Human tissue specialist Asterand (LON:ATD) said it expects to ask for shareholder approval for the sale of its non-BioSeek Tissue Based Solutions business in the next few weeks.

Shareholders applauded the news with the shares up 37 per cent today.

It is also considering options for its other subsidary, BioSeek which provides cell-based human disease models for drug discovery. 

Asterand said: “The board also continues to explore a number of alternatives in respect of the BioSeek business including the continuation of the business on a stand-alone basis or the sale of the business after the potential disposal of the Tissue business.”

It also said it is managing its cash flow carefully so that it will have the necessary funds to complete a transaction for the Tissue business.

In April, the company said it had been unable to find a single buyer for the business as a whole.

Asterand said that despite ‘volatile’ trading conditions and the distractions of the sales processes, revenue remained flat overall in the period to 31 March.

Revenue for the Tissue business improved, while BioSeek revenue reduced.

The sale of the Tissue business enable Asterand to repay its creditors but additional funding would need to be sought to keep the BioSeek business going or if it needs funds for its sale.

The group is also considering delisting after the disposal of the Tissue business in order to cut costs.

Human tissue specialist Asterand (LON:ATD) said it is ‘exploring a number of alternatives’ after the potential bidder for its BioSeek business dropped out today.

Asterand said it was making good progress with sale of the Tissue business.

On Monday, Asterand said it had signed letters of intent to sell each of its two businesses, BioSeek and non-BioSeek Tissue Based Solutions, separately. The company initially put itself up for sale in October 2011.

It added today: “The board is exploring a number of alternatives in respect of the BioSeek business, including securing additional funding from a third party, with the intention of reaching an agreement alongside its potential disposal of the Tissue business.”

Bioseek provides cell-based human disease models for drug discovery and development.

Asterand acquired BioSeek in February 2010. Asterand is a global supplier of human tissue and human tissue-based research services to drug discovery scientists.

The share price dropped 18 per cent to 2.15 pence today.

Human tissue specialist Asterand (LON:ATD) said today it was still confident talks with potential bidders would result in a deal despite several deadlines passing.

Asterand, which put itself up for sale in October, added that after several months of talks it has narrowed the field to a small number of preferred parties and is now in advanced negotiations with these groups.

It said it was not possible to conclude an agreement in February because of the complex nature of some of the discussions, but it remains confident that a transaction will be completed, albeit in a longer timescale than previously envisaged.

Asterand put itself up for sale after receiving notices of default from two of its creditors last year after trading conditions worsened and it was in danger of breaching bank covenants. 

Business subsequently picked up towards the end of 2011 with revenues for the twelve months expected to exceed 2010.

Today, Asterand said it was in a constructive dialogue with the two creditors and continues to receive their support during the sale process.

The sale process was previously extended in November last year and in January.

It said that it has received strong interest from a number of parties but it was not possible to conclude talks prior to the Christmas break.

A new deadline of January 17 has now been set. This gives the interested parties almost two weeks to submit their proposed offers so that Asterand can potentially announce a recommended offer by the middle of February, the company said.  

Asterand added that it continues to update its key creditors on the process and the developments to date.

The company was originally put up for sale in October, after it revealed in August that it would be in breach of its funding covenants in the near future. It has also explored its funding options in recent months.

Operationally the business has revealed positive news in recent months with a significant contract extension with America’s National Cancer Institute (NCI) in November. It has also achieved a research milestone in its drug discovery collaboration with Japanese pharmaceutical firm Ono Pharmaceutical.

The BioSeek subsidiary is applying its BioMAP platform to perform a number of tasks on a drug discovery target selected by Ono.  

Under the three-year agreement BioSeek is receiving research funding and is eligible to receive success payments based on the research-phase progress of this collaboration and further milestone payments based on the clinical development-phase progress of a drug candidate discovered under this collaboration.

Human tissue specialist Asterand (LON:ATD) announced today that its BioSeek subsidiary has achieved a “research milestone” in its drug discovery collaboration with Japanese pharmaceutical firm Ono Pharmaceutical.

BioSeek is applying its BioMAP platform to perform a number of tasks on a drug discovery target selected by Ono. These tasks include phenotypic screening, hit identification, lead optimisation and clinical candidate selection.

Under the three-year agreement with Ono, BioSeek is receiving research funding and is eligible to receive success payments based on the research-phase progress of this collaboration and further milestone payments based on the clinical development-phase progress of a drug candidate discovered under this collaboration. Ono will have worldwide rights to develop and sell all pharmaceutical products discovered through the collaboration.

“We highly value our relationship with Ono since it enables us to take full advantage of BioMAP'’s power to discover and develop innovative new drug candidates,” said Jack Davis, Asterand’s chairman and chief executive officer. “We are looking forward to the successful continuation and further achievements of the collaboration.”

