1 Dec 2010 07:00
1 December 2010
Source BioScience plc ("Source BioScience" or "the Company" or "the Group") Acquisition of imaGenes GmbH, Berlin, Germany
The Board of Source BioScience plc the provider of expert, quality services and products to the healthcare, pharma biotech and life science research sectors, is delighted to announce the acquisition of the entire issued share capital of imaGenes GmbH ("imaGenes") of Berlin, Germany for a total consideration of £2.0 million payable in cash.
Highlights
* Consideration of £2.0 million; revenue of £2.5 million and cash generative from operations * The acquisition will create one of Europe's strongest and most comprehensive businesses for molecular products and services * Geographic expansion; having previously focused on the UK this acquisition will provide access to the German and broader European markets * imGenes' high end bioinformatic expertise complement Group's investment in leading edge next generation sequencing * The enlarged Group will have the capability to manage and deliver more extensive projects in life science research, healthcare, agriculture and pharma biotech * Creation of new cross-selling opportunities, extended customer base and better utilisation of existing infrastructure
Dr Nick Ash, CEO of Source BioScience, said: "This transaction fits squarely with our stated objective of continued expansion through both targeted acquisitions and development of the existing business. The acquisition of imaGenes provides a platform for increased penetration of the European life science research and healthcare markets, acting as a catalyst for accelerated growth. The imaGenes team will bring significant depth of experience and knowledge to the Group and we will be able to leverage their existing links with academic centres and research institutions across Europe."
For further information, please contact:
Source BioScience plcDr Nick AshChief Executive OfficerTel: +44 (0)115 973 9010nick.ash@sourcebioscience.com
Singer Capital Markets (Financial Advisor and Joint Broker)
Shaun Dobson/Claes SpangTel: +44 (0)203 205 7500www.singercm.com
Daniel Stewart Securities (Joint Broker)
Martin LampshireTel: +44 (0)207 776 6550www.danielstewart.co.ukBishopsgate CommunicationsNick Rome / Gemma O'HaraTel: +44 (0)207 562 3350
www.bishopsgatecommunications.com
Acquisition of imaGenes GmbH
Introduction
The Board is delighted to announce the acquisition of the entire issued share capital of imaGenes GmbH for a total consideration of £2.0 million payable in cash. The expenses of the transaction are anticipated to amount to £0.2 million.
imaGenes was formed as the result of the management buy out in July 2007 of part of the RZPD (German Resource Centre for Genomics). The RZPD was a collaborative enterprise between the DKFZ (German Cancer Research Centre) and the Max Planck Institute for Molecular Genetics.
Based in Berlin, imaGenes provides its customers with access to high quality, leading edge genomic products essential for determining and manipulating gene and protein function. It has an international market for its products and services with customers including academic research institutions, government laboratories, biotechnology and pharmaceutical companies.
The business is cash generative from operations and made a small loss before tax of £24,000 in the year ended 31 December 2009 on revenues of £2.5 million. The current imaGenes directors, who are all remaining with the Group, bring an extremely well regarded and qualified talent together with a dedicated, highly skilled and knowledgeable workforce.
The vendors have looked to investing in the future of Source BioScience by indicating their intention to purchase 7,500,000 existing shares for up to a total consideration of Euro 0.6 million.
Background and reasons for the transaction
The Group's strategy is to grow its healthcare, pharma biotech and life sciences business through organic growth from existing operations combined with selected acquisitions to broaden the Company's portfolio of products and services.
Source BioScience built its business on its traditional histopathology expertise and is at the forefront of cervical cancer screening in the UK. Source BioScience has also established a diagnostic reference laboratory offering a comprehensive suite of tissue-based diagnostics and molecular pathology testing in fully accredited laboratories.
During the last three years we have enhanced the capabilities of the Group and added contract research services, including DNA sequencing, genotyping and gene expression analysis, in addition to the distribution of genomic and antibody products. This molecular biology and genomics portfolio is offered mainly to academic and research institute customers in the life science research sector in the UK. The combination of leading edge genomics and core pathology expertise also represents a powerful offering to pharma biotech and healthcare customers.
