Evotec is buying DeveloGen for up to €14 million (about $17.7 million) in shares up front and milestone/royalty-related cash earn-out payments. €6 million (about $7.6 million) worth of the total share purchase price is conditional on future milestones and will be held in escrow.
Evotec says that the acquisition will significantly bolster its drug discovery capabilities and provide promising pipeline candidates, expertise in metabolic and endocrine disorders, and ongoing alliances in the diabetes therapeutics field.
“Importantly, we are acquiring this value potential for our shareholders without assuming many of the risks associated with such transactions,” comments Werner Lanthaler, Ph.D., Evotec CEO. “Of the initial purchase price almost half will only be released following the achievement of defined company goals, and an earn-out component secures that the additional consideration will only be paid if the programs acquired generate revenues.”
Through the transaction the firm will inherit DeveloGen’s expertise in target discovery, validation, and pharmacology along with specialist knowledge in the field of metabolic diseases and DeveloGen’s early-stage in-house pipeline as well as ongoing discovery and development partnerships.
A collaboration with Boehringer Ingelheim (BI) is focused on the discovery and development of small molecules for the treatment of type 2 diabetes. Evotec will receive ongoing research funding and potential milestone payments of up to €237 million from BI.
A partnership with Andromeda Biotech is centered on commercialization of the type 1 diabetes therapy, DiaPep277, which DeveloGen transferred to Andromeda in 2007. Teva Pharmaceuticals negotiated a worldwide, exclusive license to the drug from Andromeda in 2009 and took an equity stake in the firm.
DeveloGen’s lead in-house candidate Somatoprim is a somatostatin analogue in development for treating acromegaly and diabetic retinopathy. The candidate has completed a Phase I trial. DeveloGen is also progressing a growth factor targeting beta-cell regeneration for the potential treatment of type 1 and type 2 diabetes. Currently at the lead optimization stage, the initial candidate, DG770, is being developed with funding from the Juvenile Diabetes Research Foundation. Additional in- house research at DeveloGen is focused on the development of oral insulin sensitizers.