PROGEN TO GIVE HALF ITS CASH TO SHAREHOLDERS
November 16th 2008 04:13
Thursday November 13, 2008
Daily news on ASX-listed biotechnology companies
* ASX, BIOTECHS DOWN: LABTECH UP 29%, POLARTECHNICS DOWN 16%
* PROGEN TO GIVE HALF ITS CASH TO SHAREHOLDERS
* FIVE PATRYS PRODUCTS SHOW CANCER THERAPEUTIC POTENTIAL
* INDEPENDENT COMMITTEE BACKS NOVOGEN’S CANCER TRIAL
* 42% OF CLINUVEL OPPOSE DIRECTOR L JACK WOOD’S 350k OPTIONS
* AVEXA PRESENTS PAPERS ON HIV, ANTIBACTERIAL PROGRAMS
* ARANA LOSS UP ON REVENUE UP 14% TO $39.5m
* ARANA’S US PRESIDENT PROMOTED TO ACTING CEO
* 42% OF PROTEOME OPPOSE CEO’S PERFORMANCE RIGHTS
* STEM CELL’S 2nd ASX CASH FLOW QUERY: FUNDS EXPECTED
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PROGEN
Progen will return 50 cents a share (currently trading at 63 cents), will consider an acquisition or merger and further review its pipeline of oncology compounds.
Progen said its board was “acutely aware that there has been considerable shareholder disquiet about the future direction of the company since we discontinued the PI-88 phase III trial (see Biotech Daily; July 23, 2008).
Progen released a summary of a review of the company by the Sydney-based corporate advisory firm Beerworth & Partners saying the board agreed the measures would be “fundamental in accomplishing … the restoration of Progen in the market” and supported the outcomes of the review.
Progen said it had received proposals from different companies including potential merger proposals or expressions of interest.
“All of the proposals received were incomplete and are not in sufficient detail to warrant disclosure of specific terms,” Progen said.
“Some were, in the opinion of the board, not capable of proper consideration or implementation.”
With the review completed, Progen said it would give further consideration to the proposals and investigate whether there is potential for a transaction which is in shareholders' interests.
“In the absence of any alternative proposal being in the interests of shareholders, the following is endorsed by your board as the way forward for Progen to restore its position in the market,” Progen said.
Progen said it raised about $100 million primarily to support PI-88 development and its phase III trial. Progen's cash reserves will be about $70 million by February 2009.
Beerworth & Partners recommended a capital return of 50 cents a share equating to $30.2 million or 43percnet of estimated cash reserves at February 2009.
Shareholder approval will be required for this capital return.
This would up to three years of the estimated capital and operational funding requirements for delivering the remainder of the strategy, below.
The capital return realizes some value for shareholders, but if there is greater value in alternative proposals, then the board will recommend that path.
Beerworth & Partners said Progen had a strong pipeline of oncology compounds and projects and an excellent technical team and recommended independent assistance in prioritizing the development of this pipeline.
An independent and commercially experienced life sciences expert will assist Progen’s management to review the inventory of compounds and projects to determine which should be developed, terminated or sold.
Progen said financial and economic events greatly reduced market prices and this is an “opportune environment” to consider a synergistic acquisition or merger.
Progen's business model has focused on the registration and commercialization of a single compound, PI-88. Progen's future emphasis would be on the development of a balanced portfolio of compounds and projects and licencing an appropriate partner before commencing any future phase III trial.
Progen said Beerworth & Partners found that the market restoration of Progen would involve an assurance that it has appropriate board, management and technical teams and recommended that an external organization with appropriate expertise help ensure this.
A “task force” including external advisers will review Progen’s corporate governance and risk management systems to ensure best practice protocols and procedures.
Progen will hold its annual general meeting at the Indooroopilly Golf Club in Brisbane on November 24, 2008.
Progen was up 2.5 cents or 4.13 percent to 63 cents with 1.3 million shares traded.
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