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Alliance Pharma plc (LON:APH) told investors it has reached an agreement with Sinclair Pharma Plc (LON:SPH) which will see it receive some £5mln of compensation, relating to the material reduction of business for the Kelo-stretch product. The company acquired Kelo-strech, a dermocosmetic cream to prevent and treat stretchmarks, from Sinclair in December 2015 and it had been identified as a ‘key growth brand’ but last year Alliance revealed that sales had fallen short of expectations and had negatively impacted profitability. A compensation payment of £4mln is now due from Sinclair on or before 30 April 2017, with a further £1mln due on or before 30 June 2018. The imminent cash injection is earmarked to reduce Alliance Pharma’s bank loans. As part of the deal, Sinclair relinquishes any and all rights to Flammacerium, a topical treatment used for burns and wound management, with immediate effect and will transfer those rights to Alliance Pharma. The company intends to register Flammacerium in the United States, and expects to seek registration guidance from the US regulatory authority in the second half of 2017. "We are very pleased to reach this agreement with Sinclair to address the previously announced sales shortfall of Kelo-stretch,” said John Dawson, Alliance Pharma chief executive. “We believe the cash compensation of £5 million is fair and that the US rights to Flammacerium provide us with an additional potential opportunity which we are currently exploring. “Overall, the acquisition of Sinclair's Healthcare Products Business in December 2015 has been transformational for Alliance, bringing some key growth products into the Company's portfolio and increasing our scale and international reach."NEXT ARTICLE
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