December 4, 2014
Acquisition of PneumRx

London, UK, 04 December 2014


A fast-growing interventional pulmonology business

London, UK, 4 December 2014: BTG Plc (BTG or the Company), the specialist healthcare company, is pleased to announce that it has entered into an agreement to acquire PneumRx Inc (PneumRx), a growing interventional pulmonology business, on a debt free cash free basis for an initial cash consideration of US$230 million (approximately £147[1] million) and up to US$245 million (approximately £1561 million) in performance-related future milestone payments (the Acquisition).

The Acquisition will be funded in part by a cashbox placing with gross proceeds of approximately £150 million, representing approximately 5 per cent of the Company’s market capitalisation based on 03 December 2014 closing share price, announced separately today (the Placing).

PneumRx is headquartered in Mountain View, California. It owns, manufactures and distributes the RePneu® Coil System (RePneu®), a minimally invasive treatment for advanced emphysema, which seeks to enhance patients’ quality of life by improving lung function and exercise capacity. RePneu® is sold in 11 European countries including Germany, Switzerland, Italy and Spain and has a fully recruited US pivotal clinical trial currently underway. US approval is anticipated during 2016.

The rationale for the acquisition of PneumRx is that it:

  • complements BTG’s Interventional Medicine platform expanding it into the emerging area of interventional pulmonology, a developing medical discipline;

  • adds RePneu®, a minimally invasive product backed by clinical evidence, which provides access to a specialty physician base and a market with high unmet need and significant growth potential;

  • adds a fast-growing business that enhances BTG’s European commercial platform and provides a significant US opportunity;

  • has an attractive financial impact: annual sales potential over US$250 million, estimated ROI[2] greater than 20% post US reimbursement[3] and expected to be accretive to earnings from Year 4 onwards.

 Louise Makin, CEO of BTG, said:
“PneumRx brings a differentiated, clinically proven product that can make a real difference to the lives of people with advanced emphysema, for which there are limited current treatment options. It also gives us access to a third potentially high-growth area of interventional medicine, interventional pulmonology. With an annual sales potential of over $250 million, PneumRx is a significant addition to BTG that enhances our portfolio and leadership in Interventional Medicine.”

Market opportunity for the interventional treatment of advanced emphysema

Emphysema is a progressive disease in which the natural architecture of the lungs is damaged and lung function is degraded. There are more than 10 million people in the US and EU5 with emphysema and there is a significant economic burden placed on healthcare systems relating to both inpatient and outpatient care costs. There is no cure, with the current standard of care seeking to relieve symptoms through drug therapy and pulmonary rehabilitation.

In light of the limited treatment options for patients with advanced emphysema (Gold stages III and IV) there is a high unmet need for technologies that improve patients’ quality of life. RePneu® is an implantable shape memory Nitinol[4] coil device that is designed to improve lung function in patients with emphysema. The coil restores the lung’s elasticity while holding small airways open, preventing airway collapse during exhalation. Treatment with RePneu® has been shown in European clinical studies to improve the quality of life of emphysema patients, demonstrated by clinically meaningful improvements in the St George’s Respiratory Questionnaire response and in the 6-minute walk test5.

RePneu® is currently approved to treat both homogenous emphysema (distributed more diffusely throughout the lungs) and heterogeneous emphysema (isolated in more focal areas of the lung) in Europe, receiving CE mark approval in October 2010. It is currently only available for investigational use in the US, where a fully recruited pivotal trial could lead to regulatory approval in 2016.

The RePneu® product and its method of reducing the volume of lung tissue are covered by granted US patents to 2029 and an EU patent to 2027 upon grant of the existing patent application.

BTG believes that, subject to US approval and reimbursement, RePneu® has the potential to achieve revenues of over US$250 million by 2020, assuming less than 1% penetration of Gold Stages III and IV patients.

Information on PneumRx

PneumRx is a private US corporation owned by employees and certain venture capital investors. PneumRx has 80 employees, of which 56 are based in the US and 24 based in Europe.

