(Adds closing share price in second paragraph.)
Feb. 10 (Bloomberg) -- Vernalis Plc surged the most in more than seven years in London after agreeing with closely-held Tris Pharma Inc. to develop cough and cold drugs in a market the unprofitable U.K. drugmaker valued at as much as $2 billion.
The shares climbed 29 percent to 25.25 pence, the steepest gain since July 2004, giving the company a market value of 25.1 million pounds ($39.5 million).
The deal offers potential access to the $2 billion U.S. prescription cough and cold drug market and is likely to push Winnersh, England-based Vernalis into profitability this year, Chief Executive Officer Ian Garland said in an interview. A 65.9 million-pound share sale, also announced today, will be used to hire as many as 200 salespeople and further fund the company’s pipeline or potential partnerships, he said.
“We have waited a long time for a deal of this nature, and are delighted that the company has finally executed,” Shawn Manning, an analyst at Singer Capital Markets in London who recommends buying the shares, wrote in a note to clients.
The drugs will be new formulations of six existing treatments and won’t require efficacy testing, so the first drug under the new accord could be submitted to regulators as soon as 12 months from now, Garland said. Vernalis will pay Tris, based in Monmouth Junction, New Jersey, $5 million up front and later undisclosed “success-based” milestones.
“What we’ve found in one deal is up to six products with a very large commercial opportunity, with a fast path to market and technology protection,” Garland said. “We’re building a self-sustaining business. This doesn’t depend on us doing further deals in the future.”
--Editors: Kristen Hallam, Robert Valpuesta
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