Clinical trials group Venn has sold its technology development subsidiary, Innovenn, for £4.74 million (€5.41 million).
The business is being sold to Integumen, a company set up in the United Kingdom earlier this year by Venn director Tony Richardson and Innovenn managing director Declan Service.
Integumen will issue shares worth £4.59 million to pay for the business, which is working on developing a synthetic skin that can be used in trials for testing cosmetics and skincare following an EU ban on the use of animals in such trials. Integumen will also assume Innovenn debt of £146,032.
Venn owns 70 per cent of Innovenn following the conversion of a £1.3 million loan into equity ahead of the sale. The balance is owned by Cayman-based Helium Rising Stars Fund. Helium, which invests in small UK companies is managed by Swiss hedge fund manager ISPartners.
Acquired
Venn set up the Innovenn subsidiary in 2014 shortly before it acquired the Labskin technology in its £210,000 all-share acquisitiuon of British dermatology group Evocutis. The company is also working on technology to address acne.
The sale will crystallise a gain of £959,000 for Venn, the company said in a statement. According to the company’s most recent accounts, Innovenn reported a loss before tax of £385,000 and had net liabilities of £121,000.
Integumen says it is looking to build a portfolio of businesses in the areas of skin science, oral health and woundcare. Apart from the Innovenn deal, it expects to close deals in the near future for a US skincare brand, a European oral hygiene business and a development stage woundcare diagnostics and treatment business.
Integumen, which says it is targeting a future AIM listing in London, has appointed advisers to raise funds for its development. Meantime, it is working out of existing cash reserves and a €1 million loan facility currently guaranteed by Venn.
Assuming all four deals are completed, Venn will have a 30 per cent stake in the combined business.
In a statement, Venn said its directors believe the sale would allow the group “to concentrate on its core activities of drug development and clinical research services” as well as simplifying its financial affairs “allowing for a clearer communication and understanding of the underlying value in its core business”.
As Mr Richardson and Mr Service are directors of both companies, the deal will require approval by Venn shareholders. An extraordinary general meeting will be held in London on October 26th.