In 2013, PneumRx achieved revenues of approximately US$16 million, a gross profit of approximately US$14 million and generated a loss before tax of US$4 million. As of 31st December 2013, the gross assets of PneumRx were US$22 million (approximately £141 million). Revenue in 2014 is expected to be approximately US$25 million.

BTG intends to support sales of RePneu® with a direct sales strategy in key European territories. The sales force will call on interventional pulmonologists and BTG believes that the acquisition will have scale benefits in Europe as BTG’s go-direct Interventional Oncology strategy is fully implemented in Q2 2015.

Principal terms of the Acquisition

On 3 December 2014, BTG International Inc, a subsidiary of BTG, and PneumRx entered into an agreement in respect of the Acquisition.

The initial consideration payable for the Acquisition will be US$230 million (approximately £1471 million) on a debt free cash free basis.

BTG will make further contingent payments dependent on the achievement of performance-related targets. This comprises a milestone of US$20 million payable if PneumRx meets a revenue target in 2015 and a milestone of US$60 million if FDA approval is received before 31 December 2017. BTG may also pay tiered sales milestones of up to an additional US$165 million, the last of which is payable if annual sales reach US$500 million. Total contingent payments will not exceed US$245 million (approximately £1561 million) and will be funded from BTG’s cash resources.

Closing of the acquisition is conditional on Hart-Scott Rodino approval in the US. That is expected to be received in early January 2015.

Rothschild is acting as financial adviser to BTG. Deutsche Bank AG, London Branch and J.P. Morgan Cazenove are acting as Joint Bookrunners in respect of the placing. Stephenson Harwood and Morgan Lewis & Bockius provided legal advice to BTG.

BTG will host an analyst call today at 08.00 GMT. For further details please contact Victoria Foster Mitchell on +44 (0)20 3727 1176 or



+44 (0) 20 7575 0000

Louise Makin – Chief Executive Officer
Rolf Soderstrom – Chief Financial Officer


Andy Burrows – Vice President, Corporate and Investor Relations

+44 (0) 20 7575 1741


+44 (0) 20 7280 5000

Dominic Hollamby
Julian Hudson


Deutsche Bank

+44 (0) 20 7545 8000

Ben Lawrence
Frank Kennedy


J.P. Morgan Cazenove

+44 (0) 20 7742 4000

James Mitford
Nicholas Hall


FTI Consulting

+44 (0) 20 3727 1000

Ben Atwell
Simon Conway



This announcement, including its Appendix (together, the “Announcement”) and the information contained in it is restricted and is not for release, publication or distribution, directly or indirectly, in whole or in part, in, into or from the United States (including its territories and possessions, any state of the United States and the District of Columbia, collectively the “United States”), Australia, Canada, Japan or South Africa or any other state or jurisdiction in which the same would be unlawful restricted, unlawful or unauthorised (each a “Restricted Territory”). This Announcement is for information purposes only and does not constitute an offer to sell or issue or the solicitation of an offer to buy, acquire or subscribe for shares in the capital of the Company in any Restricted Territory or to any person to whom it is unlawful to make such offer or solicitation. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions. Subject to certain exemptions, the securities referred to herein may not be offered or sold in any Restricted Territory or for the account or benefit of any national resident or citizen of any Restricted Territory. The shares issued pursuant to the Placing (the “Placing Shares”) have not been and will not be registered under the United States Securities Act of 1933, as amended (“Securities Act”) or the securities laws or with any securities regulatory authority of any other state or other jurisdiction of the United States, and may not be offered, sold or transferred, directly or indirectly, in the United States absent registration under the Securities Act or an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any other state or jurisdiction of the United States. Any offering of the Placing Shares to be made in the United States will be made only to a limited number of “qualified institutional buyers” within the meaning of Rule 144A under the Securities Act pursuant to an exemption from registration under the Securities Act in a transaction not involving any public offering and outside the United States in offshore transactions within the meaning of, and in reliance on, Regulation S under the Securities Act. No public offering of the shares referred to in this Announcement is being made in the United Kingdom, any Restricted Territory or elsewhere.

