Bay Capital (LSE:BAY) has announced it has signed heads of terms to acquire Plenty Biologics, a virtual developer of biosimilar medicines, in a deal valuing the target at £40 million on a debt-free basis.
The Main Market-listed acquisition company, whose shares sit in the equity shares (shell companies) listing category, will settle the consideration entirely through 266.7 million new Bay Capital shares issued at 15p each. That price values Bay Capital's existing issued share capital at £10.5 million, meaning the deal would hand Plenty Biologics' sellers the larger stake in the enlarged group.
Bay Capital said it intends to raise around £5 million of additional growth capital through a concurrent placing, adding to the cash already held by both companies to fund the enlarged group's expansion plans.
Plenty Biologics develops biosimilar versions of off-patent biologic drugs, retaining the IP and licensing it into territories that currently lack access to these therapeutics, with its first programme, an immunology monoclonal antibody, currently in development.
The company is pre-revenue and points to an estimated $234 billion of pre-expiry US sales across 118 biologics losing patent protection by 2034, a market it says is being helped by regulators moving towards faster, cheaper pathways for biosimilar development.
Plenty Biologics has partnerships with Alloy Therapeutics and, through Alloy's ecosystem, with Wheeler Bio and Spannerwerks, as well as a separate arrangement with clinical trials group Vantage; Wheeler Bio and Vantage are each expected to hold approximately 3.9% of Plenty Biologics' fully diluted share capital at completion.
David Williams, Bay Capital's non-executive chairman, is also an early investor in Plenty Biologics and is expected to hold around 3.9% of its fully diluted shares at completion, alongside convertible loan notes that would convert into further shares.
"We believe the market opportunity for biosimilars is considerable, and with Plenty Biologics, we have domain expertise ideally positioned to grow a substantial portfolio of biosimilar IP rights in a capital efficient way," Williams said.
Jake Schofield, Plenty Biologics' chief executive and co-founder, and Alasdair Thong, its chief operating officer, are proposed to join Bay Capital's board on completion, alongside one or more new independent non-executive directors, with Williams and Tony Morris continuing in their roles.
"Partnering with Bay Capital and listing in London gives us an ideal opportunity from which we can grow a highly repeatable industrialised IP platform," said Schofield.
The acquisition remains conditional on due diligence, definitive agreements, regulatory and shareholder approvals, completion of the placing and readmission, with Bay Capital required to complete an initial transaction by 30 July 2027.