Asterand is a supplier of high-quality human tissue and tissue-based services. It takes a “comprehensive approach” to human tissue and associated research services, which it says offers pharmaceutical, biotech and diagnostic companies a “unique opportunity” to have one company meet all of their human biomaterial needs.

Human tissue specialist Asterand (LON:ATD) announced this morning that it believes it now has sufficient cash to last the company into early 2012, after its board reviewed cash flow projections and consulted creditors.

Previously, on October 24, the firm had said that it had begun a formal sale process with the intention of targeting the second half of this month to determine a potential offer for the business. Asterand’s board has now decided to extend the timeframe to allow potential bidders more time to carry out due diligence prior to considering whether to make an offer.

The revised timetable includes a period between November 28 and December 16 in which potential bidders can conduct site visits. January 5 is the deadline for submission of possible offer terms by potential bidders, while February 6 will be the deadline for an announcement of the result of the formal sales process.

At the end of August Asterand, which supplies human tissue and human tissue-based services to pharmaceutical and biotechnology companies, said in an interim management statement that volatile trading conditions had led to a reduced outlook for the year and that further funding would be required since the company was in breach of its banking covenants.

Today, the firm issued a further interim management statement in which it said that trading conditions had improved recently and that it expects tissue revenues to be in line with last year. Meanwhile, Asterand’s BioSeek business has consolidated its trading during the second half after achieving strong growth in H1 2011.

Overall, the firm expects group revenues for 2011 to exceed those for 2010.

The board of the human tissue group Asterand (LON:ATD) has formally placed the business up for sale as it explores funding options for the company.

Asterand, which revealed in August that it would be in breach of its funding covenants in the near future, said it has received default notices from Silicon Valley Bank and holders of BioSeek notes.

In the case of the latter the company has 120 days to remedy the situation. However there was no such dispensation in the agreement with SVB.

Asterand has been in discussions with a “potential funder” with a view to refinancing the business.  

“However, whilst these discussions are still on-going there is no certainty that these talks will be successful,” the group said.  

“Given the company's financial position and the need to raise additional working capital in the short term, the board now feel that alternative options need to be considered including a sale of all or part of the business.  

“As such, the board has decided to commence a formal sale process for the entire issued and to be issued share capital of the company. “

Potential bidders are being asked to contact the City firm Daniel Stewart. 

Once non-disclosure agreements are signed would-be buyers will be given access to a dataroom and management presentations. 

“The board is currently targeting a deadline of second half of November for determining a potential offer for the company,” Asterand said. 

“Due to the board's desire to conclude a deal within a short period of time, preference will be given to cash only offers for the company.” 

Chairman and interim chief executive of the company Jack Davis said: "The board would like to thank Jonathan for his contribution over the last few years and we wish him well for the future."

Asterand is a leading global supplier of human tissue and human tissue-based research services to pharmaceutical companies, which are active in drug discovery and development.

At the end of last month, the company told investors that its human tissue supply contract with America’s National Cancer Institute (NCI) looked set not to be extended beyond February 2012 due to funding issues, but saw no impact from this on the forecast for the current financial year.

Asterand announced the deal in October, under which it would provide bio-specimens to the NCI as part of the prestigious cancer research project – the Cancer Genome Atlas (CGA).

The contract was worth an initial US$5 million over the first 17 months and up to US$24 million over five years.

The company had been notified by the NCI that it will not exercise extension options with its suppliers on CGA as appropriate funds are not available.

Therefore, the contract with Asterand is due to expire on February 23 2012.  The company was also notified that it may apply to the NCI for a no cost contract extension to realise any unexpended funds beyond this expiration date.

Revenue for the half year to June rose to US$11.9 million from US$8.7 million and includes full six months of revenue associated with its BioSeek acquisition.

Loss for the period totalled US$2.3 million versus a US$1.5 million loss last time, including a consideration of US$1.7 million exceptional interest expense relating to the acquisition of BioSeek.

At the EBITDA level, there was a profit of US$0.9 million versus a loss of US$1.4 million last time.

Gross margin improved to 57 per cent from 50 per cent and the cash position at the end of the half year stood at US$4.7 million compared to US$5.9 million at the end of December 2010.

The group (excluding Bioseek) warned it has experienced “volatile trading” since the end of the half year. This has led to a “reduced outlook” for the year and the group is consequently looking to raise funds to bolster working capital.

Jack Davis, chairman and interim chief executive officer of Asterand, says: "We are pleased to report a 36% increase in group revenues. This reflects the successful integration of our BioSeek acquisition, which has been a key growth driver within the group. At the same time we are seeing the benefits of our continuing drive to improve gross margins through focused cost reductions.

“These efforts coupled with the steps we are taking to reduce volatility in the Tissues Solutions business position us well to attain a larger share of the burgeoning tissue and tissue services market."

Based on discussions with potential investors, the board believes it has a reasonable expectation that sufficient funds will be raised within an appropriate timeframe to continue operating as a going concern and provide enough working capital headroom to fund improved tissue sourcing strategies, which are expected to improve supply and stabilise non-BioSeek sales.