To broaden and strengthen the Group's offering and enhance the financial performance, the Board has been evaluating companies providing complementary and synergistic activities. In particular the Group has looked to achieve critical mass in areas where there is infrastructure and resources which can support greater levels of business activity and where significant cross-selling opportunities exist.
imaGenes is a private company based in Berlin, Germany. The business was established in 2007 and is managed and owned by its four founder directors. There are 30 employees comprising the owner-directors, laboratory scientists, sales staff, technical support, customer services and internal support functions.
imaGenes' primary customer base has been the academic research sector in Germany and central Europe. It has forged strong and long-established links with leading academic research establishments and participates in a number of European Union and German Federal grant funded research projects.
imaGenes' product and service portfolio is complementary with that offered by Source BioScience especially in genomic products and contract research services. It is anticipated that the combination will create new cross-selling opportunities and better utilisation of existing infrastructure.
Their activities fall broadly into four categories:
* Genomic based products. imaGenes is a distributor for an archive of cDNA and genomic clone products and libraries, in addition to antibody and RNAi libraries. The breadth and extent of the clone libraries are complementary to those currently offered by Source BioScience. * Genotyping and gene expression profiling. This is a suite of genetic services whereby DNA can be extracted, banked, typed and analysed for the customer. imaGenes also applies microarray and quantitative real time PCR platforms and also provides expert analyses and bioinformatic support. * Proteomics. imaGenes custom manufacture protein expression arrays for use in a wide variety of applications including serum screening and detection of auto antigens. An in-house service is also available to customers. * Next generation sequencing and bioinformatics. High end bioinformatics are offered to customers, either for stand alone data analyses or in conjunction with next generation sequencing. imaGenes have historically outsourced next generation sequencing to a 3rd party collaborator; following acquisition this will be conducted in-house benefiting from Source BioScience's expertise with this technology.
Benefits of the Acquisition
The acquisition will create one of the strongest and most comprehensive European businesses for molecular products and services. The acquisition will bring considerable know how and flexibility in terms of both operational and scientific capability, creating an enlarged business which will have the capability to manage and deliver large scale projects in life science research, healthcare, agriculture and pharma biotech.
Expanded service offering and enlarged customer base
The acquisition of imaGenes GmbH will expand the service offering by making available proteomics capability as well as additional genotyping, gene expression and bioinformatic services to the Group's customers.
imaGenes has an established track record in Germany for proteomic and genomic services and is a certified service provider for both Agilent and Nimblegen technologies. These services are extremely complementary with Source BioScience's existing microarray services and status as a certified service provider for Illumina technologies.
In addition, imaGenes has an excellent reputation for bioinformatic services and data analysis. This type of expertise is an essential component in the Group's strategy to become the leading provider of next generation sequencing services in Europe. These next generation sequencing technologies generate huge, incredibly complex data sets, which require downstream analysis before delivery to the customers. The provision of expert bioinformatics is a key differentiator for the Source BioScience next generation sequencing service.
Geographic expansion
Source BioScience has deliberately focused its recent growth and development in the UK markets, to establish a credible and financially robust business. However, there exist many opportunities for the Group's products and services in continental Europe, especially Germany, the Benelux region and Scandinavia. Accessing these markets from the UK has always been challenging and having a central European operation will provide greater penetration of these markets for the Group. This is relevant for all of the Group's activities including the pharma biotech and healthcare activities.
Germany has a reputation for having one of the strongest healthcare systems in the world, providing universal healthcare for the majority of the population through a decentralised combination of private physicians and not for profit hospitals. Being able to access this market represents a significant opportunity for Source BioScience.
Cross-selling and enhanced product portfolio
There are significant cross-selling opportunities to offer the Source BioScience clones, antibody and other products through the imaGenes distribution channels to their existing customers, and vice versa. imaGenes has a complementary product portfolio including clones and antibodies. The acquisition will extend the existing clone and clone library portfolio of the Group by another 20%.
Source BioScience has a strong customer base in healthcare, a market into which imaGenes has limited penetration. imaGenes will also benefit from being able to access Source BioScience's customer base in life sciences. Additionally, imaGenes has customers in leading academic centres and research institutions where Source BioScience would wish to operate. Where there are common customers, it will be possible to offer the extended and complementary product and service portfolio enhancing the efficiency of the commercial activity.
