Alliance Pharma

Fast-growing Alliance Pharma is to buy most of Cambridge Laboratories’ trade and assets for £14.3m and £16.4m.

Chippenham-based Alliance, with products for skin conditions, childbirth, Parkinson’s disease and a range of other complaints, will also pay the value of inventory held by the Cambridge vendors in a deal which brings it 18 additional prescription products. These include: bladder cancer immunotherapy treatment ImmuCyst; ‘gelcair’ oral gel for oral mucositis caused by chemotherapy and radiotherapy; procarbazine treatment for Hodgkin’s Lymphoma; and the only liquid formulation for Vitamin E licensed in the UK.

The purchase also brings AIM-quoted Alliance a toxicology product bought by the UK Government for its stockpile and replaced on a two-to-three year cycle. The vendors have a £5.6m stockpile replacement contract, running from last October to January 2011.

Alliance which recently flagged up a 250% 2009 profits increase to at least £8.5m and a total annual dividend of 0.3p a share, says it expects the Cambridge deal to be ‘significantly earnings-enhancing’ this year. The company is paying a basic £14.3m, which could rise to up to £16.4m if ImmuCyst’s licence is extended beyond March 2012, according to ImmuCyst’s sales this year and next.

Alliance’s chief executive officer John Dawson says the purchase ‘fits very well with our strategy of acquiring low-risk established products’. The company is partly funding the deal with a £7.5m vendor placing at 26p, arranged by broker Numis, and partly with a £4m term loan from Lloyds Banking Group, which has also increased its working capital facility by £1m to £6m.

Recommended by Growth Company Investor at 4.38p in early 2009, Alliance shares have now reached 30.5p. Last month, we suggested partial profit taking, while retaining a chunk for further growth. That chunk is worth holding onto.

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