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Midatech to sell off US business as it looks to become a pure-play R&D firm

Shareholders will be asked to approve the US$19mln asset disposal, which will free up funds to develop its two key clinical programmes – MTD201 and MTX110
handshake
Of the total, US$13mln is due upfront, while the remaining US$6mln is dependent on hitting certain milestones

Midatech Pharma PLC (LON:MTPH) will ask shareholders to approve the sale of its US supportive care business as it looks to become a pure-play research and development company.

The AIM-quoted company has agreed a US$19mln sale with Kanwa Holdings, an investment vehicle linked to Barings, a world-renowned financial services firm.

IN-DEPTH: Midatech delighted with first MTD201 in-human data

Midatech plans to use the cash to fund the development of its MTD201 Q-Octreotide and MTX110 programmes, as well as to repay an existing loan to MidCap Financial.

“The divestment of Midatech's US commercial arm will allow us to streamline and reshape the business from a specialty pharma to a pure play biotech company, and focus all our energy, attention and resources on advancing our innovative, higher value R&D oncology pipeline,” said chief executive Craig Cook.

“Our technologies have recently reached key validation milestones in their development and following completion we intend to accelerate this momentum for our programs and platforms as we look to unlock the full value of our pipeline and address diseases with desperate unmet medical needs.”

MTD201 is being developed as a treatment for a hormonal disorder called acromegaly, as well as for carcinoid cancer, while MTX110 is a potential treatment for a rare type of brain tumour found in children.

Both programmes are in the clinic and recent results have been promising.

Revenue up, losses narrowed

Excluding the US division, revenue – income from R&D collaborations plus grants – rose 17% to £0.55mln in the six months ended June 30 (H1 17: £0.47mln).

Loss from operations fell 7% to £5.62mln H1 17: £6.04mln), while net cash outflow totalled £8.39mln (H1 17: £11.42mln).

“The first half of 2018 has been a period of significant change and good progress for the reshaped Midatech business,” said CEO Cook.

“We report a period of excellent R&D progress with all our lead product candidates now in the clinic and, post the period end, an exciting positive data readout from our MTD201 study.

“We are committed to continuing and building on this momentum as a streamlined R&D player, with a particular focus on advancing MTD201 and MTX110 to market as quickly as possible.”

Shares fell 12.7% to 24p.

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