Sinclair Sinclair Pharma forced to pay £5m to Alliance Pharma
Sinclair Pharma will be forced to pay Alliance Pharma £5m ($6m) in compensation, as a result of a sales-shortfall of Kelo-stretch, a cream bought by Alliance from Sinclair in December 2015 as part of its acquisition of Sinclair's healthcare products division. Kelo-strech, a dermo-cosmetic cream to prevent and treat stretch marks, had been identified as a key growth brand, but sales of the product fell short of expectations and had a negative impact on profitability. A compensation payment of £4m is due from Sinclair Pharma on or before 30 April 2017, with a further £1m due on or before 30 June 2018.

AIM-listed Alliance Pharma has gained £5m in compensation from Sinclair Pharma in connection to a sales-shortfall of Kelo-stretch, a cream that treats stretch marks, which it bought in December 2015 as part of its acquisition of Sinclair's healthcare products business.

The £5m compensation, which the company will use to reduce its loans, consists of £4m to be paid by 30 April and £1m to be paid by 30 June 2018.

Sinclair has also relinquished all US rights to Flammacerium, a drug to treat infections and severe burns, with immediate effect to Alliance.

As part of the acquisition of Sinclair's healthcare business, Sinclair had retained royalty rights for Flammacerium in the US but has now relinquished these as part of the compensation package to Alliance.

The company said that it is currently registering Flammacerium in the US and plans to seek registration guidance from the US regulatory authority in the second half of 2017.

Flammacerium is currently available to treat severe burns and for wound management in Europe.

Chief executive John Dawson said that the £5m compensation was “fair” and that the US rights to Flammacerium provides the company with an additional opportunity which it is now exploring.

He added: “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."

Shares in Alliance Pharma were up 1.49% to 47.70p at 0845 GMT.