ML Laboratories plc has come to an agreement with Baxter Healthcare Limited that will see ML disposing of its Liverpool based Icodextrin manufacturing business for about £6.5 million.
The decision follows ML Board’s strategic review, which concluded that ML’s manufacturing businesses are non-core.
Net proceeds of about £5.5 million will contribute working capital requirements of ML and its subsidiaries.
Divestment of ML’s DNA manufacturing business was completed in June 2002.
Icodextrin is a glucose polymer developed by ML, which holds International patents for using Icodextrin in a number of therapeutic fields. It is the active ingredient in a number of ML’s products, including Adept, Dexemel and Emmelle.
Baxter licensed exclusive worldwide rights to the use of Icodextrin solutions for treating renal disease by peritoneal dialysis, a deal concluded by ML and Baxter in 1996.
Baxter markets Icodextrin solution as Extraneal(TM), which is currently approved for marketing in 34 countries. It is used by more than 9,000 patients on a daily basis. ML has supplied Icodextrin to Baxter from its manufacturing plant since 1996. In June 1998, ML and Baxter entered into a long-term supply agreement whereby 95% of the capacity of the plant at the time was contracted to be sold to Baxter until 2007.
ML’s plant does not have enough production capacity to meet current total requirement, for Icodextrin. Baxter already sources supplies from a contract manufacturer. Baxter received marketing approval for Extraneal in the USA in December 2002 and approval in Japan is expected by in 2003. Baxter’s requirement for Icodextrin will increase as the product is launched in these countries. ML does not wish to increase its investment in a non-core manufacturing asset, which has no alternative use. ML will continue to earn royalty income on sales of Extraneal under the terms of the existing licence agreement with Baxter.
Baxter would supply ML with Icodextrin for on commercial terms, for use in non-renal dialysis applications including those for ML’s Adept, Dexemel and Emmelle products.
The deal with Baxter is conditional upon the approval of ML’s shareholders in a General Meeting.
Keywords : ML Laboratories Baxter Healthcare Icodextrin polymer Manufacturing business Contract Disposal Divestment Renal disease Peritoneal dialysis Extraneal Adept Dexemel Emmelle
