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York Pharma (YRK.L) - acquires CellTran: augmenting the bag of 'goodies'
YRK.L
Comment by Objective Capital , Oct 29, 2008
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York Pharma has just announced the acquisition of CellTran, a-Sheffield based company specialised in cellular based wound care and burn dermal therapy. CellTran had been funded to the tune of around £11 million by, amongst others the Wellcome Trust and local Development Authority money. York purchased the assets of the company from its administrators for £70,000. The company is located in the same building as York's Sheffield base and has developed two cellular therapy products (Myskin (TM) and Cryoskin (TM)) that have been launched and are manufactured in a facility that is licensed by the HTA (Human Tissue Authority).
Myskin is a cultured, autologous (from the patient) silicon-based epidermal substitute that is used for the treatment of various intractable or difficult to treat wounds (diabetic foot ulcers and other non-healing wounds) as well as partial thickness burns. Cryoskin is a monolayered allogeneic (from cultured neonatal foreskin) cellular preparation attached to a proprietary support that is used to supply remnant patient skin cells with fresh growth factors to trigger healing. Other products are in the pipeline but the current product line, prior to administration had generated an annual revenue rate of around £180,000.
Objective's view:
This product line fits in well with the recently acquired Solvay product line (Flammazine and Flammacerium) both of which are used in these markets.
This segment of the wound care and burn market is littered with products (JnJ's Regranex, Organogenesis's Appligraf, Advance BioHealing's Dermagraft...etc) that have not reached their potential due to poor or spotty efficacy as well as inadequate stability. Myskin is a bespoke product from a patient's own cells so it is used within days of being received. Cryoskin is stable for 6 months at -80°C although this too may have resulted in limited potential as not all hospitals have such freezing capacity.
Our take on this is that it is a strategically compatible and additive product acquisition which augments the bag of 'goodies' that York can bring to this physician group. In that respect, it is a net plus which could hold significant potential. Pricing is not an issue in this market for a product that works. The alternative is very costly and can be deadly.
In conjunction with this transaction, York raised an additional £500,000 in working capital from CellTran's investors who felt more comfortable having the company under the York roof than as an independent entity.
We believe that York will continue to add opportunities of this kind as they arise to build the product base that it can flow through its marketing platform to bring it closer to profitability. This is another step forward in that direction.
