MONTREAL, CANADA--(Marketwire - Dec. 16, 2010) - Paladin Labs Inc. (TSX:PLB), the Canadian-based international specialty pharmaceutical company and ProStrakan Group plc (LSE: PSK), the UK-based international specialty pharmaceutical company, announce today that they plan to enter into a new strategic relationship in which Paladin will be granted an exclusive licence to ProStrakan's products for certain emerging territories and will acquire, by way of assignment, ProStrakan's existing secured debt facility with the addition of certain conversion rights.
This announcement builds on the relationship which already exists between the two companies under which Paladin currently has in-licensed the rights to distribute Abstral and Sancuso in Canada. Today's announcement broadens this existing partnership, with Paladin being granted the exclusive license to distribute all of ProStrakan's products, including Abstral, Sancuso, Rectogesic, Xomolix and Tostran, in certain specific territories for which ProStrakan does not already have distribution agreements. These territories include: Canada, Latin America, Sub-Saharan Africa and Israel. Terms of the licence agreements are not being disclosed but equate to arm's length commercial arrangements. In addition, during the term of the debt facility, Paladin will have the right to license any new products acquired or licensed by ProStrakan for those same territories and on the same terms and conditions.
Paladin will be assigned ProStrakan's existing secured debt facility with the addition of certain conversion rights. The £50.0m (CDN$81.4m) secured facility will be amended and provided by Paladin in Canadian Dollars at a rate of interest of 10.5%. The loan assignment and conversion rights, which are subject to shareholder approval, are expected to become effective in early January, 2011, with capital repayment not due until early January, 2014. Paladin will have the option to convert the outstanding principal debt into new ProStrakan shares at any point after the initial six months of the life of the amended agreement. In the event of a change of control of ProStrakan during that initial time period, Paladin will receive a payment equivalent to the balance of interest for the first year of the loan together with a break fee of £2.0m (CDN$3.3m). The strike price for the conversion will be £1.10 per share, a 24% premium to the closing price of ProStrakan's ordinary shares on December 14th, 2010. Full conversion would provide Paladin with an approximate ownership interest of 18.3% in ProStrakan.
To further strengthen the relationship, Jonathan Ross Goodman B.A., LL.B, MBA, founder, President & CEO of Paladin, will join the Board of ProStrakan upon completion of the transaction.
A shareholder circular will be sent to ProStrakan's shareholders shortly and the proposals are conditional upon, amongst other things, the approval of ProStrakan's shareholders being obtained at a General Meeting scheduled for early January 2011.
Commenting on the proposed agreement, Peter Allen, Chairman & Acting Chief Executive of ProStrakan, said "This agreement provides strategic value to ProStrakan on multiple levels. We have, in Paladin, a capable and proven licensing partner for the emerging markets, which will allow us to extract value from markets where we currently are not active. This agreement provides an excellent way to extend our existing debt facility through an added value strategic investor, whilst ensuring that existing ProStrakan shareholders will not be subject to any near term dilution should a sale of the company result from the previously announced discussions that are currently under way. ProStrakan will now be able to focus on the strong growth prospects of our portfolio of proprietary products, particularly as we expand and grow in the US over the coming years.
"ProStrakan and Paladin already have a track record of working well together and I welcome the opportunity to do so more closely as we enter this exciting period in the development of ProStrakan, with US approvals pending for two of our products and the distribution of Sancuso scheduled to re-commence in early 2011. I am delighted to welcome Jonathan to the Board. His extensive experience of marketing products in North America will be very valuable to us as we develop our US business."
Jonathan Ross Goodman, President & CEO of Paladin, said: "We are pleased to expand our relationship with ProStrakan. This agreement provides Paladin with a basket of innovative products for Canada, South Africa, Israel and Latin America and we are now in a better position to execute our international growth strategy. With the conversion rights tied to the secured debt facility, Paladin has the option after the initial six months of the agreement to have a strategic investment in a specialty pharmaceutical company operating in Western Europe and the US. I look forward to sitting on the Board of ProStrakan to assist them in generating shareholder value."
Conference Call Notice
Paladin will host a conference call on Thursday, December 16th, 2010, at 9:00 a.m. ET. The dial-in number for the conference call is 866-393-8518 or 706-645-6871. The call will be audio-cast live and archived for 7 days at www.paladinlabs.com.
Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products for the Canadian and world markets. With this strategy, a focused national sales team and proven marketing expertise, Paladin has evolved into one of Canada's leading specialty pharmaceutical companies.
Paladin's shares trade on the Toronto Stock Exchange under the symbol PLB. For more information about Paladin, please visit the Company's website at www.paladinlabs.com.
ProStrakan Group plc is a rapidly growing specialty pharmaceutical company engaged in the development and commercialisation of prescription medicines for the treatment of unmet therapeutic needs in major markets.
ProStrakan's head office is located in Galashiels in Scotland. The company's development capabilities are centered in Galashiels and Bedminster, New Jersey, USA. Sales and marketing of ProStrakan's portfolio of products are handled by commercial subsidiaries in the UK, US, France, Germany, Spain, Italy and other EU countries.
ProStrakan's shares trade on the London Stock Exchange under the symbol PSK. For more information about ProStrakan, please visit the Company's website at www.prostrakan.com.
This press release may contain forward-looking statements and predictions. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Paladin considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but cautions that these assumptions regarding the future events, many of which are beyond the control of Paladin and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations, are discussed in the annual report as well as in Paladin's Annual Information Form for the year ended December 31, 2009. Paladin disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information or future events and except as required by law. For additional information on risks and uncertainties relating to these forward-looking statements, investors should consult Paladin's ongoing quarterly filings, annual report and Annual Information Form and other fillings found on SEDAR at www.sedar.com.