Animal pharmaceutical products manufacturer Chemeq Ltd has signed a letter of intent with European chemicals manufacturer PCAS SA, which may lead to manufacturing and marketing partnerships.
Animal pharmaceutical products manufacturer Chemeq Ltd has signed a letter of intent with European chemicals manufacturer PCAS SA, which may lead to manufacturing and marketing partnerships.
If successful, the agreement would come as good news for the company, which reported a $32.6 million loss last financial year, and recently laid off 50 employees as it moved to a new corporate model.
The LOI proposes that PCAS would become a contract manufacturer for some of Chemeq's products.
Chief executive David Williams hailed the agreement as a major development that would allow Chemeq, which suffererd big cost blow-outs during the construction of its own manufacturing plant, to reduce its production costs.
"In addition, we can better utilise our existing manufacturing facilities at Rockingham to develop new products, to increase the manufacturing know-how held by Chemeq, and to produce for niche markets whilst leveraging the huge manufacturing capability of PCAS for the large world markets for antimicrobials like our world-first Chemeq product."
The full text of a Chemeq announcement is pasted below
Chemeq Limited and PCAS SA are pleased to announce that they have today signed a Letter of Intent to examine the possibility of a wide ranging strategic partnership.
The Letter of Intent records the framework for the examination of the proposed alliance between Chemeq Ltd and PCAS. Under the LOI, the two companies will consider whether to proceed to formalise an agreement in the next 60 days.
The LOI anticipates that PCAS will contract manufacture Chemyde antimicrobial, the active ingredient in the Chemeq-branded polymeric antimicrobial 5 per cent solution, for use both in that and other applications in various countries world-wide.
The LOI also provides for Chemeq Ltd and PCAS to examine the possibility of a wider relationship in the commercialisation of Chemeq's technology in Europe and for Chemeq to become a contract manufacturer for PCAS.
Chemeq Ltd's Chief Executive Officer David Williams said the LOI was a momentous development for Chemeq Ltd's new strategy of commercialising its world class technology through strategic partnerships with major established companies.
"Chemeq is delighted to enter into this arrangement with PCAS, a highly successful manufacturing company and one of the world leaders in the manufacturing of complex molecules," he said.
"This Letter of Intent is the culmination of discussions, preliminary trials and the exchange of technical information with PCAS in recent months."
"Our initial focus under the LOI will be the contract manufacture of chemyde for use in our Chemeq product. PCAS and Chemeq Ltd have already been working closely together on this project and a project team established to analyse the results of manufacturing trials currently underway."
"Not only is this announcement a major step forward for Chemeq Ltd's ambitious world-wide commercialisation strategy, the LOI also provides for the parties to examine the possibility of Chemeq Ltd's Rockingham plant becoming a contract manufacturing facility, particularly for small batch production of APIs."
"In addition, we have also agreed to examine a wider relationship whereby PCAS can make available its market position in Europe to assist Chemeq Ltd in the commercialisation of its technology in Europe."
"In summary, this is a major development for Chemeq Ltd. If we are able to conclude an agreement with PCAS, Chemeq Ltd will be in a strong position to reduce the cost of production and prove to our customers that we can guarantee supply of Chemeq in the future."
"In addition, we can better utilise our existing manufacturing facilities at Rockingham to develop new products, to increase the manufacturing know-how held by Chemeq Ltd, and to produce for niche markets whilst leveraging the huge manufacturing capability of PCAS for the large world markets for antimicrobials like our world-first Chemeq product."
"Finally, we can also leverage PCAS' existing strengths to better commercialise our technology in Europe."
"I am excited by the opportunities this partnership opens up for Chemeq Ltd."
Chairman of PCAS Christian Moretti said that PCAS was impressed by Chemeq Ltd's technology and the progress made by the company in commercialising its unique polymeric antimicrobial.
"When we first met with David and his team, we were attracted by the huge potential of the Chemeq polymeric antimicrobial as a safe and effective replacement for the use of antibiotics in the animal health market," he said.
"We were also struck by the synergies between our manufacturing capability in complex molecules and what Chemeq Ltd was doing at its manufacturing plant in Australia."
"We believe there are enormous opportunities opening up for Chemeq Ltd and its technology in Europe and world-wide and we are pleased to enter into this Letter of Intent to examine the them as soon as possible."
"I look forward to working with David and Chemeq Ltd for our mutual benefit."
Under the LOI, which is non-binding at this stage, Chemeq Ltd and PCAS will consider whether to implement a formal agreement in relation to the following matters:
- conduct of preliminary and final pilot trials of the manufacture of Chemyde by PCAS;
- development and execution of a contract manufacturing agreement;
- future research and development in relation to the process of manufacturing Chemyde and other products for and on behalf of Chemeq;
- production of small quantities of Chemeq for use in FDA registration efficacy trials;
- production of Chemyde for products in non-pharmaceutical markets;
- consideration and development of an alliance to utilise Chemeq Ltd's capabilities in respect of the production of acrolein (a raw material used in the synthesis of products for the perfumery and pharmaceutical markets); and
- consideration of Chemeq Ltd becoming a feeder manufacturer to PCAS, particularly for small batch production of APIs.
The LOI notes that product could be available for supply from PCAS' manufacturing facilities by the second half of calendar 2007.
