Macclesfield, UK and Watertown, MA, US – 6 August 2010 – Cyprotex PLC (LSE: CRX), a Contract Research Organisation (CRO) specialising in the preclinical ADME1 assessment of drug candidates, announces that it has agreed to acquire the entire issued share capital of Apredica LLC (“Apredica”), a US-based CRO specialising in preclinical ADME and Toxicology assessment. Immediately preceding Cyprotex’s acquisition of Apredica, Apredica acquired the Intellectual Property and all other assets necessary for offering the Cellular Systems Biology (CSB™) and High Content Toxicology services previously offered by Cellumen, Inc.
The total consideration for the acquisition of Apredica is £2.68 million to be satisfied through a combination of 44,730,297 new Cyprotex shares and £1 million in cash. The transaction was unanimously recommended by the Boards of both Cyprotex and Apredica, and does not require shareholder approval.
The combination of Cyprotex and Apredica brings together two market leaders specialising in preclinical ADME Tox, giving the combined organisation operations in the world’s two largest centres of drug discovery, Europe and North America. The two companies have little overlap in their customer bases. The acquisition of Apredica’s preclinical toxicology services and the Cellular Systems Biology (CSB™) and High Content Toxicology assets of Cellumen enhances Cyprotex’s entry into the in vitro toxicology market, which will soon be further bolstered by the Company’s new toxicology laboratory in Macclesfield, opening on 1st October 2010.
Rationale for the Acquisition
The acquisition will give Cyprotex:
• The position of being the largest international specialist provider of ADME Tox contract research services;
• Laboratory and customer service operations in the US, the world’s largest market for ADME Tox CRO services;
• A doubling of its share of the US ADME Tox market;
• Immediate entry and critical mass in the in vitro toxicology market;
• The immediate ability to offer customers 11 additional services, primarily in toxicology;
• Significant cross-selling opportunities among Cyprotex, Apredica, and Cellumen's customers.
• A strengthened Board and Management team; and
• Improved economies of scale.
Background on Apredica
Apredica, based in Watertown, Massachusetts, near Boston, US, was founded in 2006 and provides preclinical contract testing services for the evaluation and optimisation of the ADMET and pharmacokinetic properties of drug candidates early in the drug discovery process.
Since its founding, Apredica has grown rapidly. Its 2009 annual growth rate was 72%. Apredica has 173 customers, mostly in the US, but including customers from Europe, East Asia, South Asia, Africa, South America, and Australia. In 2009 81% of Apredica’s revenues came from repeat customers, while Apredica acquired 56 new customers. All of Apredica’s scientists have more than 10 years’ drug-discovery experience and 80% of them have Ph.D.s. All of Apredica’s employees will remain with the enlarged business.
Background on Cellumen
Cellumen is the inventor of the Cellular Systems Biology (CSB™) approach to in vitro toxicology. CSB™ analyzes the system’s response of cell and organ models to drug treatments. This research has led to the creation of Cellumen’s Intellectual Property for next-generation reagents and multiplexed assays using the High Content Screening (HCS) technology platform. CSB™ is an extensively validated approach that has been co-developed by Cellumen with external pharmaceutical and government partners.
The acquisition of Cellumen’s assets and commercial offering significantly strengthens Apredica’s existing High Content Toxicology offerings. The Apredica and Cellumen toxicology offerings, when added to Cyprotex, make the enlarged business a leader in the rapidly growing market for predictive mechanistic toxicology services, as the in vitro methods in which Cyprotex specialises are rapidly being adopted by the pharmaceutical, cosmetics, and agrichemical industries.
Revised Board Structure
The acquisition will enable Cyprotex to strengthen its Management Team with the addition of the significant expertise of Apredica’s founders. Dr. Katya Tsaioun, Co-Founder, CEO, and Chief Scientific Officer of Apredica, is a world-renowned ADME Tox expert with exceptional understanding of the current and future ADME Tox requirements of the pharmaceutical, biotechnology, agrichemical, and cosmetics industries. Dr. Tsaioun will become Chief Scientific Officer of the combined group. Mr. Douglas Bates, Co-Founder and Chief Business Officer of Apredica, is Apredica’s largest investor and business strategist. Mr. Bates will become Chief Marketing Officer of the combined Group.