However, there are additional uncertainties related to raising funds, namely securing shareholder approval, re-negotiating conditions attached to its banking facilities, and the uncertain trading outlook.

Asterand directors have therefore concluded that the combination of these circumstances represents “a material uncertainty that casts significant doubt upon the group's ability to continue as a going concern and that, therefore, the group may be unable to realise its assets and discharge its liabilities in the normal course of business”.

Nevertheless, after considering the key uncertainties and making appropriate enquiries, the directors believe that they have a reasonable expectation the company will obtain adequate resources to continue in operational existence for the foreseeable future.

The company also announced today that its chief financial officer John Stchur has decided to step down from his post with immediate effect.

Stchur has been responsible for leading the company financially throughout its growth cycle, most recently negotiating the successful acquisition of BioSeek.

Asterand has retained Alan Fishman as the interim chief financial officer. 

In an interim management statement, the tissue science specialist said the result in the period to 30 April was achieved in spite of some rather volatile trading conditions.

The company provides services to pharmaceutical and biotechnology companies, which are carrying out drug discovery research.

BioSeek is its drug discovery business and its unique technological platform -  BioMap - allows for improved identification of lead compounds that offer safer and more effective therapeutic applications

Revenue in the period was driven by significant growth in the BioSeek business, said Asterand. Not including BioSeek, the rest of Asterand's business was flat on 2010.

At the end of the period, Asterand had cash resources of $5.1million.

The company has re-financed the payment for the BioSeek acquisition, and anticipates making a payment of $2.5mln in cash to the former owners of BioSeek this month, it added.

Asterand CEO Martyn Coombs said: "We are encouraged with growth in 2011 of over 30 percent.  Going forward, by successfully serving our customers' evolving needs for more predictive human based solutions to drive their drug discovery decision making, we are confident that the scalability of our business model will provide long term value for shareholders."

Earlier this month, broker Daniel Stewart said that despite a sector-wide downturn, Asterand's  full-year results for 2011 had "significantly exceeded" its forecasts.

With the recent acquisition and a major new contract on its way, the company's revenue base was stronger than ever, it said in a note.

The provider of human tissue based services posted an operating loss of US$2.1 million, nearly achieving break-even earnings before interest, taxes, depreciation and amortisation (EBITDA).

The company's turnover - $21.3million - was  4.4% ahead of its forecast while the company reported a slightly higher than expected gross margin.

BioSeek, which was the company’s first acquisition since going public, strongly contributed to sales growth in 2010 with its revenues soaring 68 percent over the previous year to US$6.4 million - 26 percent ahead of the broker's forecast.

"With this contract (NCI) and significant secured commitments from several other large clients, we have a greater line of sight on sales than ever before. We believe that these advancements put us on firm footing for future growth in revenue and that because our business is quite scalable, this will result in sustainable profitability," said Asterand.

Gross margin stood at 56 percent compared to 58 in 2009, while operating expenses increased from US$12.4 million to US$14.1 million. The company had US$5.9 million in cash at the end of the year.

BioSeek, a California-based company with propriety human primary cell based predictive technology was purchased for US$9.5 million in late 2009, which represents a multiple of less than 1.5 times 2010 sales. Asterand called this a favourable arrangement gives the company’s true value.

The loan note is redeemable by 30 December 2013. Asterand has also entered into a warrant agreement with the lenders, giving them the right to subscribe to up to 5.2 million shares at 14.12 pence per share. The warrant agreement will expire in three years.

Asterand investors liked the news, and by midday, the stock had risen nearly 7.5 percent to trade at 14.5 pence.

The ISO sets the global benchmark for quality assurance procedures. ISO 9001:2008 provides a set of rigorous practices to ensure that a company's processes are effective in producing quality products and are consistently monitored and continually improved. ISO certification requires evaluation by an independent, accredited auditing group. Asterand received its certificate from BSI Group Americas.

The Detroit facility’s biorepository processes encompass all activities involved in the procurement of specimens from donor sites, the processing and validation of specimen suitability and the delivery of the samples to clients, Asterand said.

Asterand provides human tissue-based services to pharmaceutical and biotechnology companies.

Tony Brown, Asterand’s general manager for Detroit operations, said: “This certification of our quality management system is an important validation of the processes we have put in place to reliably provide our clients with the high quality human biospecimens they require for their research." 

Asterand's Detroit facility focuses on the XpressBANK and ProCURE product lines.

The XpressBANK biorepository contains several hundred thousand specimens from a broad range of therapeutic areas and with diverse ethnic representation.

The ProCURE service offers clients access to the company's network of collaborative donor sites for the custom collection of human tissues and clinical data to meet special requirements.

In addition to biospecimen procurement, the Detroit facility provides services such as RNA/DNA extraction, specimen sectioning and tissue microarray creation.