Evotec Pays €10.25M for Galapagos’ Compound-Management Business
Purchase bolsters drug discovery operations and adds profitable revenues.
Evotec is acquiring Compound Focus, the compound-management business of Galapagos’ BioFocus division, for €10.25 million (almost $14.78 million) in cash up front. The deal augments Evotec’s early drug discovery capabilities, provides critical mass to its existing compound-management offering, and adds profitable revenues.
Under the acquisition agreement, Evotec also agreed to pay another €2.25 million (about $3.24 million) in potential earn-out fees upon performance of the business in 2012 and 2013 depending on revenues and certain corporate milestones.
Compound Focus is based in San Francisco and concentrates on small molecule compound-management services. The company's technologies are focused on automated storage and custom design solutions.
In 2010, Compound Focus had revenues of €7.8 million with an operating profit of €2.6 million. Customers include U.S. federal institutes and companies such as Elan, Lundbeck, Sepracor, and Procter & Gamble.
Following this transaction, Evotec says, its revenue guidance for 2011 will go up from €64–66 million to €68–70 million. Evotec says that it will have more than €55 million in cash and cash equivalents at the end of this year.
Galapagos has also changed its revenue guidance for 2011 from €150 million to €146 million. Commenting on the sale of Compound Focus, Onno van de Stolpe, Galapagos CEO, says, "Today's transaction enables us to concentrate on what we do best in BioFocus and Argenta, providing top-class drug discovery solutions needed to deliver molecules for our customers. Compound management is not strategic to our offering."
Galapagos acquired Argenta's service operations last February. It purchased BioFocus, a company based in Saffron Walden, U.K., in October 2005. Subsequent purchases like the drug discovery operations of Discovery Partners International and Inpharmatica in 2006 as well as the structure-based drug discovery business of Sareum Holdings in 2008 rounded out its BioFocus service division. The segment offers a range of drug discovery products and services encompassing target discovery and validation, screening and drug discovery, through to delivery of preclinical candidates.