Merrion Pharma to sell assets to Novo Nordisk

Shareholders in Merrion Pharma have approved the sale of some IP assets to partner Novo Nordisk and the transformation of the company into an investment vehicle.

The company will receive $3 million from Novo Nordisk for the sale of the IP and a further $10 million in accelerated milestone and royalty payments under the existing licences between the companies. The licences will then be terminated.

The proposals were approved at an extraordinary meeting of shareholders in Dublin yesterday.

Merrion will use the proceeds to pay off a $5 million loan from Irelandia Investments, the private investment vehicle of Merrion's largest shareholder Declan Ryan.

The loan was due to be paid at the end of last year but when it became clear this was not possible because of Merrion Pharma’s financial position, Irelandia said it would not seek repayment until at least September 30th last.That date was subsequently extended to the end of the year.

Since April, no interest has been paid and that has been added to the loan amount outstanding. In total, Irelandia is due $5.96 million.

Merrion’s focus has been the development of oral forms of drugs that have previously been injectable but have poor absorption for patients. It has worked with other companies – mostly Novo Nordisk – using its Gipet technology.

Licences

Since 2012, Merrion has been looking for further licence opportunities to generate additional income, in large part to pay off the Irelandia loan, but nothing substantial has emerged.

In that time, its net liabilities have risen from €3.2 million to €5.5 million as the company reported a series of losses before tax and exceptional items, shareholders were told.

As it is dependent entirely on milestone payment from Novo Nordisk, which might be replaced by other technology and were, in any case, subject to “significant development risk”, Merrion has opted to cash in on its licences.

After paying off all debt, Merrion expects to have €4 million in cash available. It says it will look to make an investment or investments in the healthcare sector in the US or Britain, possibly by way of a reverse takeover, if an appropriate opportunity comes available.

Otherwise, the money will be distributed to shareholders.

Under the rules of Dublin’s ESM stock market, Merrion has 12 months to make such an investment after which its shares will be suspended.

Shares in Merrion jumped 30 per cent yesterday to 17 cent following the EGM vote but are now trading at just half their price at the start of the year, giving the company a market capitalisation of just over €3.1 million.