Cost benefits
Cost savings can be made in a number of areas based on maximising operational efficiency across our UK and German facilities. There is some limited opportunity for the consolidation of support functions, however the main cost benefits will be derived from ensuring that technology platforms, distribution infrastructure and personnel are aligned in the appropriate location for the most streamlined delivery of our product and service offering.
Post Acquisition strategy
Source BioScience and imaGenes bring together complementary skills, expertise and product and service portfolios which will help Source BioScience enhance its position as a leading provider of diagnostic laboratory and contract research products and services for life sciences.
The management of imaGenes will add significantly to the depth of experience and knowledge in life science research and bring links to academic centres and research institutions that will be beneficial to the Group. They have an established network of contacts both in research and commercial enterprises and are collaborators on a number of EU and German Federal funded research grants and projects.
Principal terms of the Sale and Purchase Agreement
Pursuant to the Sale and Purchase Agreement which was executed and exchanged on 30 November 2010, Source BioScience has acquired the entire issued share capital of imaGenes for an aggregate cash consideration of £2.0 million, subject to an adjustment based on completion accounts satisfied.
The Sale and Purchase Agreement contains warranties and indemnities for the benefit of Source BioScience that are usual for a transaction of this nature. The maximum amount of the liability of the Sellers under the Sale and Purchase Agreement is limited to 50% of the total consideration received by the Sellers.
Financial information of imaGenes
Financial information of imaGenes for the 12 months ended 31 December 2009 issummarised below. Year ended 31 December 2009 £'000 Revenue 2,548 Operating profit 15 Net loss for the year before tax 24 Total gross assets 1,290 Net current assets 187
Included in net current assets at 31 December 2009 are bank borrowings and finance lease creditors totalling £0.5 million. Of this amount, £0.1 million is due within one year and the balance is due for repayment between 2013 and 2017 under the current terms of the financing.
Outlook
Source BioScience has strengthened its position across all of its markets through a combination of organic growth and targeted acquisitions. The acquisitions have been successfully integrated and the Group now offers a range of expert products and services to the healthcare sector and for use in a broad spectrum of life science applications.
With the acquisition of imaGenes, Source BioScience will significantly enhance its portfolio with complementary products and services. In addition, it will open up new markets for the Group's activities, both geographically and through an extended customer base.
About Source BioScience:
Source BioScience is a highly focused healthcare and biotechnology group providing diagnostic and screening services to the healthcare community and genetic analyses and biomolecular tools and products to the life science research and pharma biotech sectors.
Its Healthcare operations provide screening and reference laboratory diagnostic testing for cancer and other diseases and additional predictive testing for treatment optimisation for clinicians and patients. PharmaBiotech Services offers support for early stage therapeutic development, offering a 'one-stop shop' from tissue pathology, immunohistochemistry, sophisticated image analysis, biomarker determination and assay development to pharmacogenomics including genotyping and gene expression analysis. The LifeSciences division provides core laboratory research support from conceptualisation to implementation, calling upon a wide range of cutting-edge technology platforms including an online catalogue of biomolecular tools. This incorporates next generation sequencing, conventional sequencing, microarray analysis and whole genome amplification in addition to a comprehensive library of genomic reagents and clones including cDNA and RNAi, as well as facilitating rapid access to high quality antibodies, cell cultures, diagnostic assays for cancer and other genetic testing, and related research tools.
The Group has its headquarters in Nottingham, UK where it operates state of the art reference laboratory facilities, with additional UK laboratory facilities in London, Cambridge and Oxford and European facilities in Berlin and Dublin. Source BioScience is CPA, GLP and GCP accredited and is licensed by the Human Tissue Authority.
Further information about Source BioScience can be found at www.sourcebioscience.com.
GLOSSARY Antibodies Antibodies are proteins that are found in blood or other bodily fluids; they are used by the immune system to identify and neutralise foreign objects, such as bacteria and viruses. Antibodies are also used as highly specific probes for detecting proteins of interest in tissues. A wide range of antibodies with a large variety of cellular targets is available to research scientists through distributors such as Source BioScience. Bioinformatics The application of information technology, and computer science, to the field of molecular biology. Common activities in bioinformatics include mapping and analysing DNA and protein sequences, aligning different DNA sequences to compare them and handling and analysing huge data sets generated by the latest sequencing technologies. Biomarkers Biomarkers often refer to substances found in blood, urine or tissue, changes in which may be used to indicate presence of disease or response to treatment. More generally the term biomarker refers to any molecule that can be used to monitor a particular cellular process and may be a protein, DNA or RNA molecule.
