Esbatech, a Swiss based unquoted portfolio company, has been acquired by Alcon to obtain Esbatech’s ophthalmic assets for USD150m upfront and USD439m in achievement based milestones.
International Biotechnology Trust currently has an investment in Esbattech of GBP1,039,545, invested since July 2006. The director’s have changed the valuation of IBT’s interest in Esbatech from GBP1.3m to GBP2.2m to reflect the terms of the deal.
The upfront payment is recognised in full at GBP1.9m, the escrow payments are recognised at 50 per cent of their value (GBP0.2m) and milestone payments due in the next 24 months make up GBP0.1m of the valuation. Milestone payments due after 24 months are not currently reflected in the valuation.
If all milestones were paid, each of which is dependent on success in clinical trials, this would add GBP2.7m further to the GBP0.1m now recognised; meaning the sale has the potential to generate returns of 4.9 times the original investment which was made three years ago.
A new company Delenex Therapeutics has been set up to hold the non-ophthalmic assets previously owned by Esbatech, and IBT will hold a stake in this business in proportion to the ownership it previously held in Esbatech. Delenex Therapeutics will take on a range of products in development, including an osteoarthritis drug in phase II trials.
Kate Bingham, investment manager of IBT, says: “This deal provides a great example of the kind of returns on offer from unquoted biotech companies. Esbatech is a high quality firm with an exciting antibody fragment platform that has many promising products in development. We are delighted to continue working with many of these products through Delenex Therapeutics, through which we look forward to further returns from the products originating from Esbatech’s technologies.”
