US Edition 
BTG acquires PneumRx in $475m debt-free deal
FTSE 250 group buys Californian biotech using a funds raised from a new share issue
Specialty pharmaceuticals group BTG has acquired Californian biotech PneumRx for $230m (£147m) plus up to $245m in milestone payments in future.
The deal will expand BTG's presence in the interventional medicine market, which serves surgeons who use X-rays, ultrasound, MRI and other imaging techniques to perform keyhole surgery.
PneumRx's, single product, RePneu, is a tiny coil used to hold open small airways in people suffering from emphysema, a condition in which the lungs lose their structure, making it difficult to breathe.
Louise Makin, chief executive of BTG, said the acquisition would give the company access to "a third potentially high-growth area of interventional medicine".
BTG's growing interventional medicine portfolio is dominated by cancer therapies. It also sells products for treating blood vessel conditions, such as varicose veins. However the company is best-known for its antidote for rattlesnake bites, CroFab.
BTG funded the upfront payment of the debt-free acquisition by placing 18,867,925 new ordinary shares at a price of 795 pence each. The so-called "cashbox placement" raised £150m - around 5pc of the company's market capitalisation.
Ms Makin said the company used equity to fund the deal, rather than drawing from its existing £78m cash pile, to give the company "financial flexibility".
She said BTG would use its cash for the additional, performance-related milestone payments to PneumRx, which is owned by its employees and venture capital investors.
RePneu has already won regulatory approval in Europe and PneumRx hopes to get the green light in the US in 2016.
Ms Makin said sales for the treatment could reach $250m per year, and that the deal would start contributing to BTG's earnings in four years' time. PneumRx made $16m in 2013, and is expected to make $25m in 2014.
Max Herrmann, analyst at Oriel Securities, said the deal, at 9.2 times earnings, was "high risk but potentially high reward". BTG's sales projections for the product were based on the assumption it would reach 9,000 patients, less than 1pc of the 5.3m people who suffer from emphysema in the US and EU.
Shares in BTG dropped as much as 2.16pc on Thursday and were trading down 1.5pc at 798 pence just before markets closed.