabolic bone diseases at the University of Sheffield.

ProSkelia was formed in July 2002 as a spinout from Aventis' bone diseases group. The company had three products in clinical development: Trim Patch in Phase III for hormone-replacement therapy; PSK 3841, a topical anti-androgen for alopecia and acne; and PSK 3471, a form of estrogen in Phase I for osteoporosis. Totten, the company's founder, would not comment on how much ProStrakan would seek to raise in an IPO.

"We have no thought about that at present," he said. "The important thing from my point of view as a newcomer [as CEO] is the company is well developed and is a good, robust IPO prospect."