Expert endorses Alchemia oncology spin-off

Alchemia (ASX:ACL) has filed papers with ASIC regarding the proposed spin-off of its oncology business, after the independent analysts hired to assess the deal concluded that the demerger is in shareholders' best interests.

The company has filed the scheme booklet for the proposed demerger with ASIC, including independent expert BDO Corporate Finance's report.

This report concludes that, on balance, spinning off Audeo Oncology and its HyACT chemotherapy drug delivery platform – leaving the parent with its business producing anticoagulant generic fondaparinux – is in the best interests of Alchemia shareholders.

In making its assessment, BDO Corporate Finance weighed the benefits against the potential drawbacks.

BDO said that in this case, benefits include both Alchemia and Audeo being able to focus their resources on their respective goals, and to adjust their capital structures to reflect their individual strategic objectives.

Listing Audeo Oncology on the Nasdaq exchange would also augment the company's access to US investor capital, and could pave the way for a takeover by a larger company, which could provide value for shareholders.

Alchemia investors will meanwhile be able to adjust their holdings depending on if they want to be invested in a biotechnology company with an already commercialised product, a development-stage company with a promising pipeline, or both.

However, the demeger will also create two smaller companies with a less diversified business portfolio, increase corporate costs for running two stand-alone companies, and cut Audeo Oncology off from the financial support associated with being a subsidiary of a larger and more established company, said BDO.

Last week, the Federal Court convened an October meeting for Alchemia shareholders to vote on the proposed spin-off. Alchemia first revealed plans to pursue the demerger in November last year.

Alchemia (ASX:ACL) shares were trading 2.97% higher at $0.520 as of around 3pm on Wednesday.