This Announcement has been issued by, and is the sole responsibility, of the Company. No representation or warranty express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by J.P. Morgan Securities plc or Deutsche Bank AG, London Branch (the “Joint Bookrunners”) or N M Rothschild & Sons Limited (“Rothschild”) or by any of their respective affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

J.P. Morgan Securities plc and Rothschild are each authorised by the Prudential Regulatory Authority (the “PRA”) and regulated by the PRA and Financial Conduct Authority (the “FCA”) in the United Kingdom. Deutsche Bank is authorised under German Banking Law (competent authority: BaFin – Federal Financial Supervisory Authority). Deutsche Bank is further authorised by the PRA and is subject to limited regulation by the FCA and the PRA in the United Kingdom. Details about the extent of its authorisation and regulation by the PRA and regulation by the FCA are available on request.

The Joint Bookrunners are each acting solely for the Company and no one else in connection with the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to clients of the Joint Bookrunners nor for providing advice in relation to the Placing and/or any other matter referred to in this Announcement. Rothschild is acting for the Company and no one else in relation to the Acquisition and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Rothschild nor for providing advice in relation to the Acquisition and/or any other matter referred to in this Announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on the Joint Bookrunners or Rothschild by the Financial Services and Markets Act 2000 or by the regulatory regime established under it, neither Deutsche Bank AG, London Branch, J.P. Morgan Securities plc, nor Rothschild, or any of their respective affiliates accepts any responsibility whatsoever for the contents of the information contained in this Announcement or for any other statement made or purported to be made by or on behalf of either Joint Bookrunners or Rothschild or any of their respective affiliates in connection with the Company, the Placing Shares, the Placing or the Acquisition.

The Joint Bookrunners and Rothschild and each of their respective affiliates accordingly disclaim all and any liability, whether arising in tort, contract or otherwise (save as referred to above) in respect of any statements or other information contained in this Announcement and no representation or warranty, express or implied, is made by the Joint Bookrunners or Rothschild or any of their respective affiliates as to the accuracy, completeness or sufficiency of the information contained in this Announcement.

The distribution of this Announcement and the offering of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company or the Joint Bookrunners that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and the Joint Bookrunners to inform themselves about, and to observe, such restrictions. For the avoidance of doubt, Rothschild is not acting for the Company or any other party in relation to the Placing and, as such, has taken no action that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required.

The information in this Announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction, or disclosure of this information in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions. This Announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company’s current expectations and projections about future events. These statements, which sometimes use words such as “aim”, “anticipate”, “believe”, “intend”, “plan” “estimate”, “expect” and words of similar meaning, reflect the directors’ beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement.

Statements contained in this Announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this Announcement is subject to change without notice and, except as required by applicable law, the Company does not assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Announcement. No statement in this Announcement is or is intended to be a profit forecast or profit estimate or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company. The price of shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the shares.

The Placing Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than the London Stock Exchange.

Neither the content of the Company’s website nor any website accessible by hyperlinks on the Company’s website is incorporated in, or forms part of, this Announcement. 

[1] Converted at a GBP:USD exchange rate of 1.56944 as at December 3, 2014.

[2] Return on Investment (ROI) is defined as trading profit after tax less capex and net working capital investment, and before depreciation & amortisation, divided by the consideration paid.

[3] This statement is not intended as a profit forecast or profit estimate and related to future actions and circumstances which, by their nature, involve risks, uncertainties and other factors. This statement should not be interpreted to mean that the future earnings per share of the enlarged group for current or future financial years will necessarily match or exceed historical or published earnings per share of BTG.

[4] A metal alloy of nickel and titanium.
5 Shah, P et al. Endobronchial coils for the treatment of severe emphysema with hyperinflation (RESET): a randomised controlled trial. The Lancet 2013; 1: 233-240.