Share consolidations normally destroy value – at least in the short term – so it is not entirely encouraging to see Minster Pharmaceuticals propose a 50-for-1 consolidation. It may, however, be inevitable with the shares trading at just 1.5p. Minster is also raising £17 million with a placing at 1.3p (or 65p in the new form). Two specialist US investment companies with good credentials in the pharmaceutical area are taking a big chunk of the placing and will end up with just under 29 per cent of the enlarged company.

However, the good news is that the money will be used to accelerate the development and commercialisation of tonabersat, the company’s migraine treatment, for which very positive Phase IIa trial results were announced in January, with a target US launch date of end 2009/start 2010. The one major competing drug achieved sales of $560 million in its first year, despite the fact that patients suffer side-effects. Minster will also spend money further developing the schizophrenia drug, sabcomeline.

A £75 million market capitalisation continues to look a paltry valuation of the potential. Although the shares are well down on the 2.35p at which they were recommended here in January last year, they should not be sold now.

Minster Pharmaceuticals	AIM	£11.19m	19.00p	0.00p
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Other company articles:
Minster Pharmaceuticals			12/06/2008
Minster’s key tonabersat trial underway			07/12/2007
A more palatable pill			05/10/2007
Minster Pharmaceuticals			20/07/2007
Minster raises �£17 million and consolidates shares			02/03/2007