Capillary Electrophoresis DNA sequences are determined using a chemical DNA Sequencing
reaction that results in an array of products that
(also known as Sanger terminate in a different fluorescent coloured dye, sequencing or
which vary in size by one nucleotide. The products
conventional sequencing) are separated, like the rungs of a ladder, by passing
them through a capillary with an electric current and determining the order in which they emerge. This method was used for the large DNA sequencing projects of the last 15 years and remains the only way of inexpensively analysing large numbers of small sets of samples (see also Next Generation DNA Sequencing - below). CYP2D6 Breast cancer patients with certain genetic variations in the CYP2D6 gene may be slow metabolisers of the drug tamoxifen to its active metabolite endoxifen. In this case changes to the treatment regime may be indicated because the efficacy of the drug is reduced. Circulating Tumour Cells The identification of small numbers of cancer cells (`CTC') circulating in the blood has been shown to be of potential prognostic significance in breast cancer, colorectal or prostate cancer, and useful for monitoring response to drug therapy. Clinical Pathology CPA is the accreditation body for clinical pathology Accreditation services. Accreditation involves audit of the ability(`CPA') of a laboratory to provide a service of high and consistent quality by declaring a defined standard of practice, which is performed by the CPA accreditation body. Companion Diagnostic A test based on a biomarker (which might be a protein, DNA or RNA molecule), the presence or absence of which is associated with the likely efficacy of a drug or other treatment. Companion diagnostics are useful in stratifying patients into groups which are known to respond in a particular way to a drug. A good example of such a test from the Source BioScience breast cancer portfolio is the HER2 test, which assesses levels of the HER2 protein, expression of which is correlated with response to Herceptinâ„¢. DNA and cDNA DNA (Deoxyribo Nucleic Acid) is a large, complex molecule which, by virtue of a unique sequence of building blocks, contains all the genetic information required to create a cell or organism. cDNA (complementary DNA) can be made from all the genes in a genome, from a single gene,, or from part of a gene. cDNA is DNA that has been synthesised artificially using an RNA template (see below) from the gene(s) selected. Duty of Care Review An audit of a specific pathologist's practice. Pathology departments have a duty of care to patients whose treatment or clinical management may need to be changed in the light of revised opinions arising from a review of a pathologist's or team's work. Where good practice is suspected to have broken down it may be necessary to arrange a systematic review of cases to fulfil a department's duty of care to their patients. Source BioScience offers a full duty of care review service to pathology departments that need specialist second opinion in these circumstances. FocalPointTM (`FP') An automated imaging system for screening SurePathâ„¢ liquid based cytology slides. It uses complex algorithms to interpret the images of each slide and decide the 10 `fields of view' most likely to have any abnormal cells. It can archive up to 25% as `no further review' which then do not need to be manually screened. Fluorescence In Situ In situ hybridisation (`ISH') is a powerful Hybridisation technique, not unlike immunohistochemistry (below), (`FISH') for visualising the presence of specific sequences of DNA or RNA in tissue sections. The technique uses short synthetic sequences of DNA or RNA which will bind, or hybridise, to the tissue with high specificity for the DNA or RNA of interest. Fluorescent `tags' are attached to these synthetic sequences, allowing them to be visualised with a special microscope, even when present at very low levels (FISH). Genomics Genomics is the study of an organism's entire genome, where the genome of an organism is its whole hereditary information and is encoded in the DNA (see above) and RNA (see below). This includes both the genes and the non-coding sequences of the DNA.
Genomic clone libraries A clone library is a collection of clones containing
complementary DNA (`cDNA') (see above) and is often intended to represent the genes that are expressed within a given cell or tissue type at a given period. Genomic products and In this instance, DNA or RNA extracted and purified reagents from a range of species and provided in a variety of forms for research purposes.
