Nuformix (LSE:NFX) announced it has signed heads of terms to acquire Biovara, a privately owned UK pharmaceutical developer, in a share-based deal described as "a merger of equals".
The London-listed Nuformix is a drug development company targeting fibrosis and oncology through repurposing established pharmaceutical compounds, and its lead programme, NXP002, is an inhaled formulation of tranilast being developed for idiopathic pulmonary fibrosis (IPF) and related interstitial lung diseases.
Biovara's lead asset, LipAprep, is a patent-protected lipid-based formulation of aprepitant, an established NK-1 receptor antagonist, being developed for lung cancer-related cough, a condition the companies say has limited effective treatment options.
LipAprep has completed a single ascending dose Phase 1 study at doses up to 750mg and is being prepared for multiple-dosing and Phase 2 proof-of-concept studies; its formulation carries patent protection to at least 2045.
The combined group would carry two clinical-stage respiratory assets, with the board citing diversified development risk, complementary scientific and commercial expertise, and potential operational efficiencies as rationale for the tie-up.
Consideration would be new Nuformix shares issued to Biovara shareholders, with the combined valuation of the enlarged group still to be agreed.
Tim Metcalfe, Nuformix's chairman, said the deal was "not diversification for its own sake", adding: "We see clear alignment between the programmes, the capabilities needed to advance them and the pharmaceutical partners most likely to be interested in their potential."
Metcalfe was appointed Nuformix's non-executive chairman with effect from 1 September, succeeding Dr Julian Gilbert, and brings more than 30 years of City experience including roles at Rothschild and as joint chief executive of Zeus Capital.
The transaction would be accompanied by cancellation of Nuformix's Main Market listing and admission of the enlarged group's shares to AIM, which the company said would better align the market with the combined group's stage of development.
The deal may constitute a reverse takeover under the UK Listing Rules; should AIM admission not proceed, Nuformix said it would need to publish an FCA-approved prospectus to remain listed on the Main Market.
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Nuformix said its existing partnering discussions for NXP002, ongoing since at least its half-year results, continue in parallel and are not expected to be delayed by the proposed acquisition.
The heads of terms provide exclusivity for six months and a long-stop date of 30 April 2027, and remain principally non-binding aside from provisions on confidentiality, exclusivity, costs and termination.
Completion depends on reciprocal due diligence, definitive transaction documentation, shareholder approval of resolutions to issue new shares, and a Takeover Panel waiver of the Rule 9 mandatory offer obligation, itself subject to independent shareholder approval.
Nuformix has appointed SP Angel Corporate Finance as financial adviser on the proposed acquisition and admission, with SP Angel expected to act as nominated adviser and joint broker to the enlarged group following admission.
"There can be no certainty that the Proposed Acquisition will proceed or as to its final terms," the company said, adding that further announcements will follow as the transaction progresses.