Bay Capital is set to acquire biotechnology developer Plenty Biologics in a £40m all-share deal, as the listed acquisition company seeks to capitalise on growing demand for biosimilar medicines.

The proposed transaction values Plenty Biologics at £40m and will be funded through the issue of 266.7 million new shares at 15p each. Bay Capital also plans to raise around £5m through a placing to support future growth.

Plenty Biologics develops biosimilar medicines, focusing on monoclonal antibodies, and operates a capital-light model through partnerships with companies including Alloy Therapeutics, Wheeler Bio, Spannerwerks and Vantage.

The deal gives Bay Capital exposure to a market it estimates could be worth $234bn as major biologic drugs lose patent protection over the coming years.

David Williams, Bay Capital's non-executive chairman, said: “We believe the market opportunity for biosimilars is considerable, and with Plenty Biologics, we have domain expertise ideally positioned to grow a substantial portfolio of biosimilar IP rights in a capital efficient way, leading to multiple licensing opportunities without the risk of novel drug development.

“Biosimilars are little known outside of the specialist pharma industry, however their significance will soon be appreciated by a wider audience as their potential becomes evident.”

Jake Schofield, CEO and co-founder of Plenty Biologics added: “Partnering with Bay Capital and listing in London gives us an ideal opportunity from which we can grow a highly repeatable industrialised IP platform, generating returns for shareholders not based on biology risk but on executing our plan based on already approved drugs.”

The acquisition remains subject to completion and regulatory processes, with Bay Capital's shares suspended while the enlarged group seeks readmission to the London market

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