Bioprogress acquires edible film assets

BioProgress, a UK provider of delivery mechanisms for the pharmaceutical oral dosage markets, has acquired the edible film production assets of Aquafilm, which excludes Aquafilm's interests in Connecticut, US and Hartlebury in the UK.

Based in Tampa, FL, US, Aquafilm was founded in 2000 and has a film production facility with FDA certification to produce soluble films for use in nutritional products (vitamins, minerals and supplements) and food products. The procedures and systems are in place to enable the facility to be quickly upgraded to full pharmaceutical production standard (cGMP).

BioProgress is acquiring certain assets of Aquafilm for up to US$11m, and will also be investing up to an additional $3m during 2004 to bring the plant up to pharmaceutical standard and refurbish the offices and packing facilities.

Aquafilm has been a supplier to BioProgress of films for the Xgel technologies and can produce films for all the BioProgress Xgel dosage forms. In addition Aquafilm has been developing fast dissolving 'in the mouth' films for retail consumer products. This is a new and growing market which has seen breath freshening product introductions from Warner Lambert and Wrigleys in the USA and Europe, and Boots in the UK. In addition to breath freshening strips, Aquafilm has developed dissolve 'in the mouth' vitamin strips and a number of other innovative applications for this technology.

BioProgress has recently filed patents on a new technology the company has been developing for nearly two years, which enables a more effective delivery of active ingredients including pharmaceutical drugs into 'in the mouth' dissolving films. BioProgress believes this new Wafertab technology will significantly enhance the Aquafilm current product offering, and intends to upgrade Aquafilm's Tampa facility to full pharmaceutical production standard and accelerate the development of the Wafertab technology into the pharmaceutical sector. It is anticipated that this has potential as a new drug delivery platform and that it will create further exclusive licensing opportunities for BioProgress.

Aquafilm has been working with a number of multinationals as well as European and US companies developing film products under various brand names. Aquafilm has a film manufacturing as well as a conversion and packing capability in Tampa, and therefore can supply finished products ready for shipping.

Aquafilm is forecasting revenues of around $50m in the period 2004 - 2006 from 'in the mouth' dissolving consumer products supplied to a number of companies. Commenting on the acquisition, Angel Oliva, ceo, chairman and the majority shareholder in Aquafilm, said: 'The soluble film business is an exciting business and has the potential to grow fast. As a private company we have made a substantial investment in getting the Aquafilm business this far. Further investment is required and BioProgress has the resources to undertake this. BioProgress also has a number of patents on soluble film and film applications which, when linked with Aquafilm know-how, will put BioProgress in a strong position to develop both the consumer and pharmaceutical markets for this technology. I am confident BioProgress is the right company to take the business forward.'

Scott Schaneville, the coo of Aquafilm, said: 'The team at Aquafilm are really excited about becoming part of BioProgress. I believe Aquafilm will produce significant revenue and profits for BioProgress in the short and medium term while the major BioProgress dosage form technologies are beginning to roll out following the strategic licensing agreements BioProgress has been able to secure.'

BioProgress ceo Graham Hind, said: 'This is an excellent acquisition for BioProgress as it enables us to commence Xgel film supplies to our customers almost immediately, avoiding any delays in the development and roll out of our Xgel technologies with our licensing partners. It provides us access to know-how and practical film manufacturing experience which will save costs, shorten the timeframe, and be generally invaluable in the establishment of our first phase European film production facility in Cambridgeshire. We still need to proceed with the first phase of this project as our customers expect the security of two site supply.

'Finally we believe we have secured Aquafilm at an excellent Price Earnings valuation. We have secured immediate, significant and growing short and medium term revenues which we are sure will be received well by our Shareholders. We have enabled the acceleration of our existing technologies by the early supply of film and brought on board further know-how and expertise to enable faster development of what we believe will become an extremely valuable new core technology, namely Wafertab.'