Proposed Dividend, based on Royalty Income
15/05/2008
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Proposed Dividend, based on Royalty Income
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Continued Growth in Investment in Commercial Clinical Trials
Biocompatibles International plc (LSE:BII) today announces that it intends, commencing in the first half of 2009, to pay a dividend funded out of royalty income received from its out-licensed technologies (the Royalty Dividend). In order to enable the Company to pay this dividend, the Board intends to undertake a reorganisation of the share premium account and reserves, for which shareholder approval will be sought at an Extraordinary General Meeting to be held on 9 June 2008.
The Board intends to pay a first Royalty Dividend of up to £2m, or approximately five pence per share, during the first half of 2009.
The Board expects to continue to pay the Royalty Dividend annually for as long as Medtronic sustains an appropriate level of sales of its Endeavor Drug-Eluting Stent, on which Biocompatibles earns a 1.5% royalty. The Board also intends that thereafter the Company would pay a dividend from profits, though at this time there can be no certainty that this transition can be achieved as planned.
The rationale for the Royalty Dividend is that it enables shareholders to benefit from the cash that is being received by the Company from its cardiovascular business and which is not required for the building of the sustainable profitable business that is the focus of the Company’s business plan.
The Board has also reconfirmed its commitment to the continued development of the core Drug-Eluting Beads clinical programme. The key trials in this programme are randomised Phase II trials designed to drive the commercial success of the products¹ . PRECISION V is nearing completion² and PARAGON I is under way³ . The Company intends to initiate at least a further two such trials before the end of 2009, at least one of which would be in patients for whom Drug-Eluting Bead therapy would offer the prospect of a potential cure4.
The Company will also continue to actively review acquisitions and in-licensing opportunities that would strengthen the Company’s competitive position and accelerate progress to profitability.
Crispin Simon, Chief Executive commented “The Royalty Dividend will deliver value in cash to shareholders from the Company’s earlier investments in cardiovascular therapy; while we continue to execute our strategy to deliver value in future capital growth from the Company’s investment in cancer therapy.”
Should the resolution to cancel the share premium account, in connection with the reorganization of the share premium account and reserves, be passed at the Extraordinary General Meeting, the Company would intend to apply to the High Court for confirmation of the cancellation in September.
Shareholders representing more than 60% of the Company’s share capital have indicated their intention to vote for the resolution at the Extraordinary General Meeting.
The Board of Biocompatibles continues to believe that the Company’s business strategy of developing Drug-Device Combination Products with a principal focus on oncology has the potential to create significant shareholder value; and also continues to believe that optimising the Company’s financial strategy is an important part of the value creation process.
The board also reconfirms the guidance first provided on 9 January, 2008 that 2008 sales are expected to be in a range of £12 to £15m; and that closing net funds are expected to be around £30m.
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- The Drug-Eluting Beads have been approved by regulators as medical devices and do not therefore require the Phase III data that regulators generally require for the approval of new drugs.
- Results to be announced at the September 2008 meeting of the Cardiovascular and Interventional Radiological Society of Europe (CIRSE).
- “FDA Approval of Drug-Eluting Bead Clinical Trial” Biocompatibles News Release 06/03/2008
- For example: “Studies show benefit of Drug-Eluting Beads for Liver Transplant Patients” Biocompatibles News Release 14/04/2008
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