The new Board of Cyprotex will be:
Mr. Steve Harris Non-Executive Chairman
Dr. Anthony Baxter Chief Executive Officer
Dr. Katya Tsaioun Chief Scientific Officer
Mr. John Dootson Chief Financial Officer
Mr. Douglas Bates Chief Marketing Officer
Principal Executives attending Board meetings will now be:
Mr. Simon Bury Chief Commercial Officer
Mr. Mark Warburton Chief Operating Officer and Legal Counsel
Following the acquisition the Company will seek to recruit at least one new Non-Executive Director to join the Board.
Dr. Anthony Baxter, Chief Executive Officer of Cyprotex, said:
“The acquisition of Apredica is highly significant for Cyprotex as it creates, at a single stroke, a transcontinental ADMET services business. We believe the acquisition is revenue and earnings enhancing and highly valuable to our shareholders.
“Apredica is a well-respected US-based operator in the ADME Tox contract research arena. The addition of Dr. Tsaioun’s ADME Tox expertise and industry contacts, and Mr. Bates’ business acumen will significantly enhance the Management Team. The combination of businesses offers our customers, both existing and new, a greatly enhanced ADMET offering and scientific consulting service in this vital area of drug discovery services.”
Dr. Katya Tsaioun, Chief Executive Officer of Apredica, said:
“I am delighted to have the opportunity to lead the scientific operations of the combined businesses. Cyprotex and Apredica have highly complementary operations. Cyprotex’s strength is in ADME screening and modelling, predominantly in Europe. Apredica’s strength is in ADME customisation and mechanistic toxicology, with a significant market share in America. There are no redundancies.
“I am looking forward to leading the Company’s scientific growth into the in vitro toxicology market, where rapid scientific advances are now being made by pioneers in the field such as Cellumen. Such technologies simultaneously improve our ability to detect mechanisms of human toxicity, reduce the time and cost of developing safe and efficacious drugs, and pave the way towards developing toxicology models that are more predictive of human biology than currently available models. As human-biology-based models improve, they will reduce and ultimately replace animal toxicology models.”
Terms and Financing of the Transaction
The £2.68 million consideration for the acquisition of the entire issued share capital of Apredica will be settled by the issue of 44,739,297 new Cyprotex ordinary shares and a cash payment of £1,000,000, £450,000 of which will be loaned back to the Company for repayment over the next two years.
Application has been made for the new Cyprotex shares, which will, when admitted to trading, rank pari passu with the existing Cyprotex shares, to be admitted to trading on AIM. It is expected that admission will take place at 8.00am on 12 August 2010.
The cash elements of the transaction will be met from the Company’s existing resources.
Financial Information and Current Results
For the year ended 31 December 2009, Apredica reported revenues of £1.05million and an EBITDA of £0.1m
Cyprotex PLC will announce its 2010 half-year results on 12th August 2010 in London. Further information regarding this transaction will be presented there.
1. ADME is an acronym for the Absorption, Distribution, Metabolism, and Elimination of xenobiotics (chemicals such as drugs which may be introduced into an organism but which are not normally produced or expected to be present in the organism). ADMET and ADME Tox are acronyms for ADME and Toxicity.
Dr. Anthony Baxter, Chief Executive Officer Tel: +44 (0)1625 505100
Mr. John Dootson, Chief Financial Officer Tel: +44 (0)1625 505100
Mr. Mark Warburton, Chief Operating Officer and Legal Counsel Tel: +44 (0)1625 505100
Dr. Katya Tsaioun, Chief Executive Officer Tel:+1 617-812-1911
Mr. Douglas Bates, Chief Business Officer Tel:+1 781-679-2172
Singer Capital Markets Ltd (Broker to Cyprotex)
Shaun Dobson Tel: +44 (0)20 3205 7626
Claes Spang Tel: +44 (0)20 3205 7638
Financial Dynamics Tel: +44 (0)20 7831 3113
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