AMED Amedeo Res

RNS No 4361a
CHIROSCIENCE GROUP PLC
10th August 1998

 
 
 CHIROSCIENCE ANNOUNCES CASH INVESTMENT OF #30 MILLION BY ASCOT PLC FOR
 30% SHAREHOLDING IN CHIROTECH TO BUILD AN INTEGRATED CHIRAL TECHNOLOGY
                       AND MANUFACTURING BUSINESS
                                    
                THERE WILL BE AN ANALYST CONFERENCE CALL
                WHICH WILL START AT 9.30AM THIS MORNING.
                                    
                                    
Chiroscience  Group  plc  ("Chiroscience"), the emerging  pharmaceuticals
company, announces that it has agreed to sell 30% of Chirotech Technology
Limited   ("ChiroTech"),  Chiroscience's  chiral  products  and  services
subsidiary,  to  Ascot  Plc  ("Ascot") for  #30  million  in  cash.   The
companies have also agreed to enter into a formal manufacturing  alliance
between  ChiroTech  and  Mitchell Cotts Chemicals Limited,  Ascot's  fine
chemicals manufacturing subsidiary, based in West Yorkshire, UK.
 
ChiroTech  has  a  leading  position  in  the  provision  of  chiral  and
speciality  chemical  products  and  services,  ranging  from  technology
consulting  to  the  sale  of small quantities  of  proprietary  chemical
building  blocks and catalysts, through to the provision  of  multi-tonne
quantities of advanced chiral intermediates.
 
Ascot  is  a  group with interests in specialist and chemical engineering
including Mitchell Cotts Chemicals Limited.  Mitchell Cotts has been  the
contract manufacturer of a number of products for ChiroTech over the last
five  years, including (-) lactam, one of the key intermediates  used  by
Glaxo  Wellcome  plc to manufacture abacavir, their new  anti-viral  drug
that was filed for registration in June 1998.
 
The  investment  in  ChiroTech by Ascot formalises the strong  commercial
partnership  that  has been developed with Mitchell  Cotts  and  provides
ChiroTech  with  access to the manufacturing infrastructure  required  to
serve its broad and growing range of customers, providing facilities from
research  scale  to  multi-tonne  production  scale  manufacturing.   The
manufacturing  alliance  will  enable ChiroTech  and  Mitchell  Cotts  to
promote jointly their combined technological and manufacturing strengths,
essential to meeting the requirements of major companies operating in the
Life  Science  industries, and provide ChiroTech with additional  outlets
for the application of its chiral technologies.
 
Principal Terms of the Transaction
 
The  cash consideration will be paid on completion, which is expected  to
occur  on 1st September 1998.  Ascot will acquire 30% of the issued share
capital  of Chirotech Technology Limited.  The Ascot shares will  bear  a
preferential  right to dividends from the business to the  extent  of  #3
million per annum and will have a preferential right to the proceeds on a
sale  of  the business.  As a 70% subsidiary of Chiroscience, ChiroTech's
results will continue to be consolidated in the Group's accounts.
 
In  the  year ended 28th February 1998, ChiroTech recorded sales  of  #16
million  and operating profits of #7.1 million.  The assets and  business
of  the drug discovery operations of the Group were transferred to a  new
subsidiary, Darwin Discovery Limited, on 1st March 1998, leaving only the
ChiroTech  business within the Chirotech company, whose net  assets  have
been agreed at #0.8 million.
 
Reasons for the transaction and use of proceeds
 
In reviewing the future of the ChiroTech business, the Chiroscience Board
considered  a number of key criteria.  These included gaining  access  to
manufacturing  capability with a proven record of customer  service,  and
creating  an  environment in which the company's technology-driven  staff
could  flourish.   Furthermore, the needs of the Group as  a  whole  were
considered in how to grow shareholder value, including the advantages  of
strengthening  the  balance  sheet in  order  to  provide  resources  for
investment in other Chiroscience businesses, the Group's intent on moving
into profit and the risk profile of the Group as a whole.
 
The  deal  with Ascot offers a balanced solution, allowing the  ChiroTech
business  to  grow  while  providing  the  Chiroscience  Group   with   a
significant  interest in this growth.  At the same time, funds  generated
can   be  applied  to  developing  the  Rapigene  and  Chiroscience   R&D
businesses.
 
The ChiroTech Business
 
ChiroTech's sales have grown strongly over the last three years  and  the
business achieved revenues and operating profits of #16 million and  #7.1
million respectively for the financial year ended 28th February 1998. Its
current order book has increased significantly to over #35 million and it
has   ongoing   collaborations  with  many   of   the   world's   leading
pharmaceutical companies.  These include, but are not limited to:
 
Glaxo Wellcome plc

As announced in Chiroscience's Report and Accounts in May 1998, ChiroTech
has  capitalised  upon its 8 year collaboration with Glaxo  Wellcome  and
secured  a  #25 million, two year supply agreement to supply  multi-tonne
quantities  of  (-) lactam for use in the manufacture of abacavir,  Glaxo
Wellcome's  new  anti-viral  drug.  Orders  have  been  placed  by  Glaxo
Wellcome which already exceed this figure and discussions are ongoing for
an extension to the current supply agreement.
 
R.  W. Johnson Pharmaceutical Research Institute (a subsidiary of Johnson
& Johnson)

ChiroTech is to supply to R. W. Johnson with multi-tonne quantities of  a
key  intermediate in the manufacturing process for a new product that  is
shortly to enter development.  The initial order is worth in excess of #1
million, and the product will be delivered in 1998 and 1999.  Should  the
development   continue   successfully,   this   would   provide   further
demonstration  of  the  value  of  ChiroTech's  technology   and   secure
intellectual property position.
 
