BioWorld International Correspondent

Dutch biotechnology firm Pharming Group NV, which has been in bankruptcy protection for the past year, took another step in its restructuring by spinning out its U.S. technology development and licensing subsidiary, ProBio Inc., via a management buyout that has been supported by external investors.

The two firms have entered a cross-licensing agreement covering a range of technologies. Moreover, Leiden-based Pharming retained a 20 percent stake in ProBio, which resumes its independent existence just 16 months after becoming a subsidiary of the Dutch company. It is headquartered in Melbourne, Australia, at present, but will probably relocate to the UK, said Chief Operating Officer Phil L'Huillier.

Pharming originally paid US$4.2 million to acquire ProBio, with additional earnout provisions. Terms of the spinout were not disclosed, but in reporting its second-quarter results last week, Pharming said it raised a combined €2.3 million from the ProBio transaction and from settling a legal dispute with Genzyme Corp., of Cambridge, Mass., arising out of their collaboration on Pompe's disease. "That was one of the main triggers of this whole mess," Pharming Chief Business Officer Rein Strijker told BioWorld International.

Pharming, whose work on the production of therapeutic proteins from the milk of transgenic animals once made it a flagship for Dutch biotechnology, hit a cash crunch last year. It entered court protection - termed a legal moratorium in the Netherlands - last August with debts of €42 million. Since then, it has reduced that figure by more than half, Strijker said, and has pared back its costs by slashing its work force from 230 people to just 45.

"We're now in pretty good shape to exit the moratorium and continue as a going [concern]," Strijker said. The company, he said, is offering its creditors full payment of the first €1,000 they are owed, plus 75 percent of the remaining debt. So far, Strijker said, more than half have agreed to the settlement terms. The company is holding a creditors meeting Sept. 26, at which it hopes to secure additional approvals and end the moratorium. It needs a minimum of 75 percent, he said, to trigger an automatic acceptance. But it must also raise cash to fund the proposed plan.

The company reported a profit of €500,000 for the first half of the year, and cut expenditures to €2.9 million, down from €16.1 million for the same period last year. Its lead compound, a recombinant form of human C1 inhibitor for treatment of hereditary angioedema, a genetic disorder characterized by recurrent swelling of soft tissues found in the mouth, throat, skin and gut, is entering Phase II trials.