Xenova and KSB to merge

UK biotechnology companies Xenova and KS Biomedix have recommended to their shareholders a takeover deal, which values KS Biomedix at £8.5m.

The move should benefit both companies, which have been blighted by poor financial results in recent years. Xenova lost almost half of its value earlier this year when it was forced to terminate development of one of its lead development candidate, the breast cancer agent, tariquidar, and it has just reported losses for the first six months of 2003, of over £10m, 20% higher than the previous year. KSB fared even worse with reported losses of more than £33m.

The merger will be seen as the creation of a stronger oncology business, combining eight product candidates and development expertise in this therapeutic area. Xenova says that it will focus development on commercially more attractive and later stage drug candidates in order to extract the greatest value and near term benefits. Another advantage is the significant opportunities for synergies and cost savings by rationalising and consolidating the development functions, operational sites and central support costs of the two groups and by selling off or closing non-core operations.

Commenting on the offer, David Oxlade, ceo of Xenova, said: 'Our objective is to build a profitable, oncology focused UK biotechnology company with a sufficiently broad portfolio to manage risk for investors and provide medium term returns to shareholders through successful drug development. Our acquisition of KS Biomedix, which adds a product at the Phase III development stage and two other clinical programmes to Xenova's existing pipeline of nine drugs in clinical development, is another step along the road to achieving this objective.'