BioWorld International Correspondent

LONDON - CeNeS Pharmaceuticals plc freed itself from the inheritance of its joint venture with Elan Corp. plc, putting together a group of institutional investors to buy Elan's holding of 16.9 million shares for 3.875 pence per share.

CeNeS and Elan also agreed to convert outstanding convertible loan notes worth US$21.7 million into approximately 20 million shares at an average price of $1.10 per share, and those also have been placed with the institutions at 3.875 pence per share.

At the same time, CeNeS raised £675,000 cash through a placing of 17.4 million shares at 3.875 pence. That will be used for general working capital.

A company spokesman said the transaction left Cambridge-based CeNeS completely free to move forward independently. "It also makes them a much more attractive M&A proposition as they have more cash than their valuation, no ties, no licensing deals and two products in late-stage clinical trials."

On completion of the agreements, Elan, of Dublin, Ireland, will have no shareholding in CeNeS. The move follows the announcement June 18 that CeNeS was terminating its joint venture with Elan, established in June 2001, to develop morphine-6-glucuronide (M6G), a metabolite of morphine, for post-operative pain. While it reacquired full rights, CeNeS has agreed to pay Elan a percentage of all future revenues from M6G, which is in Phase III.

The agreements are subject to the formality of the new shares being admitted for trading on the Alternative Investment Market (AIM) in London. CeNeS recently stepped down from the main market to AIM, saying it was more appropriate for a company of its size and development.