For Subscribers

Get the complete article now!

TWST: Let’s start with an introduction to CeNeS (London: CEN.L) and bring us up to date with what’s happened since we last spoke?

Mr. Clark: The key developments since we last spoke are, having ridden the wave as a newly floated company in early 2000 and having completed an acquisition of a small Nasdaq-listed company in late 2000, CeNeS then ran into difficulties as the sector fell away in terms of its overall market cap performance. We were struggling for cash and so in late 2001, we were one of the first companies to announce and go through a major restructuring. At that time, we had 150 people, research facilities in the Boston USA region, Scotland, and Cambridge England. As part of that restructuring, we’ve gone from 150 people down to 10; we’ve spun out two businesses; we’ve partnered all non-core assets; we’ve made some people redundant; and we’ve got rid of our American and Scottish operations. Obviously, our market capital at the same time was struggling as we effectively lost a certain amount of support that we had in the sector. The restructuring however has gone well and we’ve now sold one of our final assets and we’re sitting on over 2 years cash. We have a Phase III program in pain and a Phase II program in pain, which we’re looking to push forward. There are a lot of companies, especially in the UK and Europe, that over the last 12 or 18 months have really had to face up to cash shortfalls and restructuring because there is no real appetite for biotech companies. Our advantage was that we acted earlier and we have not issued any capital since then; we’ve lived off our own means. We are quite proud that the restructuring has met its targets and we’re now sitting here with a small well-funded company with a small focused pipeline and a simple story, which is something it didn’t have in the early days when it was a more complicated business. We’ve managed to maintain some significant upside to come with our clinical programs, which are late stage and we think will add value. We are spending money on them as we speak, as well as looking at other opportunities.

TWST: Did you retain an interest in any of the product assets you sold?

Mr. Clark: Yes, actually for all of those partnered assets, we have a carried interest either in the form of a small shareholding, milestones, some of which are set milestones where we will have cash coming in over the next couple of years, others which are dependent on clinical progress with our partners. If you bundle that up, there’s potentially $20 million worth of clinical milestones or other milestones plus royalties to come. That is not all going to happen, but it’s certainly a hidden asset within CeNeS. We’ve got, for example, a US private company, Acorda, who are working on a GGF2 for Multiple Sclerosis. They have just raised $55 million in the US a couple of months ago, so our program is with a private company that’s more focused on that area than we ever were and they have good funding. And that is as good as we could hope for.

TWST: How would you like to see the next 12 to 18 months progress for CeNeS?

Mr. Clark: We are in control. We have a very clear and crisp story at the moment and a focused portfolio on pain that is well-funded to accomplish the milestones we are aiming for over the next 18-24 months, and there’s still money thereafter. If we meet clinical milestones, we should be able to either find partners or raise money if the market is back. We will focus on trying to find a partner -- the sooner the better because I think it’s another step in the validation of what we have. We previously had Elan as a partner, which came with some baggage, but at least it was a validation of the program, and we need to replace them with a plain vanilla partnership deal We also will be looking to rebuild our credibility in the City, and I think this is already happening; there is beginning to be recognition of the restructuring because other companies who were perhaps perceived as bigger and better run have all fallen into difficulties. At the end of the day all these companies burn a lot of money and if you don’t get results or shareholders don’t perceive that you’re going to get returns, they’re not going to carry on investing, however well-regarded you are. We also have the advantage of now being small, but still having the asset of a listing. There’s a lot going on the private sector, so there’s potential for some M&A activity, but we don’t have to do anything. I think that’s the key. For the first time, since CeNeS acquired the listing in late 1999, it’s in the best funding state it’s been in and it’s got the clearest strategy.