Alcon (part of the Nestle group)

In  July 1998 ChiroTech procured an order to supply launch quantities  of
the   active  pharmaceutical  ingredient,  a  prostaglandin,  for  a  new
ophthalmic  product.   This  will yield between  #0.8  million  and  #2.9
million  over  the next 18 months, dependent on whether this  late  stage
development candidate proceeds to market.
 
Firmenich SA

Following   successful  commercialisation  of  the   DuPONT   in-licensed
asymmetric  hydrogenation technology, ChiroTech has sold, and has  orders
in  hand  to supply, multi kilogram quantities of the proprietary  ligand
(R,R)-Me  DUPHOS to Firmenich SA, a world-leading flavour  and  fragrance
manufacturer.
 
Triangle Pharmaceuticals

ChiroTech  has  entered into two research and development  collaborations
with Triangle Pharmaceuticals, North Carolina, USA, whereby ChiroTech  is
applying  its  proprietary  bioresolution  technology  to  develop  cost-
effective  processes for the manufacture of a number of  advanced  chiral
intermediates used in the synthesis of two of Triangle's lead  anti-viral
compounds.
 
Pharmacia and Upjohn

Over  the  past  two  years ChiroTech has developed a  relationship  with
Pharmacia and Upjohn encompassing the supply of multiple chiral  products
and   services.   These  include:  Tipranavir,  a  late-stage  anti-viral
protease  inhibitor, the large scale manufacture of which  makes  use  of
ChiroTech's proprietary asymmetric catalysis technology; (R)-naproxen,  a
chiral  auxiliary  supplied in hundreds of kilograms, manufactured  under
contract  in  India  by  Shasun  Chemical and  Drugs,  and  produced  via
ChiroTech's proprietary bioresolution technology.
 
In   addition  to  these  agreements,  ChiroTech's  asymmetric   catalyst
business,   ChiroCatsTM,  and  its  chemical  building  block   business,
ChiroChemTM, are starting to show real promise.
 
The  arrangements with Ascot do not affect any existing contracts  within
ChiroTech,  including  the  agreement with  Shasun  Chemicals  and  Drugs
Limited  for the manufacture of (S)-naproxen and an exclusive  sales  and
marketing arrangement with Chugai Boyeki for the Far East and Pacific Rim
Region.
 
The  Board of Chirotech Technology Limited will initially consist  of  Dr
John  Padfield  as  non-executive Chairman,  Dr  Alan  Shaw  as  Managing
Director, Ms Christine Soden, the Finance Director of Chiroscience, and a
representative appointed by Ascot.  The parties intend to appoint  a  new
non-executive  Chairman in due course to oversee the development  of  the
ChiroTech business.
 
Commenting, Dr John Padfield, Chief Executive of Chiroscience said:
 
"This  is  an excellent opportunity for ChiroTech because it  allows  the
business  to  develop  in  partnership with  a  focused  and  experienced
speciality  chemicals manufacturer with an excellent record  of  customer
service and with whom it already has a strong established relationship.
 
It  provides the Chiroscience Group with considerable flexibility in  the
future  utilisation  of  this  key asset,  which  is  valued  by  today's
transaction at a minimum of #100 million, and allows the Group to benefit
from the majority of the contribution from ChiroTech's operations and the
enhancement  in  value  afforded by the opportunities  available  to  the
business.  In  particular, the future for advanced chiral  intermediates,
including   (-)   lactam,  is  very  exciting,  given  Glaxo   Wellcome's
expectations for abacavir and our new agreement with R. W.  Johnson.   In
addition,  the injection of cash into the Group's balance sheet  provides
further flexibility in growing shareholder value from Chiroscience's  key
assets."
                                    
For further information contact:

Dr John Padfield, Chief Executive
Christine Soden, Finance Director

Rebecca Iveson, Media and Investor Relations
Tel: +44 (0) 1223 420430

http://www.chiroscience.com
 
Giles Sanderson
Financial Dynamics
Tel: +44 (0) 171 831 3113
 
NOTES TO EDITORS
 
Chiroscience Group plc
Chiroscience Group plc is an emerging pharmaceutical company  which  uses
its  diverse technology platform to discover and develop novel  medicines
for improved healthcare.  It is listed on the London Stock Exchange.  The
Group  has  three principal activities: Chiroscience R&D;  Rapigene;  and
ChiroTech.
 
The  Chiroscience R&D drug discovery and development activities are based
in  Cambridge  and Stevenage, England, and Seattle, Washington,  USA  and
encompass  skills from gene-based target research and molecular  biology,
through  chiral-based, combinatorial, medicinal, and process chemistries,
to  clinical development and registration.  The focus of activities is on
the  discovery  and  development of innovative small molecule  drugs  and
related  diagnostics  with a therapeutic focus on  cancer,  inflammation,
pain, osteoporosis and autoimmune diseases.
 
Rapigene   is  involved  in  the  creation  and  provision   of   genomic
technologies and services to partner companies and to Chiroscience's drug
discovery  programmes.   Its  DNA  analysis  systems  comprise   of   DNA
hybridization, DNA arrays and mass spectrometry tags.
 
Ascot Plc
Ascot   is   a  Chemical  and  Specialist  Engineering  Group.   Chemical
Engineering   comprises   contract  manufacturing   of   speciality   and
performance chemicals and, in Mitchell Cotts Chemicals, a range  of  fine
chemicals   and  insecticides.   In  Specialist  Engineering  there   are
businesses  in  commercial  refrigeration and  air  conditioning  and  in
specialist  industrial manufacturing including steel wire,  work  holding
components and cold extrusion products.
 

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