Radient Pharma Set to Sell China Subsidiary

Apr.14.10 | About: Radient Pharmaceuticals (RXPC)

Radient Pharmaceuticals (NYSE: RPC) currently expects prospective purchasers of its China subsidiary, Jade Pharmaceutical, Inc. to complete their due diligence by the end of May 2010. Radient, which announced plans to divest itself of Jade in Q3 of 2009, places a $20 million value on Jade. It owns 98% of the China enterprise, though Radient doesn’t expect to realize nearly that much upon the sale.

Radient said that its relationship with Jade’s management became increasingly strained during the first three quarters of 2009. According to Radient, Jade’s management: (1) refused to release financial information to Radient; (2) would not transfer money into Radient’s bank accounts; (3) did not communicate with Radient about the sale of another China subsidiary; and (4) did not communicate about its general operations.

Given the situation, Radient worked out an agreement with the three minority shareholders of Jade. Jade was “deconsolidated” from Radient’s operations, and Radient’s shares of Jade were exchanged for non-voting preferred shares. Radient relinquished all claims to past and future profits, gave up management positions and reduced its presence on Jade’s Board of Directors to a minority position.

Apparently, Radient holds a note of $5.3 million from Jade, on which it has recorded a $2.7 million reserve because it does not deem the entire amount collectible. It has also exchanged $731,000 worth of salaries paid to Jade employees for 731,000 shares of JPI common stock.

Previously, Radient said it expected to list Jade on Shenzhen’s GEM exchange, though the subsidiary’s rogue status made that plan unworkable.

Radient was previously known as AMDL, Inc. Its plans for the future are based around two separate lines of business: an in vitro diagnostics unit, including the FDA-approved cancer test Onko-Sure, and a high-end line of anti-aging cosmetics, called Elleuxe.

In the first nine months of 2009, Jade reported revenues of $8.7 million, roughly half of its year-earlier sales. About $300,000 of that derived from Onko-Sure.

Disclosure: none.