Genotyping and sequencing DNA sequencing is the process of precisely ordering
the building blocks, or nucleotides, of an organism's DNA. The method can be used to determine short sequences of DNA or, in larger experiments, to sequence the entire genome of an organism. Genotyping, in turn, is the process whereby DNA is characterised and then compared to reference data or, if large numbers of samples are genotyped, the data can be examined for patterns which might lead to discoveries of the fundamental causes of inherited diseases. Genotyping is commonly performed by PCR (below) or DNA sequencing. Good Clinical Practice Good Clinical Practice is an international ethical (`GCP') and scientific quality standard for designing, conducting, recording and reporting clinical trials that involve the participation of human subjects. Compliance with this standard provides public assurance that the rights, safety and well-being of trial subjects are protected, consistent with principles that have their origin in the Declaration of Helsinki. Compliance with the principles of GCP is assured via monitoring by a governmental agency, the Medicines and Healthcare products Regulatory Agency (`MHRA'). Good Laboratory Practice Good Laboratory Practice is a set of principles that (`GLP') provides a framework within which laboratory studies are planned, performed, monitored, recorded, reported and archived. These studies are undertaken to generate data by which the hazards and risks to users can be assessed for pharmaceuticals (only preclinical studies). GLP helps assure regulatory authorities that data submitted is a true reflection of the results obtained during the study and can therefore be relied upon when making risk/safety assessments. Compliance with the principles of GLP is assured via monitoring by the Medicines and Healthcare products Regulatory Agency (`MHRA'). HER2 Human Epidermal growth factor Receptor 2 is a protein whose over-expression within a breast tumour sample may indicate a patient is suitable for treatment with Herceptinâ„¢. A test for such over-expression is carried out on all new breast cancer patients. Histopathology The study of changes in tissues and cells as a consequence of some disease or toxic processes. Immunohistochemistry Immunohistochemistry is a technique for visualising (`IHC') proteins and other molecules in thin sections of tissue. This technique uses antibodies raised in other species against the protein of interest as a tool, and exploits their exquisite sensitivity and specificity for binding to that protein. K-RAS K-RAS is a gene that produces an important cell signalling protein responsible for cell growth. The presence of a mutated form of the K-RAS gene in colorectal cancer may indicate that a patient is unsuitable for new anti-EGFR drugs such as Erbituxâ„¢ and Vectibixâ„¢. Liquid based cytology Liquid based cytology is a process for collecting and(`LBC') processing cytology samples from epithelial tissues such as the cervix. It produces a cleaner preparation of cells, without the other materials which frequently contaminate the sample such as blood or mucus. Microarray Microarrays are a microscopic series of nucleic acid spots of known sequence which are deposited in a regular array typically onto glass slide. A DNA or RNA probe can then be hybridised to the slide which results in a DNA or RNA fingerprint of the sample in the probe enabling you to determine the sample nucleic acid sequence.
Next Generation DNA Next Generation DNA Sequencing refers generically to Sequencing (`NGS'), a set of recent technologies, in our case Illumina Illumina GAIIxâ„¢ and GAIIxâ„¢ and Illumina HiSeq 2000â„¢ in which extremely Illumina HiSeq 2000â„¢ large numbers of short sequences can be determined in
a single experiment; for example the Illumina HiSeq 2000â„¢ selected by Source BioScience can sequence two human genomes in approximately one week. Proteomics Proteomics is the study of specific amino acids, proteins or the entire proteome (a complete translated genome, see above) of an organism. Proteomic techniques include, for example, surveying complex biological samples for protein content, or determining the level of specific proteins in tissues using techniques like immunohistochemistry (IHC, see above) RNA RNA (RiboNucleic Acid) is a molecule similar to DNA, but is an intermediate product between the DNA of the gene, and the ultimate protein product of that gene. The level of expression of a gene can be gauged by the amount of RNA synthesised from that gene, a process usually measured by quantitative real-time polymerase chain reaction (`Q-PCR').
RNA expression analysis RNA expression analysis measures the activity of a
large number of genes simultaneously, generating a global picture of cellular function. The expression analyses, or profiles, can distinguish between cells that are actively dividing, for example, or show how the cells react to a particular treatment. --- ENDS ---
vendor